Is Free Trading Always Free? This Company is Highlighting Some Hidden Costs of Commission-Free Brokers

Photo by Tornado

The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.

“I think that as a retail investor, the key question you have to ask yourself is: does your brokerage help you invest better?” says Tornado CEO and Co-Founder Bernard George. 

Despite an estimated 20% of U.S. trading volume coming from the hands of retail investors last year, most of them might be unaware of sound investing principles. Headlines often highlight traders who win big while dismissing the majority -- up to 90% -- who end up losing money.

Tornado believes the current crisis in financial education mixed with the accessibility of modern-day brokerages begets a need for credible sources on investing principles. Historically the tools and knowledge available to players like Goldman Sachs GS or Deutsche Bank DB have been out of reach for the retail investor, but Tornado hopes to level the playing field by providing access to professional insights, educational incentives, and a world-class data set.

Many traders believe they’re receiving a cost-free segue into the markets but incur implicit costs and risks through payment-for-order flow, rehypothecation, and possibly an improper understanding of risk management.  

Tornado believes that the world needs more education-based brokerages, and it wants to be that brokerage for its customers. 

The Road to Proper Education?

Tornado is a web-based and mobile brokerage whose mission is to help investors make smarter, and more informed decisions. It wants to make smart investing an engaging experience and has already taken initiatives to turn that into reality. 

The company kickstarted its Learn and Earn initiative — one that pays you up to $50 when you advance through a series of educational lessons on investing — with a multi-year partnership with the Minnesota Timberwolves. As a strategic decision to target investors with little to no experience, Tornado is offering college students with verifiable emails free account signup as well as up to 2,500 complimentary tickets to Timberwolves games. 

Armed with $10 million in seed money, Tornado’s tri-faceted education platform boasts a community of professional investors, a host of content, and a mix of tools and analytics aimed at improving the investor’s experience. Its seasoned management team, which includes Shark Tank’s Alex Rodriguez and former Walmart Inc. WMT President and CEO Marc Lore, provide different perspectives on how to solve the current “education crisis” in the investment community. 

According to George, Tornado employs a subscription-based model with limited commissionable trades. With a price as cheap as $5.99 for 30 trades per month, Tornado aims to become a premier brokerage service as well as a market leader in investing in education services. 

Through its engaging and social platform, the company hopes to create a “pathway of least resistance” toward smart investing and help people in their journeys into becoming profitable speculators. 

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.