Fineco Review
Name: Fineco
Description: Fineco is an Italian bank and brokerage, active across Europe which has been in operation for 20 years. Fineco has over 1.30 million clients and assets of more than €82.0 billion under administration. Fineco became a bank in 1999 and through M&A became a part of the Unicredit group in 2008. Ultimately Fineco demerged from Unicredit to become an independent company in its own right in 2019.
Summary
Fineco’s main problem for UK investors is that it is based in Italy. That being said, in Italy, it is often referred to as the Hargreaves Lansdown of Italy. But then if you’re based in the UK, surely you’re better of investing with Hargreaves Lansdown?
Pros
- Low costs
- Wide market ranage
- Direct market account
Cons
- Not based in UK
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Pricing
(4)
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Market Access
(4)
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Online Platform
(3)
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Customer Service
(2.5)
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Research & Analysis
(2.5)
Overall
3.2Fineco Expert Review
In this review we:
- Give our ratings based on their nearest peers
- Tell you what we think of them after testing them with real money
- Highlight the key costs, facts and figures of their accounts
Fineco offers both margin trading and investing, as well as asset management services and a full range of banking products, all of which are available from one account.
Fineco offers CFDs, Forex, physical stock, bond and fund trading alongside futures and options brokerage.
Fineco Trading Account
Fineco offers trading on CFDs on equities and equity indices, as well as futures and options on more than 20,000 instruments from 26 global markets through its own proprietary trading platform that contains live prices, news feeds charting and indicators.
Fineco charges no commissions on equity CFDs for UK, US and European shares and has competitive spreads on its index CFDs. For example a spread is just 0.60 pips on the Nasdaq 100 index. The bank also has a very commercial rate card for futures trading with fees from €0.75 per lot.
Fineco Investing Account
You can open an investment account with Fineco with as little as £100.00 and can opt to make regular monthly savings from £50.00 per month.
You can apply for both an investment account or stocks and shares ISA online (you need to open a Fineco standard account ) and you can also transfer an existing ISA from another provider to the bank.
Fineco’s investment accounts fees are competitive by industry standards. For example, Fineco charges a fixed £2.95 commission for trades in UK equities and €3.95 for trades on European stocks across a broad product coverage with more than 20,000 instrument
Fineco Mobile App
Fineco offers a mobile app for trading, from which you can access all of the markets they offer to their customers. You can find the app in the Apple, Android and Huawei app stores.
There have been more than 500,000 downloads and installs of the android version alone. As you would expect the app offers live prices, charting position and account balance monitoring. Alongside watch lists, news trade history etc.
The app offers most of the functionality of the firm’s Powerdesk trading platform but of course, some things are just easier to read and interpret on a big screen, for example, long-term charts with multiple indicators.
Alongside the desktop and mobile trading apps, Fineco offers a web or browser-based trading platform with useful features such as a stock screening tool and data about order book depth.
Advantages
- Banking, trading and investing all available from one account
- Low rates of commissions and competitive spreads
- A choice of trading platforms
Disadvantages
- Fineco is an Italian business with only limited regulation and supervision from UK authorities
- Fineco doesn’t publish a full list of the instruments it trades and customer service does not have that information either.
- Fineco doesn’t offer spread betting
- Fineco doesn’t offer a universal demo account on its trading platforms, instead, you have to book a specific demonstration with the firm.
Fineco Pricing, Charges & Fees
Fineco operates with a low-cost charging structure which it hopes will win it market share; that model certainly seems to work in its native Italy where it is responsible for more than a quarter of all brokerage revenues generated in the country. That low-cost model even becomes no cost in certain markets and products for example zero commissions on equity CFDs on UK European and US shares which makes them cheaper than IG, CMC Markets and Saxo Markets, three of their largest competitors.
Fineco offers tight spreads on index CFDs and are often cheaper than their three big rivals and if they are not then, Fineco are at least matching the competitors spreads.
Whilst in physical equity trading Fineco undercut the competition considerably, with minimum commission charges on UK shares of £2.95 and $3.395 and €3.95 for US and European stocks. What’s more, there are no currency conversion fees on trades in US stocks and that mean significant savings for active investors who are trading through the likes of AJ Bell Hargreaves Lansdown or Interactive Investors.
The low-cost ethos runs through Fineco’s other products including futures and options, ETFs and ISAs and they occasionally enhance this with special offers such as no ISA Fees for a set period.
Fineco CFD Trading
Fineco offers CFDs on equity indices as well as individual equities and ETFs and charges no commission or additional spread on equity CFDs, it also has very competitive spreads on its index CFD products as well. As such their offering compares very favourably with rivals such as Saxo Markets, IG Group and CMC Markets.
CFDs or contracts for differences are margin trading products that allow users to speculate on the rise and fall in the price or value of a financial instrument without conferring ownership of the underlying.
The contracts are traded OTC or over the counter, are cash-settled and have no fixed expiry date. When an investor trades using a CFD their trading deposit is levered or geared up by the broker, allowing them to control a much larger position in the market than would otherwise be possible.
