Tornado App Review: A Gated Community for Investing

What if you could combine social media and investing? Tornado is the perfect mix between a brokerage app and your favorite internet community. Got a stock pick you're dying to share? Share an "idea" with your connections, and put it to the test with community-written "pros and cons." New to investing? Receive up to $50 in investment credit when you complete Tornado's Learn and Earn program. Tornado makes investing a social experience, but at a steep price. Is Tornado the best online broker for you? Read on for our full Tornado App review.

This stock broker is a good fit for: Community-driven investors seeking to share and debate investment ideas.

Top perks

Social features

One of Tornado's most unique draws is its suite of community-driven features. In addition to connecting with other users and viewing their portfolios and trades, Tornado makes the experience interactive. Have a hypothesis on a stock? Spell it out with an idea and send it to your network. Then, hash it out with pros and cons, where your connections can share their thoughts in 250 characters. Next, see how your ideas compare to the portfolios of Thought Leaders, including distinguished community members and famous investors, as pulled from public financial records. With Tornado, investing is no longer a spectator sport.

Learn and Earn program

With the Learn and Earn program, Tornado users are encouraged to take educational investing courses. Tornado users can earn up to $50 with a live brokerage account. The educational curriculum is customized based on investment experience and delivered by in-app courses. The reward for completing courses is available to trade immediately, but the rewards must stay in the account for one year before being withdrawn.

Portfolio Optimizer

Tornado's Portfolio Optimizer uses mathematical models to create risk-optimized and personalized portfolios. By factoring in a user's ideas, risk profile, and investment goals, the Optimizer structures a portfolio holding only the stocks and ETFs a user shares. By evaluating volatility and correlation of holdings, the Optimizer calculates a weighted portfolio which maximizes projected returns while minimizing risk. While the Optimizer's calculations are available for all Tornado users, only those with accounts of $3,000 or more can generate one-click trades to implement it.

What could be improved

High fees

Charging a subscription fee is incredibly rare among top online brokers, making Tornado's $4.99/mo price well above the average monthly cost for brokerage services. While a membership subscription is not required to trade stocks and ETFs with Tornado, the $4.50 per trade commission charge costs nearly as much as the monthly fee. Regardless of membership status, any Tornado user attempting to make more than 25 trades in a month will be paying the $4.50 commission fee on every single trade. Most brokers offer zero-commission trading without a membership fee, so unless the other aspects of Tornado's platform appeal to you, the steep fees could price you out.

Limited investment options

Tornado currently offers only stocks and ETFs, in full or fractional shares, on its platform. While that selection may be adequate for the average investor's needs, some investors may be disappointed. The more risk-averse investor will notice the lack of bonds, CDs, and mutual funds. Investors with a higher appetite for risk may be disappointed without derivatives and crypto.

With a membership subscription, users can place up to 25 commission-free trades each month. If a user exceeds the 25-trade limit, or does not have a membership subscription, a commission fee of $4.50 applies to each trade.

Tornado allows users to trade stocks and ETFs, but not mutual funds. ETF trades count toward the 25 commission-free trade limit available monthly to subscribers.

Unlike most brokers, Tornado operates on a subscription basis. Users can sign up for a membership at the price of $4.99 per month. Additionally, users can access articles from independent content creators by adding a Viewpoint Subscription at the price of $1.99 per month. Here are some of the fees you might encounter as a Tornado user:

• Membership subscription: $4.99/mo
• Viewpoint Contributor subscription: $1.99/mo
• Outgoing ACAT: $75
• Returned check/ACH/wire fee: $30
• Paper statements: $5
• Paper trade confirmations: $2

Tornado offers both a mobile trading app and a desktop interface. Stacked with community features, the mobile platform feels more like a social media app than a brokerage app. However, behind the shares and comments is a sleek trading platform. Tornado offers much of the functionality users have come to expect from brokerage apps, but with added social overlays such as weekly stock and user leaderboards.

Tornado users also have access to a wide variety of customized information. Financials, news, and social sentiment in the form of pros and cons are available for each stock in the app. Investors can set a watchlist of their favorite stocks for ease of tracking performance. With a tailored news feed, investors can keep track of the latest happenings on all holdings. Finally, short write-ups on the Tornado blog cover timely topics including broad topics and pointed interviews.

Tornado is not currently opening new margin accounts, but it says on its website it hopes to again in the future. For those who already have a margin account with Tornado, the margin rate is 6.50%.

Tornado offers its users little by way of traditional market research. Instead, Tornado provides easy access to company fundamentals, and to predictions from Viewpoint Contributors.

• A social investing club is your thing: The social aspect of Tornado's platform is rare and refreshing in the brokerage industry. It represents a conscious effort to appeal to younger investors, and certainly makes trading exciting.
• A monthly subscription won't stop you: In an industry where most players charge zero fees, Tornado is one of the few to charge a monthly subscription fee. At a cost of $4.99/mo, Tornado is one of the more expensive brokers out there.
• You don't trade often: Making more than 25 trades each month? If so, you'd better look elsewhere. Tornado's $4.50/trade fee is one of the most expensive we've come across.

At The Motley Fool Ascent, brokerages are rated on a scale of one to five stars. We primarily focus on fees, available assets, and account types; however, we also take into account features like research, education, tax-loss harvesting, and highly rated mobile apps. Our highest-rated brokerages generally include low fees, a diverse range of assets and account types, and useful platform features.

See our full methodology here: Ratings Methodology