An interview with M1 CEO Brian Barnes on the new High-Yield Cash Account and more

Brett Holzhauer
Brett Holzhauer April 22, 2024
Brian Barnes

We’re one quarter into the new year, and, behind the scenes, our CEO Brian Barnes and the entire M1 team have been hard at work building on what we started nine years ago.

Now we’ve got some exciting updates for our users.

I sat down with Brian to talk about the new High-Yield Cash Account, the economy, and what M1 clients can look forward to. 

The High-Yield Cash Account is the new kid on the M1 block 

Last week, we launched the new M1 High-Yield Cash Account, where users can earn 5.00% APY¹ on their uninvested cash.  

“M1 really wants to offer a comprehensive personal finance platform that meets every individual’s financial needs,” Brian said. “And so we look to offer valuable yield that you get on uninvested cash, offer an automated investing platform, and easy ways to spend money.” 

The Cash Account comes with several features, including: 

Joint accounts 

The ability to have up to five Cash Accounts per M1 login 

  • You can have four individual cash accounts and one joint account per M1 login. This is a great way to divide your funds for different financial goals, while still earning the same interest across the accounts. 

Smart Transfers to and from your Cash Account 

  • Your funds should be easy to maneuver how you see fit. You can use Smart Transfers to intelligently move money in and out of your Cash Account. You can also use the funds within it to automate payments to pay off the balance on your M1 margin loans or M1 Owner’s Rewards Card. 

Up to $3.75 million² of FDIC insurance for your funds 

  • This insurance protects your cash, so you can rest easy knowing your swept funds are in a secure account. 

It’s important to note that if you opened an M1 High-Yield Savings Account last year, you can continue to use that account as normal and earn the same interest. And you’ll be able to open a Cash Account as well and make use of the new features. 

Greenbacks are having their most (interest)ing moment in recent memory 

I asked Brian why now is the right time to launch the Cash Account. 

“When you zoom out, different asset classes become more attractive and less attractive at different points in time,” he said. “Cash was a pretty unattractive asset class really from the 2008-09 crash.” But because of rocketing interest rates, the potential interest returns for depositors are high.  

These interest rates are connected to the Federal Funds rate, which is the target interest rate set by the Fed for commercial banks. This rate is the dynamic price of what borrowing and lending money costs, which heavily influences how much banks can pay everyday depositors. With rates high, Brian says there is ample opportunity to earn returns on your cash.  

“Every single person should be getting paid [5.00%] on their money. If you look at the nation, there’s about $20 trillion in deposits, which means that individuals across the United States should be getting paid about $1 trillion a year in interest. The actual rate is well less than half [of] that,” he said. 

He urges that simply moving your cash can be well worth it. “In my opinion, the single easiest solution for any single person to do to improve their finances is to move any account that is paying you less than 5.00%—into one that’s paying you 5.00%. So this is the easiest money move that anyone could ever do, and if you’re not doing it, you are leaving money on the table.” 

With the M1 High-Yield Cash Account, you can move your cash into a brokerage account and earn 5.00% APY¹ on your uninvested cash. It can potentially be a great tool to have alongside your long-term investing strategy. 

Stay the course and ignore the noise 

Recent economic news has been less than optimal as inflation remains sticky and Fed officials suggesting higher rates for longer. This combo is unfortunately leaving many consumers with fewer financial choices. 

When I asked Brian about how clients should potentially be thinking about their own cash positions, he suggests embracing the uncertainty with a solid financial plan. 

“We tend to react to short-term noise. And if we went back five years and tried to predict the next three months, six months or the next year, every single time we would probably be horrendously wrong, whether it’s an individual investor or an expert investor,” he said. He followed with a famous quote often attributed to Yogi Berra: “It is difficult to make predictions, especially about the future.” 

He wrapped up by saying, “It’s uncertain what will happen, and a wide range of outcomes can possibly happen. And so what matters is more people are creating a plan, sticking to the fundamentals, adhering to it. And so, you know, to me, it’s much more important that people do the basics incredibly well.” 

Those basics could include setting automatic deposits into an interest-bearing account or brokerage account to continue your journey to accomplish your financial goals.  

The excitement within M1 

Brian has made it a goal for himself and M1 to build a product that can help simplify the investing journey. Now, with significant strides ahead, Brian is looking forward to make the needed improvements to make the client experience the best it can be. 

“Over the last two to three years,” Brian said, “we’ve been really focused on building all the necessary technology as well as the regulated entities to support all brokerage and banking products as a launching pad for all the things that we want to do. With the introduction of the Cash Account, we can finally say that we have done that.” 

In other words, M1 now offers solutions for earning, investing, spending, and borrowing. Brian continued, “I’m really excited about having a comprehensive best-in-class financial platform that exists on the marketplace, nine years in the making.” 

It’s an exciting time at M1, and we’re looking forward to the rest of the year as we continue building our products with one core focus in mind—you. 

¹ Stated APY (annual percentage yield) with the M1 High-Yield Cash Account is available from date of account opening and is accrued on account balance. Obtaining stated APY requires a minimum initial deposit of $100. APY is solely determined by M1 Finance LLC and its partner banks, and will include administrative and account fees that may reduce earnings. Rates are subject to change without notice. M1 High-Yield Cash Account is a separate offering from, and not linked to, the M1 High Yield Savings Accounts offered by M1 Spend LLC’s banking partner. M1 is not a bank. 

2 The cash balance in your Cash Account is eligible for FDIC Insurance once it is swept to our partner banks and out of your brokerage account. Until the cash balance is swept to partner banks, the funds are held in a brokerage account and protected by SIPC insurance. Once funds are swept to a partner bank, they are no longer held in your brokerage account and are not protected by SIPC insurance. FDIC insurance is not provided until the funds participating in the sweep program leave your brokerage account and into the sweep program. FDIC insurance is applied at the customer profile level. Customers are responsible for monitoring their total assets at each of the sweep program banks. A complete list of participating program banks can be found here

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