Fineco Forex Trading
Fineco categorises its FX trading as CFD trading so as above when you trade Forex with Fineco you do not buy and sell the underlying currency but take out a contract for difference position.
Fineco Direct Market Access
Fineco’s trading platform offers live prices and some direct market access or DMA trading but the firm also acts as a systematic internaliser on many products. This means that it makes its prices and tries to match off as much business as it can internally between its customers and order flow.
For most traders and their orders, this won’t be an issue and may prove to be beneficial, and as part of MiFID II, best execution rules Fineco has to record and report on its executions and make that information available to the public via a website which indeed it does.
The trading platform is offered without charge and Fineco offers low or no commissions on electronically traded products however where securities are not traded online then additional fees can apply for example in certain Finish or Helsinki listed equities.
As an overall package, the Fineco platform is competitive and has helped the bank to achieve its number one position in the Italian markets. Success that it hopes to build on elsewhere in Europe.
Fineco Futures Trading
Fineco offers its clients access to exchange-traded futures from the CME, Eurex and IDEM (the Italian derivatives exchange) clients can trade futures on equity indices, commodities, bonds and currencies.
Fineco charges a commission per lot traded a lot is the standard contract size for a given future. Fees vary depending on the market and product traded but index futures on Eurex and IDEM are charged at between €0.75 and €0.95 per lot traded. Whilst Commodity futures at the US CME are charged at $2.00 per lot. Fineco does not charge its customers a monthly exchange fee either.
Most CFD broker don’t offer exchange-traded futures broking so in this instance, Fineco is competing with rivals such as Saxo Markets and Interactive Brokers. Saxo, of course, has a tiered commission structure based on activity and account size and on that basis, Fineco will likely be a cheaper trading venue for all but the most active traders when compared to Saxo.
Fineco Options Trading
Alongside futures trading, Fineco also offers exchange-traded options on a range of US and Italian equities and selected equity indices. For trading on these products Fineco operates a tiered charging structure which is based on a client’s activity in the previous month so for example, if you generated $500 or more on commission the previous month then options trading will be $2.95 per lot if you haven’t then you will pay $3.95.
If you are an active trader and generated commissions of $10,000 or more in the prior month then those fees will drop to $1.95 per lot. However, if you are generating $10,000 commission per month through options trading then I think you might be expecting wider coverage and a few more bells and whistles than Fineco currently offer.
Interactive Brokers, who admittedly are options specialists, have a wider coverage and far cheaper fees in both their fixed and tiered options commissions structures with rates as low as $0.15 per lot for very active traders.
As part of its investment services Fineco offers stocks and shares ISAs, ISAs are government-backed tax-efficient investment vehicle for UK investors and savers. Investors can open ISAs each year and invest up to £20,000 per annum under current legislation. Fineco is currently offering to waive ISA management fees until April 2022 for those who open an ISA with them before the end of June 2021. That fee would normally be 0.25% of the ISA value per annum.
ISA holders can invest in stocks and shares, ETFs and Bonds through Fineco and will pay the same fees and commissions as standard account holders. This means commissions of £2.95 per trade in UK equities and €3.95 in European stocks for example.
Fineco is cheaper in terms of ISA trading commissions and annual fees than AJ Bell, Barclays and Hargreaves Lansdown.
Fineco SIPP Account
Fineco does not currently have a SIPP account
Fineco Trading Platform
Fineco offers three separate trading platforms with the PC based Powerdesk the flagship product alongside which it offers a browser-based web trader and mobile apps for Apple, Android and Huawei devices. The bank prides itself on its execution capabilities and claims to handle 75,000 plus trades per day.
Powerdesk comes with live prices and charting for 26 global markets in shares, CFDs, FX ETFs Bonds and Futures and Options all of which are offered for free stop-loss, limit and take profit orders are available and the platform uses a colour-coded order status system to inform you about your executions and pending orders.
The desktop layout is user-configurable and can be personalised to create the trading workspace that you require. Fineco’s charting system offers 90 technical indicators and the ability to view as many as 6 charts within a single chart window and also offers six different chart types as well.
Finecos Powerdesk is a multi-asset trading platform with charting and news from one of Europe’s leading brokers that’s provided for free and comes loaded with functionality and as such it compares very favourably with the competition.
Fineco doesn’t currently offer commission-free share dealing though you can trade equity CFDs commission-free through the bank. Instead, Fineco offers low-cost physical shares dealing with charges as low as £2.95 per trade.
As we noted earlier Fineco operates as a systematic internaliser which means that it tries to match up as much of its order flow in-house as it can. Commission-free share trading is typically supported through what’s known as PFOF of Payment For Order Flow. Under which a broker aggregates and sells its client order flow to a market maker or high-frequency trader, something that’s not compatible with Fineco’s current business model.
Fineco allows to trade in four base currencies which helps to minimize the need for FX conversions and the bank charges low FX conversions fees for those occasions when they required for example charging just £22.30 on the conversion of £10,000 lower than comparable fees from the likes of Revolut and Transferwise and far cheaper than investment platforms such as Interactive Investors or Hargreaves Lansdown.
