Review of Tornado Investing
Tornado is a new brokerage firm with some really fresh ideas on trading and investing. While there definitely are some strengths here, there are also some red flags. Here’s the rundown:
Tornado Investing Pricing
| Investments | Commissions |
|---|
| Stocks and ETFs |
membership costs $4.00 per month which includes up to 20
trades per month; $4.50 after that
|
| Options | not offered |
| Mutual funds | not offered |
| Investments | stocks, ETFs, closed-end funds |
| Minimum deposit to open account | $0 |
| Fees | Tornado fees |
Tornado Invest Pros...
Unique investing method. You won’t find Bollinger Bands here.
Helpful website. The broker’s only trading platform delivers a lot of useful features.
Simulated trading. It’s possible to try out the broker’s tools before opening a live account.
Tornado Invest Cons...
Commission schedule is not competitive. Tornado is one of the few brokerage firms left to still
charge subscription and stock trading fees.
Customer support leaves a lot to be desired. Most channels don’t exist.
Many investment vehicles can’t be traded. Don’t bother asking about mutual funds, bonds, forex, precious metals, or futures.
Opening an Account
Tornado offers two account types: simulated and live. The former will get you into the door so you can take a look around and see if you like what the broker has to offer. The latter will enable you to place real trades with real money.
With just a name and e-mail address, you can open the demo account. The process to get the account up and running is very easy and takes just a minute or two. You will need to create a password.
On the second screen, you’ll be presented with stock categories and sectors, like dividend payers or diversified ETFs. We chose dividend payers and received a list of investments like GE, Ford, and Coca-Cola.
Insurance and Regulation
Tornado is a member of SIPC and FINRA. The company’s BrokerCheck profile shows that it was registered just in 2016. It currently has no disclosures, which certainly is a good sign.
Through SIPC, every customer gets $500,000 of insurance. And with a supplemental policy through Lloyd's of London, that number increases to $37.5 million, with a brokerage firm limit of $150 million.
Style of Investing at Tornado
Tornado offers trading in stocks, ETFs, and closed-end funds. No other products are available.
The basis of Tornado’s method of financial management is social networking. Instead of using technical or fundamental analysis to make trading decisions, Tornado traders look at what other people are buying and selling.
This social-networking style of investing is possible through two channels: pros and amateurs. Tornado clients can log in and see what professional money managers are trading. For example, Tornado’s site displays the portfolios of big names in the industry like Carl Icahn (Icahn Capital), David Tepper (with Appaloosa Management), and Bill Ackman (CEO of Pershing Square).
It’s also possible to send an e-mail to Tornado investment professionals (called Community Thought Leaders) to ask what they think of a particular stock. When we did this for Facebook, we received a short answer (similar to a tweet) that was bullish. We were able to click on agree or disagree and go to Facebook’s profile to see what other traders were thinking.
This is where the second avenue is found, the amateur space. Customers can post a pro or con
statement (less than 250 characters) about a particular security. This will be posted on the asset’s
profile where other customers can approve or disapprove of the comment.
It’s possible to build connections with other traders and see how their investments are performing. Tornado’s platform displays how well their ideas have performed historically, asset allocation percentages, and conviction levels.
Open Tornado Account
Open Tornado Account
Customer Support
We were not able to find Tornado’s phone number, which should tell you a lot straight away. The bulk of the company’s atrocious customer service is a list of FAQs inside its website. Topics include how to invest on the broker’s platform, trading on margin, how to transfer funds, and how to use simulated trading.
We did find an email address for customers who still have questions after reading through the list of FAQs. It is hello@Tornado.com. After waiting 24 hours for answers to some of our questions, we still have no response.
Tornado does not have any branch locations. Its website has no robo or human chat service, there is no internal messaging, and the online self-help section is almost empty.
Price Schedule
And what does Tornado charge for its social trading services? There is subscription plan that costs
$4.00 per month and includes 20 free trades. Equity trades are $4.50 each after that. Paper
statements are $5 each, and trade confirmations cost $2. Tornado is the only brokerage firm we know
of to charge for tax statements. They’re $5. Margin loans are a flat 6.50% for all balance levels.
Website
Tornado’s website is where all the action takes place. The broker doesn’t have a desktop program, which really isn’t at all surprising given its investing model.
During our study, we found the site easy to navigate. A very handy menu appears on the left-hand side of the screen as a column. The top choice is dashboard. This is a good starting point. It shows account value, current market indexes, and stocks that Tornado customers are talking about.
