Tornado Review – Membership Based Investing and Education Platform

Pros

• Great account opening bonus
• Actionable insights from professional traders and active investors
• One-click portfolio optimization

Cons

• Members limited to 40 commission-free trades per month
• No direct ownership of crypto or other alternative assets

Online brokerage platforms can feel cookie-cutter, like they’re all built from the same stuff. Try one and you’ve tried them all.

Tornado is different. Not exactly revolutionary, but different enough for would-be users to stand up and take notice. 

Formerly known as Nvstr, Tornado is organized around a simple membership model. It rejects the sort of gamified, high-risk trading popularized by Robinhood and its imitators. It has robust educational features and simulated trading accounts for beginner and intermediate traders. It’s building active communities of market enthusiasts and professional investors who share insights and investing ideas with everyday Tornado users.

If Tornado sounds like your kind of online brokerage, read on to learn more about its features and benefits.

Key Features

Tornado has a nice lineup of customer-friendly features, like an account opening bonus worth up to $1,000, a simple membership plan that emphasizes quality trades over quantity, and a rich expert community accessible to every user.

Account Opening Bonus (Funding Bonus)

For a limited time, Tornado offers an account opening bonus (funding bonus) for new account holders. The minimum deposit to earn any bonus is $50. 

Bonus tiers are as follows:

• $5: Deposit $50 or more
• $15: Deposit $100 or more
• $75: Deposit $1,000 or more
• $150: Deposit $10,000 or more
• $300: Deposit $100,000 or more
• $1,000: Deposit $1 million or more

Note that you can open just one brokerage account at a time. There’s no funding bonus for simulated trading accounts, which don’t use real funds.

Tornado Membership

Tornado encourages but doesn’t require users to join its one-level membership plan.

Membership costs $7.99 per month. In exchange for this monthly subscription fee, you get 40 commission-free trades each month. That works out to about $0.20 per trade if you max out the commission-free allowance without going over.

Each trade over the monthly cap costs $4.50. If you don’t join Tornado as a member, you pay $4.50 for every trade you make here.

Portfolio Optimization Feature

Tornado’s portfolio optimization feature uses data-driven guidance to help you construct a portfolio that provides the ideal risk-reward combination. Once you narrow down your investment ideas and decide which stocks you want in your portfolio, use this feature to determine the optimal allocation for each one. You can do this with a single click.

To be clear, Tornado is not a robo-advisor. The portfolio optimization feature doesn’t place trades on your behalf. It merely provides an optimal portfolio design based on the information you provide. You retain control over your assets at all times.

Margin Trading

You can trade on margin in your Tornado account. The minimum margin account balance is $3,000 and the interest rate on margin trading is 6.50%. Rates are subject to change and Tornado reserves the right to suspend or revoke margin trading privileges at any time.

Community Features

Tornado has a multilayered investor community built around the principle that investors do better when they know more. Tornado members can read insights from and interact with three different types of community participants:

• Viewpoint Contributors. These are independent financial content creators who voluntarily choose to share market-related insights with Tornado members. Any Tornado member can apply to become a Viewpoint Contributor.
• Community Thought Leaders. These are distinguished Viewpoint Contributors. They’re paid for their contributions and Tornado features their insights more prominently. However, they’re not employees of Tornado and don’t represent the platform or provide investing advice on its behalf.
• Thought Leaders. Thought leaders are famous investors and hedge fund managers who manage at least $1 billion in disclosed assets. They must meet other criteria for prominence as well.

Additionally, you can share Ideas — posts expressing sentiment about a particular stock or fund — with anyone in the Tornado community. If you prefer to keep these investment ideas private, you can change your sharing settings in the app.

Learn and Earn

If you have a live brokerage account with Tornado, you can earn up to $50 to participate in the Learn and Earn program. This is an in-app investing curriculum that’s personalized to your experience level as an investor. You’ll earn money the first time you take each course and can repeat courses as often as you’d like.

Simulated Trading (Paper Trading)

If you’re not quite ready to open a live brokerage account with Tornado, start with a simulated trading account. 

Tornado’s simulated accounts have access to many of the same features as its live brokerage accounts, including portfolio optimization. They can help you hone investing strategies and back-test hypothetical investment decisions. The biggest difference: When you use the simulator, you don’t risk your own money.

