eToro vs CommSec: Which Is The Best Platform For Aussie Investors?

CommSec, or at least CommBank, will likely be a familiar name to anyone reading this article. eToro, on the other hand, might be a name that is less well-known to some.

That said, eToro is one of the fastest-growing brokers globally, with 33.4 million users – ten times CommSec’s 3 million. So, is this a simple case of choosing between the more boring, traditional, but trustworthy incumbent versus a shiny, new, but potentially riskier challenger?

Or is there more for an investor to consider?  

This article will offer an honest and unbiased analysis of the two platforms, while offering insight into the best platform for your situation.

(Related: 10 Best Share Trading Platforms In Australia).

eToro vs CommSec: My Quick & Dirty Verdict.

Be honest.

Are you someone who has banked with CommBank for your whole life because your parents did, and their parents did, and their parents did?

Your account will be linked to your banking app, and it will function pretty well. But you can also expect all the usual pain points associated with a ‘Big 4’ bank.

Not a current CommBank client and want a trading app that meshes the latest trading technology with a social network? eToro will most likely suit your needs best.

Finally, while both platforms target a typically younger and less experienced investor, the slight nuance is that an expert trader can profit from eToro’s users under copy (UUC) feature.

This works somewhat like how a fund manager profits from taking a percentage of assets under management (AUM). This feature might make eToro an attractive proposition to a professional investor.

Selection Of Assets.

There is a clear difference in tradable securities available between CommSec and eToro.

While eToro has a strong lead in the number of exchanges it gives you access to, most retail investors will never venture past NASDAQ, NYSE and the ASX.

When was the time you bought an equity on the Toronto or Bombay stock exchange? That’s right, never.

In addition, CommSec’s inability to trade crypto may be a deal breaker for some.

Trading Tools And Features.

In terms of the features offered, the two provide quite different offerings.

eToro leans heavily on its social trading features, and is likely the main reason an investor chooses this platform.

CommSec again focuses on convenience, while its educational material and investment analysis may be more suited to the more sophisticated investor.

There is also the option to use their Smart Portfolios, created by eToro’s professional analysts and allow you to home in on a particular sector or theme, such as early-stage AI or healthcare.

Investors can study the past returns of expert investors and the various Smart Portfolios before deciding where to invest their money.

While these are no guarantee of success, the range of strategies can be a great resource for:

Commsec, meanwhile, offers a somewhat unique product called Pocket. This allows investors to access a small pool of ETFs from as little as $50.

This might be useful for a new investor to experience investing and get comfortable with smaller sums of money.

These cover most major markets, and this strategy has been championed for retail investors by investors such as Warren Buffet.

Personally, I prefer to buy ETFs directly rather than buying them through CommSec Pocket at hugely inflated prices.

A good feature CommSec offers is the ability to purchase on credit and transfer funds later, which is not available through eToro and can be a frustrating experience.

Charting tools are available on both platforms, alongside company analysis and educational materials. eToro’s offering has more of a retail feel, with some of the company analysis sounding suspiciously like ChatGPT.

Consequently, a more sophisticated investor may prefer this experience, which may provide a more nuanced view beyond the simple explanation of the data.

User Experience.

CommSec has endeavoured to improve its user experience, but it still lags behind what you would expect and is a clear pain point with users.

It will feel more like your favourite apps, particularly social networking ones.

Beyond this, both platforms can be accessed via their website and Android/iOS apps (which contain almost all the same features as the full web platform).

Fees And Commissions (How They Make Their Money.)

Fees are a big factor when considering either of these platforms as neither would be suited for the most cost-conscious investor.

Consequently, this is reflected in the higher-than-average fees charged.

That said, despite CommSec just offering the more traditional range of features, its fees are still relatively uncompetitive.

Domestic Equities.

As you can see, for anyone wanting to trade exclusively on the ASX, eToro is going to be less attractive due to the 1.5% conversion fee each time you deposit or withdraw assets.

However, for those looking to trade internationally, this is less important, as CommSec will charge a conversion fee on top of higher trade costs.

Neither is as competitive as dedicated no-frills budget brokers, like MooMoo.

CommSec is charging for the ease of use (if you’re an existing CommBank customer), while eToro are charging you for the access to the additional features it offers, such as CopyTrading.

eToro has the potential to save you more time via its CopyTrading and Smart portfolios, but only if these are features you would use.

Security Measures.

Both companies are registered with most of the major financial regulators (CommSec via CommBank internationally), while CommBank is publicly traded on the Australian Stock Exchange, increasing the transparency around this company.

In addition, CommSec offers CHESS-sponsorship, which is not offered by eToro.

Thanks to improved financial regulation, the days of a regulated broker running off with clients’ shares and funds is now highly unlikely.

In addition, eToro offers insurance of up to $1 million per account, while investor funds are segregated.

Consequently, for accounts under $1 million this is likely a moot point. For accounts over $1 million, investors will likely be experienced enough to make this judgement for themselves.

Customer Support.

Customer support is the one area that lets both CommSec and eToro down.

While they both offer email support and an FAQ section, there is no live chat feature like you get with Plus500, for example.

This could concern investors looking for quicker response times to issues.

CommSec does have phone support and an X customer support account, which goes some way to bridging this gap; hence, slightly edging the scores here.

Exploring The Negative Reviews.

CommSec

Overall, the main complaints here are much the same as you would expect to see with CommBank.

Most relate to customer service; however, the relatively new international site does come in for a lot of criticism as well and is indicative of the generally sub-par user experience offered.

That said, this will unlikely be a surprise to anyone considering CommSec, and it is far from unusable.

eToro

Regarding eToro, the bulk of complaints centre on issues with deposits and withdrawals. As eToro is an online broker and not a subsidiary of a bank (like CommSec), it unsurprisingly will not function like a current account.

Consequently, investors will be subject to waiting times for funds to clear both into their trading account and back into their bank account.

This is not unique to eToro and is a contingency you should probably build into your strategy. Should you want your investment account to function like your current account, you are better off with CommSec.

Both platforms experience negative reviews around personal information. Regarding personal information, financial regulators are taking an increasingly tough stance on their Know Your Client “KYC” regulation.

This means that, as a user, you will be asked to provide A LOT of data, some of it very personal. This is designed to try to prevent money laundering and is simply the platform fulfilling its regulatory obligation.

As these obligations get tougher, you may be asked to provide further information in years to come, so this should not come as a surprise. The platform may be obliged to freeze your account if you do not comply.

Steven