Page 47 - Investment Advisor July/August 2021

“gamification to encourage and entice “If you sell kind of when the market is someone else’s performance and try to
continuous and repetitive use” of its down, that could have potential implica- copy-trade them, which is another fea-
mobile application. In late May, a judge tions more long term,” so gamification ture that we’ve seen?”
in Massachusetts denied Robinhood’s can be used to remind investors they An investor may try to mimic another
request to stop the state’s administra- have a long-term strategy they may want trader who was up 10% for the month
tive case against it. to continue with, he said. but has no idea whether that other trad-
During a panel session at an online er has a similar risk profile or whether
FINRA Annual Conference in May, GAMIFICATION RISKS they had success with stocks last year,
Haimera Workie, head of financial inno- “Haime makes a lot of good points about Price pointed out. “If I try to copy what
vation and senior director responsible some of the benefits of gamification,” they’re doing” based on one small “snip-
for leading FINRA’s Office of Financial said Steven Price, a senior vice president pet” of trading activity, “I may end up
Innovation, pointed out: “Gamification at FINRA who oversees its National hurting myself,” he said, adding: “It may
is a tool. And, as with any other tools, Cause Program that was created in 2020 be Jeff Bezos on the other side of that
what makes it useful or not is really in to consolidate the intake and investi- trade and may be able to withstand a lot
how you use it.” gation of matters based on triggering more risks than I can.”
events or regulatory intelligence across What it comes down to, Price
GAMIFICATION BENEFITS the U.S. explained, is that “anything that really
Gamification techniques, which pushes” investors to make an “emo-
include rewards and leaderboards, “Gamification is a tool. tional decision rather than a ratio-
can be used by BDs to “do things nal decision is a risk.”
like educate investors,” Workie And, as with any other Platforms that encourage inves-
explained. “This is something tors to trade more often are just
that’s actively being done within tools, what makes it “not necessarily recipes for success
the industry today to give people a when you have somebody that is
way to approach kind of the infor- useful or not is really in not very experienced or is a nov-
mation gap that may exist within how you use it.” ice,” he added.
the investment community in a way Workie agreed that gamifica-
that’s kind of more salient, more tion can be “detrimental” to inves-
clear, [and] in a way that’s more fun —Haimera Workie, FINRA tors. But he also warned it can be
so people are more likely to learn detrimental to those firms using
more about investing.” “I agree that it can certainly be used it. “What is important to keep in mind
Gamification techniques can also be for the positive,” Price said of gamifica- as you’re using any of these tools is
used to encourage people to save or tion use by BDs. what type of governance process do
invest their money and can be done in However, he was quick to add: “The you have around it? What kind of safe-
such a way that it serves to “demystify” danger here is that investors may be guards are being built in place so that
investing and make it easier to under- making decisions that are contrary to you make sure that you’re thinking
stand before clients “start the investing their own financial goals. [For example] about what the overall impact would
journey,” he said. if I’m sitting on a [exercycle] and I see be, not just on the firm itself but also
Once people have started investing, a [performance] leaderboard … I may on the investors?”
gamification also can be used on BDs’ peddle a little harder to try to move up In the big picture, “FINRA doesn’t
platforms to “give them prompts or other to the next spot,” Price explained. want to get in the way of firms using
things to help them [and] nudge them The same may apply to trading. effective or clear designs in their com-
along to try to make these decisions that “If people are experiencing the same munications with the public,” accord-
are in their interest,” he noted. types of incentive when they’re trading, ing to Amy C. Sochard, vice president
For example, during a down market, they may not be looking at their own of FINRA’s Advertising Regulation
some investors “may be inclined to sell financial picture quite as closely,” Price Department. “But the flip side is that
their stocks even though they’re very warned. “For example, if I see that I’m there is some risk here as to the influ-
Adobe Stock stocks tend to be cyclical and they tend to other traders, am I going to trade where I think we want to dive deeper
performing in a certain way compared
ence on investor behavior and that’s
long-term investors and, as we know,
and take a look” at gamification.
to go up and down,” he pointed out.
more frequently or am I going to see
JULY/AUGUST 2021 INVESTMENT ADVISOR 45