Directa review: read this before you start

Pros and cons of using Directa

The story of Directa

Directa Sim is one of the first online trading platforms available in Italy. Founded in 1995 by three professionals from Turin with the idea of connecting private investors directly to the Italian stock exchange. Over the years, with the growth of the web, online trading became the most immediate way to access the financial markets directly and Directa took advantage of this popularity to offer an increasingly complete service.

In 2000, it allowed its customers to buy and sell securities on the US and then world markets. By 2007, it expanded abroad, opening in Germany, France and the Czech Republic. Today, it has more than 80,000 open accounts and is one of the most important Italian brokers with €4.7 billion in total client assets.

Fees

The Directa account has no opening, closing, inactivity or monthly fees.

However, for transactions, Directa has different fees which vary depending on the type of commission profile you choose when signing up:

• Simple: you pay a fixed commission regardless of the order value.
• Dynamic: you pay a decreasing commission over the course of the same day, so the more transactions you make the less you pay per transaction.
• Variable: you pay a commission proportional to the order value.

As you can tell, it can quickly become confusing to know which one to choose when creating your account as it depends on which market you're making your purchases:

ETF fees

Like many other online brokers Directa offers advantageous conditions for buying ETFs and subscribing to PACs. Let's take a look at the breakdown for buying ETFs which is dependent on the market you'll be purchasing from:

"Zero Commission" promotion

Directa, thanks to partnerships with several ETF providers, offers a varied list of ETFs that can be purchased with zero fees. In many cases, however, it is necessary that the transaction amount exceeds €1,000. Providers include the large asset managers like Blackrock, DWS and Vanguard.

Currency exchange fees

The Directa account is a single-currency euro account. In the case of foreign currency orders, the conversion is done automatically by Directa. Directa applies no additional fees and no spread on currency conversion.

Convenience of Directa

Savings plans

One of the most interesting features is the possibility of automating the investment process through the ETF PAC. Directa's ETF PAC allows you to accumulate units of one or more ETFs automatically on a bi-weekly or monthly basis. In addition to the frequency, you can also select the amount you wish to invest periodically.

Since Directa does not allow the purchase of fractional shares, rounding is by default, so if for example you want to invest €100 and the market price of the ETF shares you want to purchase is €30, Directa will only purchase 3 shares. Similarly, if the market price of the ETF rises to €40, Directa will only buy 2 units.

Directa's ETF PAC allows you to save on buying commissions, in fact, thanks to the partnership with Amundi ETF, iShares, VanEck and WisdomTree, you can invest with zero trading commissions on a selection of ETFs.

Administered regime

Directa offers a choice between the declarative and the administered regime for your taxes. In the case of the declarative regime, you will have to calculate the taxation yourself, while for the administered regime Directa will act as tax withholding agent applying all applicable taxes. You can monitor realised capital gains/losses by consulting the tax section of your Directa account.

You cannot buy fractional shares using Directa

Fractional shares are what they sound like: they allow you to buy a fraction or part of a share according to your budget, instead of only being able to buy whole shares. For example, if you have €125 to invest but each share only costs €50, you will get 2.5 shares.

Fractional shares allow you to buy what you can afford and build a portfolio that would otherwise be unaffordable. One of the advantages of investing in ETFs is that it allows you to diversify your portfolio. Buying several ETFs with fractional shares can make a diversified portfolio even more affordable.

Unfortunately, it is not possible to buy fractional shares with Directa.

Customer support

Directa provides telephone, chat and email support via a Help Desk. Telephone support is available Monday to Friday from 08:00 to 23:00. The chat service is available Monday to Friday from 08:00 to 22:00. On Trustpilot there is a rating of 3.8/5 with about 60 reviews, which is a fairly limited number to guarantee a reliable evaluation.

Setting up an account

Let's dig into the details of creating your Directa account for the first time:

Opening an account

To open a Directa account you can choose one of these 2 options:

• on the official Directa website
• through a partner bank
  

Opening an account on the Directa website is quite simple and it takes about 10-15 minutes to fill out the application form, using your tax code, a photo of an identity document and a valid IBAN.

Identity verification can be carried out in two ways:

• identity verification via SPID
• verification via video recognition (to be booked with a Directa operator)
  

Then you will have to wait for Directa's verification of your documents. The entire process takes 2 to 4 business days.

You can create an account on mobile

Directa offers several web and app platforms. The web platforms differ in the type of information shown and the graphics but, being a trading app, Directa shows a lot of details that are not very relevant to most investors, especially long-term investors.

