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The Psychology Behind M1 Finance's Platform And Its Focus On Financial Well-Being

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The Psychology Behind M1 Finance's Platform And Its Focus On Financial Well-Being

M1 Finance was one of the speakers at the Benzinga Global Fintech Awards that took place on November 10, 2020.

The journey to achieving financial freedom is no easy task. And for many, the subject of money is met with feelings of anxiety and worry. 

Brian Barnes, Founder & CEO of M1 Finance, believes that the relationship someone has with money is dependent on their mindset, and one way to help achieve a more positive outlook on money is through money management. 

“After you get your basic income and expenses sorted out, it’s about prioritizing every dollar. You need to see your spending, investing, saving, and borrowing in one big picture because nothing really works in a silo. It’s really about knowing your risk tolerance and biases, being patient, and continuing to educate yourself,” Barnes said. 

At M1 Finance, they believe that financial well-being is fundamental to overall well-being. The company’s personal finance platform, The Finance Super App™, was built on the desire to make personal finance easier, simpler, and smarter. This platform was created out of the CEO’s passion for personal finance.

“I’ve loved all aspects of money management from a young age. My parents introduced me to investing, and it quickly became a hobby. Then I realized it was only one aspect of money management, and the status quo was broken.” 

The Intersection of Psychology & Personal Finance

Money is a means to an end. It helps you achieve comfort, safety, and happiness. Although, achieving happiness through money can be difficult if you do not feel financially free. For this reason, M1 Finance built its platform on the basis of helping empower others to improve their financial well-being. 

“There’s a lot of psychology involved in both the brand and platform,” said Barnes. “Everything from ease of use to our trade windows shows client-first thinking. We’re really thinking about empowering you to make the best decisions for your money.”

To demonstrate the path to financial wellness, the company uses a model similar to Maslow’s Hierarchy of Needs. This concept, introduced by Maslow in 1943, used a pyramid to outline what Maslow believed were the 5-tiers of human needs. At the bottom of the pyramid were our basic needs as humans, and at the top were our highest needs. It showed our desire as humans to reach a level of self-actualization. But in order to reach self-actualization, the lower level needs had to be met first.

M1’s model replaces self-actualization with financial freedom and shows the levels of financial well-being that need to be met before one can achieve financial freedom.

Here are the four-tiers that M1 Finance’s Hierarchy of Financial Needs consists of:

  1. Financial Survival - the money you need to cover basic living expenses
  2. Financial Security - you can cover basic living expenses and also have money saved for emergencies as well as future financial goals
  3. Financial Flexibility - you have additional income to spend on travel, entertainment, or personal shopping
  4. Financial Freedom - at the highest tier, you have enough in savings and investments to live the life of your choosing

“We think about it as a pyramid, because it’s really a hierarchy of financial well-being. If you don’t have enough money for food or shelter, you’re going to be anxious because you need those to survive. But higher up on the pyramid, money helps with flexibility and goals which can impact your happiness,” said Barnes. “Without financial freedom, it’s easy to feel stuck.”

How M1’s Platform Helps Users Achieve Financial Wellness

During Barnes’s own personal finance journey, he noted his frustrations with the few financial tools that were out there. Do you just let your money sit in a checking and savings account with no potential return or give it to a money manager who will charge you fees for doing so? Or do you forgo the money manager and do it yourself, manually calculating every money move?

“There had to be a better way to manage, visualize, and integrate your finances,” said Barnes. “That’s where M1 came in.”

The platform helps clients automate, integrate, and control their investments, portfolio line of credit, and cash. This means their clients can build the wealth they want, how they want while following sustainable wealth-building practices. 

And since you’re managing your own money, there are fewer fees and less math because of the platform’s built-in features and algorithms that do it for you. Barnes also wanted to integrate a visual experience that resulted in fewer headaches from complicated interfaces. So, the company pioneered Pie visualization, which is an intuitive way to visualize your portfolio.

Their platform also allows you to personalize different aspects of your finances through the ability to build custom portfolios of stocks and ETFs.

The Finance Super App puts you in control of your finances by providing users with the information they need to make the best decisions for their money while taking out the extra as to not get demotivated.

“Our entire platform and our content are here to empower people to improve their financial well-being. It’s really about giving people financial management options that are made for them.”

To learn more about M1 Finance, click here.
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All investing involves risk, including the risk of losing the money you invest, and past performance does not guarantee future performance. Borrowing on margin can add to these risks.

Brokerage products and services offered by M1 Finance LLC, an SEC registered broker-dealer and Member FINRA / SIPC

Photo by Simon Migaj on Unsplash

 

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Posted-In: Benzinga Global Fintech Awards M1 FinanceFintech News Psychology Opinion General