Tornado Review: Social Investing And 1-Click Portfolio Optimization

Investing in the stock market can be difficult when you\'re doing it alone and just starting out. But what if you could have someone experienced provide a few tips and guidance?

That\'s different from taking an online stock investing course. While those can certainly be helpful, you won\'t usually have the option to reach out to anyone for advice and ideas. But Tornado is trying to change that by making it easier for ordinary investors to learn from thought leaders in the investing space.

On the Tornado platform, you can interact with other members about potential investment ideas. You also get to see what top investors like Warren Buffet and Bill Ackman are doing. There\'s a lot more to go over too, including top-notch research, so let\'s jump right into our full review of the Tornado platform.

Tornado (Nvstr Financial LLC.) is a broker and social investing platform. Bernard George is the co-founder and CEO. The company was founded in April 2015 and is based in New York City.

“...The idea for Tornado really came out of our collective realization that there’s just a massive divide between the tools and the technology and the investment processes that sophisticated institutions have versus what’s available to your regular retail investors and individual investors,” said George in an interview with Sure Dividend.

The Tornado leadership team has a lot of experience in the investing space. George himself managed fundamental and quantitative analysis strategies at hedge funds and major banks such as J.P. Morgan and Credit Suisse. And his co-founder Patrick Aber previously designed investment strategies at Tower Research Capital and The Carlyle Group.

It recently raised $10 million from famous investors like Alex Rodriguez, Marc Lore, and Dave Portnoy.

Tornado means invest better together, which is a reference to the social aspects of its platform. It costs $4.99 per month to access all of Tornado\'s tools. 

There\'s no minimum to get started with Tornado. If you\'re just starting with investing or want to try out Tornado, you can use the simulated trading feature before committing real money. Simulated trading also provides access to the portfolio optimizer.

Tornado has three investing styles to choose from — hands-on, semi-automated, and social.

Hands-on is for those who want to do all the research and pick their own trades. Social means interacting with other Tornado members to get trade ideas.

Semi-automated is for those who want someone to tell them how much to invest in certain trades. This is done through the portfolio optimizer tool (more on that later).

Currently, clients are able to trade three types of securities on the Tornado platform:

• Stocks
• ETFs
• American Depositary Receipts (ADRs)

However, several asset types are not yet supported, including:

• Options
  
• Mutual Funds
  
• Futures
  
• Cryptocurrencies

Tornado also doesn\'t currently offer retirement accounts. Margin accounts are available but you’ll need at least $3,000 in your account.

Tornado has excellent research tools. S&P Capital IQ provides research on company financials and fundamentals. If you want to use S&P Capital IQ as a stand-alone tool, it will cost $10,000 per year. But you get access to it at no additional charge with Tornado.

Other members and experts also provide useful stock information. Tornado\'s full range of social investing features includes community thought leaders, experts, viewpoint contributors, and investment ideas. Experts receive compensation from Tornado. Tornado must approve every expert.

Using the thought leader feature, you can browse top investor portfolios, including:

• Warren Buffet of Berkshire Hathaway
• David Tepper of Appaloosa Management
• David Einhorn of Greenlight Capital
• Bill Ackman of Pershing Square

Tornado gets this data from US Securities and Exchange Commission (SEC) filings, news reports, and other financial data sources. Finally, Tornado provides a stock and ETF screener to help you quickly find securities that meet the criteria you set.

Related: Key Value Stock Fundamentals For Screening Stocks

Tornado\'s 1-click portfolio optimizer uses Modern Portfolio Theory (MPT) to determine the right amount of risk and return for your profile. It essentially works like a robo-advisor for your stock holdings (most robo-advisors use ETFs to build their portfolios).

The optimizer doesn’t place trades for you. Rather, it adjusts the sizing of each of your stock positions. You’ll need an account with at least $3,000 to use the optimization tool. But if you meet that requirement, Tornado\'s 1-click optimizer can instantly help you find ways to improve your asset allocation. 

For a limited time, Tornado is offering a signup bonus of up to $1,000 for new subscribers. The table below shows the maximum deposit you could earn depending on your deposit size.

To avoid forfeiting your bonus, you can\'t withdraw your funds for one year and you must place at least one trade within a month of opening your account.

There is no publicly-listed customer service number to be found on Tornado\'s website. It\'s possible that you might get access to more support options after creating an account and logging in. But if you want to ask questions before signing up, you\'ll need to reach out via email at support@tornado.com.

Yes, Torando offers a membership subscription that costs $4.99/mo. For that membership fee, you get 25 \"free\" trades per month. All trades above the 25 per month limit (or those placed without a subscription) cost a whopping $4.50 per trade.

If you have a large asset balance and make less than 25 trades per month, Tornado\'s fee structure could be affordable. For a $50,000 account, for example, Torando\'s $4.99 membership fee ($60 per year) would translate to an annual advisory fee of 0.12%. 

However, for a $5,000 account, Tornado\'s flat fee structure equates to a 1.2% annual fee. That\'s higher than what most robo-advisors charge and, even, many human advisors. Also, Tornado\'s $4.50 commission on trades (other than the 25 per month that are included with membership) virtually makes it a non-starter for high-volume traders. See Tornado\'s full fee schedule here.

You can visit the Tornado website to get started. You can create an account in minutes by simply providing your name, email and a password.

Keep in mind that in order to qualify for a new member cash bonus you\'ll need to transfer your funds and make at least one trade within a month of account opening. Also, the bonus offer doesn\'t apply to simulated trading accounts.

Brokerage assets are not FDIC-protected. However, your account will have up to $500k in SIPC protection, including $250k cash. There’s also an additional $37.5 million of insurance provided by Lloyd\'s of London.

If you have an orientation towards social investing or want access to research provided by S&P Capital IQ, Tornado can be worth it. It\'s one-click optimization tool could also be a great way to improve your asset allocation without giving up any control of your portfolio. 

Tornado would likely appeal most to individual stock investors who make a few trades per month and would like to leverage technology and social cues to build better portfolios. But passive investors may be better served by a robo-advisor. And highly active traders will want to opt for one of the many stock brokers that offer unlimited free trades. 

Here are a few of the most common questions we see people asking about Tornado:

Did Tornado used to be called Nvstr?

Yes, Nvstr rebranded itself as Tornado in July 2021.

Can Tornado clients receive advice from humans?

Yes and no. While you can interact with thought leaders on Tornado\'s social network, the company doesn\'t offer one-on-one consultations with financial advisors.

Is Tornado expensive?

For smaller account balances, Tornado\'s subscription fee will be higher than what you\'d pay to most robo-advisors that use an assets under management (AUM) pricing model. Its pricing could make sense for larger accounts, but only if you make 25 or less trades per month.

Does Tornado place trades for you?

No, while it can suggest diversified portfolios that align with your risk tolerance and goals, you\'ll still need to initiate every trade yourself.

Is Tornado offering any bonuses for new clients?

Yes, you can receive a bonus of $15 to $1,000 depending on the size of your initial deposit.