How Do Composer Vs M1 Finance Vs Robinhood Compare? a Comprehensive Review

Robinhood is the market leading investing app for first-time self-directed traders. With its intuitive design, clean user interface and gamified experience it makes trading fun and easy. M1 Finance and Composer employ a more automated approach to trading, allowing the user to create trading algorithms with stocks and ETFs that execute on a pre-determined cadence. Over the years both M1 Finance and Robinhood have branched into additional product lines; in Robinhood's case Robinhood Retirement and Robinhood Cash Card and in M1 Finance's  case M1 Spend and M1 Borrow.

This article is going to primarily focus on the trading and investing aspects of each platform in order to provide an apples-to-apples comparison. When it comes to trading Robinhood, M1 Finance and Composer each has its unique advantages and disadvantages. 

I've outlined some of the key differences between Composer, Robinhood and M1 Finance to help you make an informed choice if you are looking for a new trading platform to explore. 

What is Composer?

Composer is an AI powered trading platform that allows retail traders to build trading algorithms, backtest them and then execute them directly from its platform. Through its no-code visual editor or its AI powered strategy creator traders can create strategies that are unique to their goals, strategy and risk concerns - without having to know how to code. They also offer a pre-built selection of over 1000 community built strategies that can be implemented directly. This makes Composer a powerful trading platform for retail traders.

What is Robinhood? 

Robinhood is a trading app famous for being the first to offer commission free trading. Robinhood primarily caters to active traders, especially those getting into trading for the first time. To reduce the barriers to entry Robinhood has no account minimums and a wide ranges of assets available to trade. 

What is M1 Finance?

M1 Finance is an online brokerage platform that in many ways is like a DIY robo advisor. M1's focus is primarily passive investors who seek automatic rebalancing, tax-advantaged accounts and DRIPs (dividend reinvestment plan). Only premium M1 accounts provide investors with a 1% APY on idle cash, through an M1 Spend account. 

Composer vs Robinhood vs M1: Which One Should Traders Use?

User Interface & Platform Access

Composer offers two different interfaces to create trading strategies. The first is a visual no-code strategy builder that gives both beginners and advanced traders the ability to build custom strategies (symphonies) with ease. Composer also has a "Create with AI" tool via an integration with GPT4 that allows you to create strategies in natural language. For those who are just looking to get started they offer a database of over 1000 strategies created by the community that can be implemented with the click of a button. Once a strategy (symphony) is chosen Composer automates the trading of the strategy based on its underlying logic.

M1 Finance has built its product around the concept of "pies." M1 allows users to invest in a portfolio of assets that can be viewed as a pie, with each slice representing different securities such as stocks, ETFs and cryptocurrencies.  Users have the option to create their own Pie or choose and modify pre-built portfolios known as Expert Pies. M1's setup offers a simple but visually intuitive interface to for investors who want to automate basic investment portfolios. 

Robinhood is perhaps the most popular trading app in the market. It was designed to democratize access to markets and was the first app that offered free trading. As a result the interface is extremely simple to get started trading with and is primarily designed for the first-time trader. Robinhood also makes access to asset classes such as options, which previously only experienced traders invested in, available to novice traders.

Pricing

Composer gives you access to the majority of its software for free. This includes the ability to create strategies from scratch both using AI and its no-code tooling, access to its library of over 1000 community created strategies and its proprietary backtesting engine. Once you decide to invest in a strategy Composer charges $30/month (or $288/yr) to handle trade execution. There are no commissions when it comes to trades executed through Composer. A full fee schedule can be found here.

M1 Finance doesn't charge management fees for its M1 Invest product. There are fees related to inactivity, optional transactions etc. that they share via their fee schedule. They also offer a premium product called M1 Plus that offers additional benefits for a monthly fee. Specifically on the investment side an M1 Plus membership gives investors access to two trading windows instead of one, access to custodial accounts and a slight reduction in fees. M1 Plus costs $10/mo. 

Robinhood is famously known for being the first trading app to allow for free stock trading. They've stuck to this ethos of low fee, accessible trading.  Robinhood Gold costs $5/mo and gives traders access to additional data and insights from Morningstar. It also offers additional benefits in terms of rates on IRA Matching and allows traders to earn a 1.5% APY on idle cash. Similar to M1, Robinhood does have fees related to optional transactions. 

Assets

At present Composer allows you to invest in and create strategies using US Exchange Listed Stocks and ETFs. Over time they plan to roll out additional asset classes to invest in. They also offer fractional shares, which is a massive benefit it minimizes deviation from the strategy's underlying logic during rebalancing. Creating strategies using fractional shares also allows traders to invest smaller amounts of money into any particular strategy.

M1 Finance allows you to create pies using stocks, ETFs and crypto. Each pie can hold up to 100 different assets. The M1 Finance platform also allows for the use of fractional shares in its pies. It is similar to a robo advisor is many ways that can be customized to a specific investor's discretion. 

Robinhood accounts offers the most diverse set of assets to trade in of the three. Assets you can trade using Robinhood include stocks, ETFs, crypto, options and IPOs. However, Robinhood IRA accounts only give you the option to trade stocks and ETFs. Robinhood aims to offer options trading within IRA account shortly. 

Account Types

Composer offers three account types at present: taxable margin accounts, Roth IRA and Traditional IRAs. 

M1 Finance offers the greatest variety in terms of account type choice with the ability to invest through a taxable account, Roth IRA, Traditional IRA, SEP IRA  or Joint Trust.

Robinhood historically only allowed for Taxable Margin Accounts.  With their recent launch of Robinhood Retirement they now offer access to Roth and Traditional IRA accounts as well. Within the Robinhood Retirement accounts you are currently excluded from trading options and crypto. Also in order to open a Robinhood Retirement account you first need to have opened a regular margin trading account. Robinhood crypto offers the most popular cryptocurrencies and stablecoins currently on the market.  

Account Minimums

Composer has a $50 account minimum to get started, though the recommended amount is $2500 to avoid unfilled orders. Additionally the minimum to invest in any particular strategy is $50. This ensures that large strategies that contain both fractional shares or ETFs and non-fractional shares or ETFs match their intended strategy allocations.

M1 FInance has a minimum $100 deposit amount for its regular brokerage account. Retirement accounts have a minimum deposit amount of $500.

Robinhood has no account minimums for its brokerage accounts. 

Which Platform is Right for You?

All three platforms Composer, Robinhood and M1 offer commission free trading. That is where the similarities end.

Robinhood has built its business focusing on first time traders and and are now expanding into new offerings through Robinhood Retirement and Robinhood Gold. While the simple trading interface is great for first time traders, it lacks in functionality for more experienced or sophisticated traders. Robinhood is also great for discretionary trades but doesn't incorporate any automation or logic in how those trades are executed. 

M1's software is more ideally suited to the passive or longer-term investor. The ability to create custom pies is unique but it also lacks functionality that active traders would be looking for (access to data, backtesting etc.) 

What makes Composer unique is that it offers all of the same functionality as M1 but also additional functionality on top, which makes its offering a superset to what M1 offers traders. You can build the equivalent of a pie in Composer but you can also add logic and reasoning to make your strategies more sophisticated. Composer's AI feature is also completely unique as neither M1 or Robinhood have incorporated Generative AI into their respective products. 

Of the three investing apps, M1 is the most focused on passive investors. Overall Robinhood is great for the beginner active investor but if you're looking to level up and incorporate sophisticated logic in your trades then Composer is the right choice for you!