Fineco ETFs (Exchange Traded Funds)
Fineco offers its clients the ability to buy and sell a wide range of ETFs or Exchange Traded Funds. Traders can benefit from low commission across major markets with US dollar-denominated stocks charged at $3.95 per trade for example. Trades in Euro denominated ETFs are charged at €3.95 per order and Sterling denominated funds are charged at £2.95 a trade.
Note that if you are a long-term investor then trading CFDs on ETFs commission-free through Fineco may be an alternative to trading in the physical shares and could potentially be cheaper too.
Fineco Managed Portfolios & Asset Management
Fineco offers investment services to its customers through its asset management division clients can choose to invest in the funds offered by a wide range of blue-chip fund managers from the UK, Europe and the US and they can invest in lump sums or through regular savings.
However, clients can also choose to utilize Fineco’s range of pre-selected funds which include the FAM Megatrends fund a multi-strategy fund that aims to invest in high growth areas such as electric vehicles, smart homes and infrastructure and Fintech.
FAM Evolution is a fund of funds provided on an advisory basis that aims to match risk and reward with periodic rebalancing of the portfolio and the FAM series funds pick a selection of high-quality strategies provided by the blue-chip fund managers that Fineco offers.
Finecos investment and fund management services are more traditional and in some cases more hands-on than say IGs Smart Portfolios which are more thematically focused.
Fineco operates a sliding scale for its investment management services charging 0.25% per annum on the first £250,000, then 0.15% on the next £750,000, then 0.05% on portfolios between £1.0 and £2.0 million and nothing on portfolios that are worth £2.0 million or more
Fineco Investment Education & Market Analysis
Fineco has a learn to trade program which includes live events, webinars and a library of videos for would-be traders to watch and learn from. A recently introduced feature is a live trading segment in which three seasoned US traders take viewers through the events and news that’s moving the markets and how they would trade those items sessions last for an hour and aimed at more experienced traders rather than newbies or novices,
However, there are educational events for beginners such as how to trade CFDs and the price action masterclass. Fineco has what it calls a newsroom on its website that contains topical articles about investing and trading whilst the trading platform has news feeds from the likes of Reuters and Seeking Alpha throughout the day.
Fineco does not charge for its educational services but you do have to pre-register for live events and webinars. The educational offering is not as comprehensive as say IG Groups or CMC Markets but as a free resource, it more than holds its own.
Fineco Professional Trading Account
Fineco offers a separate account for professional traders who can demonstrate a high net worth/ substantial portfolio of liquid investments industry and product knowledge and minimum levels of historic trading activity. Professional clients are not subject to ESMA leverage restriction and can access gearing of up to 100:1 on index and forex trading and 50:1 on share CFDs.
Pro clients get access to a team of trading specialists at Fineco and benefit from upgrades such as push quotes which update automatically not just on refresh.
However Professional clients receive fewer investor protections than retail clients and can be treated as experts by their broker.
Fineco Alternatives
Fineco competes with brokerages and bank across Europe, however in the UK as far as trading and investing are concerned it’s competing with IG Group, CMC Markets and Saxo Markets and in investing and share trading with AJ Bell, Interactive Investor, Hargreaves Lansdown as well as the UK clearing banks such as Barclays and Lloyds Banking Group.
Fineco has a low-cost high volume model and it tries to make money through matching up and internalising its order flow, a model that has allowed it to attain the number one spot among Italian brokerages. The principal attraction of Fineco is that you get access to trading and investment products alongside a multi-currency bank account and full banking services. Something that is not available from UK providers currently.
Fineco Versus CMC Markets
Fineco has a wider product range than CMC Markets and offers access to physical share dealing and exchange-traded futures and options as well bonds. Fineco has a zero commission policy on equity CFDs. However, being an Italian bank Fineco does not offer Spread Betting which of course CMC does. Fineco also offers a bank account as standard, something that CMC does not do. In terms of pricing on popular products, it has narrower spreads than CMC on CFDs over the Nasdaq 100, S&P 500 and Dow Jones Indices. Fineco is aimed at customers who want to trade in multiple currencies across Europe and beyond.
Fineco Versus IG
Fineco competes with IG in CFD trading and physical share-dealing and to some extent investing though Finecos investment management operations are based on a more traditional than IGs smart portfolios. Both businesses offer low-cost share dealing IG offers some clients access to commission-free US share dealing something that Fineco does not do. On a head-to-head price comparison Finceo is cheaper on equity CFDs where it charges no commission at all versus IGs £10.00 minimum ticket whilst Fineco matches or is cheaper than IG on Index CFDs in the US and Europe.
As we have already noted Fineco does not offer Financial Spread Betting an area where IG is the acknowledged market leader. IG has recently acquired TastyTrade in the USA a specialist futures and options broker and it’s likely that these products to IG existing client allowing IG to compete head-on with Fineco in these markets something that IG previously couldn’t do.
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