Another selection in the menu is top performers. This shows the most profitable stocks being traded at Tornado (specifically, the top 10%). A connections tab is where users can keep track of their investing contacts.
A search field at the top of the site is a good place to research stocks, assuming you already have a ticker symbol or company name. Graphs are very small with no tools other than a comparison to the S&P 500.
Tornado’s trade ticket is rather simple. Market, limit, stop, and stop limit order types are available. Whole-dollar investing is not possible.
Funds
Tornado offers trading in closed-end and exchange-traded funds. Profiles for them are pretty much the same as for stocks. There is no fund commentary from Morningstar or other notable analysts. There also is no traditional fund screener on Tornado’s platform.
The suggested way to invest in funds at Tornado is the same method to invest in stocks—browse through what other people are buying and discuss the upsides and downsides. Using this method, we discovered on the day we did our research that the most popular fund trades at Tornado were EEM, EFA, and SPY. Dates in the future may see different funds.
Investment Education and Research
There are no pdf stock reports or similar commentary at Tornado. Instead, the idea is to discuss via social networking what professionals and Tornado customers are buying and selling.
On a stock’s profile page, news articles are shown in two columns: one for bullish articles, and another for bearish articles. Tornado uses the terms pro and con. Clients can click on agree and disagree links to show their approval or disapproval of posted articles.
Stock profiles also come with a company description, financial data such as net debt and forward
EPS, and a link to SEC filings.
Tornado members get access to Capital IQ data. This professional-quality data source - used by Wall
Street banks, hedge funds, and research shops - typically costs over $10k/year, and Tornado members
get it for no extra cost. Capital IQ also powers their advanced stock screener (called “Explore”),
which is a great way to quickly find stocks you may be interested in.
Community Thought Leaders are former Wall Street pros who offer an intelligent perspective on
stocks and markets every day through exclusive content on Tornado. The experts write bite-sized
commentary that’s easy to navigate and understand. It’s presented in a highly personalized
“news feed” format that’s similar to Facebook or LinkedIn, and makes it easy to stay abreast of
the latest developments, research stocks you’re interested in, and discuss with the community.
Tornado also offers a portfolio optimizer, based on Nobel Prize-winning research by Harry Markowitz
and others. This feature is unique among brokerage platforms, and helps members build smart
portfolios based on their own views, risk tolerance, and other fully-customizable parameters.
You can access the optimizer by pressing the green button on the top right of the website, or
choosing the Analysis option on the main menu.
Other Services
Because Tornado doesn’t offer mutual funds, there obviously isn’t a periodic mutual fund investing service. The broker also doesn’t offer banking tools, portfolio management, or a skill for digital assistants like Alexa.
Comparison
The vast majority of online discount brokers have eliminated trading fees. With a $4.50 commission (or a monthly subscription to get rid of it), Tornado is at a serious disadvantage. Whether its social investing platform justifies the cost is debatable.
The real problem we have with the company’s investment method is an overreliance on the opinions of other Tornado traders (and therefore amateurs). Although professionals are available, it’s possible to consult professional opinions on stocks at other brokerage firms.
For example, TD Ameritrade offers free stock reports with trade recommendations from analysts like
Zacks, ValuEngine, and MSCI. Moreover, TD Ameritrade provides social signals on stocks that are
taken from social media sites. And TD Ameritrade has $0 stock and ETF commissions.
Recommendations
Mutual Fund Investors: Firstrade would be a good pick.
Individual Retirement Accounts: Because of Tornado’s fee schedule, we think
TD Ameritrade would be a better broker.
Beginners: Tornado’s materials aren’t geared towards new traders.
Chase would be a
better choice.
Active Stock and ETF Trading: Tornado’s software isn’t designed for frequent trading.
Webull would be a better route to take.
Long-Term Investors and Retirement Savers: With TD Ameritrade large selection of mutual funds, we have to go with it.
Tornado Invest Review Summary
Tornado offers a unique style of investment management that will cost you $48 a year. With this review
you should be able to decide if it is worth it.
Open Tornado Account
Open Tornado Account
Chad Morris is a financial writer with more than 20 years experience
as both an English teacher and an avid trader. When he isn’t writing
expert content for Brokerage-Review.com, Chad can usually be found
managing his portfolio or building a new home computer.
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