For this reason, the mobile experience can be quite complicated and it is difficult to find the information needed to make an investment decision. Directa App is available for iOS and Android devices and is characterised by its ease of use compared to more complicated desktop platforms.

Ease of use: 3/5

Being a trading app, Directa shows many details that are not very relevant for most investors, especially for buy-and-hold investors. Moreover, the various platforms available do not enhance the features described above, but add complexity.

For this reason, the mobile experience can be rather clunky and it is difficult to find the information needed to make an investment decision. The design is rather dated and there are better-looking applications out there. That is why we have given it a rating of 3 out of 5!

Children's accounts and joint accounts

You cannot create child accounts or joint accounts on Directa. You can only have one account in your name on the platform.

Business accounts

You can create a business account on Directa's platform.

Is Directa safe?

Who is the regulator?

Directa is not a bank, it does not offer a current account or credit cards or other typically banking services. Its services are therefore restricted to the investment sector. In terms of security Directa operates under the supervision of CONSOB and the Bank of Italy.

Have they had any problems with the regulator?

No, we are not aware that they have had any issues with the regulator.

How much of your assets are protected by the investor protection scheme?

You are protected by the EU's €20,000 investor protection scheme.

Is your cash protected by the deposit guarantee scheme?

No. As Directa is not a bank, they aren't a member of the Interbank Guarantee Fund, which insures your capital up to a maximum of €100,000.

Alternatively, you can keep your funds and securities directly with a bank affiliated with Directa, in a special trading account that adheres to the Interbank Guarantee Fund which insures your capital up to a maximum of €100,000.

Does Directa deal in securities lending?

Yes, Directa engages in securities lending. Securities lending is a practice in which brokers borrow stocks and ETFs from customers to use directly or to lend them to institutional investors in exchange for interest income, which is automatically accumulated in the customer's account.

Securities are only remunerated when Directa actually borrows them, at its discretion, depending on market demand.

Does Directa do payment for order flow?

No, they do not do payment for order flow (PFOF). This is an important source of income for many new brokers, including the German provider Trade Republic. This practice consists of routing your orders to certain market makers, who then pay the broker for the right to execute those orders. PFOF can be to your detriment, as brokers may prioritise payment over executing the best possible trade for you.

The easier way: Curvo

Brokers push you to trade and to pick individual companies to invest in. Rather than picking individual stocks such as Amazon or Tesla, index funds are a way to buy the whole market, across all sectors and regions of the world. Essentially, you own a small portion of thousands of companies throughout the world. Instead of betting on a particular company, you are placing a bet on the global economy.

Rather than having to pick the right stocks or ETFs among the thousands available through a broker like Directa, you invest in a portfolio that is tailored to you and your goals. These portfolios are composed of globally diversified index funds, meaning you earn a piece of the growth of the global economy, and they're best suited to make the most of your savings long term. And they're secure, as they're managed by NNEK, a Dutch investment firm under supervision of the regulator in the Netherlands (AFM).

We believe that investing is an important tool for our generation to improve our financial well-being and to prepare for our future. We are building Curvo to fulfil that vision, by making good investing easy and accessible to all:

• Diversified portfolio set up for you: The best portfolio for you is built by NNEK based on your time horizon and financial goals. Simply answer a short questionnaire and you’ll get everything set up for you.
• Automated savings plans: Through Curvo’s app you can set up a monthly contribution from €50. That means that money is automatically invested for you in your portfolio. Put your savings on autopilot!
• Fractional shares: All the money you send towards your portfolio is fully invested by NNEK. No cash is left on the side.
• Sustainable investments: Your investments focus on one guiding principle: don’t invest in companies that are considered destructive to the planet. This means that sectors like non-renewable energy, vice products, weapons and controversial companies are all excluded.
• Project yourself into the future: Through Curvo you can see how much your portfolio is expected to be worth in the future. You can answer questions like “how will increasing my monthly contribution by €50, €100 or €200 affect my long-term savings?” to give a concrete idea for the “future you”.

Learn more on how it compares to investing through a broker.

Summary

Directa is a good broker for Italians investing. In general, commissions are on average high, but if you decide to invest in ETFs and use a PAC, you can drastically reduce costs. In addition, the possibility of adopting the administered regime makes the service very convenient. In this way, you will not have to worry about any tax declarations: Directa will do everything for you in comparison to some foreign brokers.

Questions you may have

How safe is Directa?

Directa a secure broker. It is authorised by CONSOB to provide investment services and is under the supervision of the Bank of Italy.

How much does it cost to open a Directa account?

Opening a Directa account is totally free of charge.

How many customers does Directa Sim have?

Directa has approximately 80,000 active accounts.