Additional Insurance for Investors

Through Apex, its securities clearinghouse, Tornado offers more protection for individual investors than the standard limits allowed by the Securities Investor Protection Corporation (SIPC). 

SIPC insurance covers up to $500,000 per account, including $250,000 in cash. Apex has supplemental insurance policy, procured through Lloyd’s of London, and offers up to $150 million in aggregate coverage. It includes up to $37.5 million for any individual customer’s securities and up to $900,000 for any individual customer’s cash.

Referral Program

Tornado promises at least $10 per successful referral. There’s a chance you could earn more than that for any given referral. As of Sept. 25, 2021, you have 25% odds of receiving $11 for a successful referral, 25% odds of receiving $15 for one, and 0.02% odds of receiving $1,000 (the maximum per successful referral).

Advantages

Tornado has a lot going for it. Its account opening bonus offers a great incentive to switch, and its robust investor community, education resources, and innovative portfolio optimization tools offer even more value.

1. Very Good Account Opening Bonus

Tornado’s account opening bonus (funding bonus) is worth up to $1,000 with qualifying deposits. 

To earn the maximum bonus, you’ll need to transfer at least $1 million in new funds or securities to your Tornado account. But you can earn a $5 bonus with as little as $50 in new money.

2. Robust Community Features

Tornado is more community-focused than the typical online brokerage. It has three different layers of visible community contributors, ranging from famous Thought Leaders to active Viewpoint Contributors. And you don’t have to be any of these to share investment ideas with other Tornado users, thanks to the platform’s Ideas feature.

Tornado’s Learn and Earn education platform is a community of sorts as well. Through it, you can learn how to become a better investor. Eventually, you might feel confident enough to share what you’ve learned as a Viewpoint Contributor or Community Thought Leader.

3. Portfolio Optimization Tools for Faster, More Customized Portfolio Construction

Tornado isn’t a robo-advisor and can’t place trades on your behalf. However, through its Portfolio Optimization feature, it can provide you with actionable asset allocation guidance that could improve performance in the short-term and long-term. 

You can implement Portfolio Optimization guidance with a single click, drastically reducing the time it takes to build a well-balanced investment portfolio.

4. Insurance Above SIPC Limits

Through its securities clearinghouse Apex, Tornado offers considerably more account insurance than is standard. Its private, supplemental insurance policy builds on government-backed SIPC insurance. This policy provides as much as $37.5 million in securities coverage for any one individual customer and up to $900,000 in cash balance coverage for cash balances held by any individual customer.

Disadvantages

Tornado has two downsides worth noting: a monthly limit on commission-free trades for members and no direct access to crypto or other alternative investments.

1. Members Limited to 40 Commission-Free Trades Per Month

Tornado caps free trades at 40 per month. This is a disadvantage in comparison to competing platforms that offer unlimited commission-free stock trading.

That said, Tornado’s per-trade fee is quite low for members who approach or reach the monthly cap without going over. And Tornado positions its membership fee and trading commission as checks on “excessive, gamified trading” that commission-free platforms may encourage. 

Although Tornado’s website is silent about whether the platform accepts payment for order flow (PFOF) like Robinhood, co-founder Bernard George criticized the practice in an interview with Yahoo! News. It’s clear, at least, that PFOF isn’t Tornado’s principal revenue source. 

2. No Direct Access to Alternative Investments

Tornado doesn’t offer direct access to alternative investments like cryptocurrency, precious metals, or fractional shares of real estate. However, it’s great for investors seeking exposure to more traditional market-traded investments, like stocks and exchange-traded funds (ETFs).

Final Word

Tornado takes a gentler, more collaborative approach to investing than many of the commission-free lookalikes it competes against. It helps users become smarter, more thoughtful investors, rather than crowd-followers who simply plow into whatever meme stock happens to be dominating the conversation today.

Tornado isn’t perfect. The monthly limit on commission-free trades means it’s not appropriate for frugal day traders. The lack of direct access to cryptocurrency and other nontraditional investments could turn off some would-be users too. But all in all, Tornado is far superior to the cookie-cutter alternatives.