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Investment Gamification and Implications for Capital Markets

Recommendations to Maximize the Benefits and Mitigate the Risks of Gamification

London, United Kingdom 17 Nov 2022

A new report published today by CFA Institute, the global association of investment professionals, puts forth nine recommendations for regulators, standard setters, and the investment industry, to maximize the benefits and mitigate the risks from the rising trend of investment gamification.  

Gamification refers to the application of game-playing design elements and principles to products or services. The report, Fun and Games – Investment Gamification and Implications for Capital Markets, discusses the ethical, market, and corporate governance implications of gamification, and considers the behavioural techniques faced by users of gamified investing apps. These include visually appealing aesthetics, celebratory messages, audio cues, leader boards, practices that increase user convenience, advertising narratives that reinforce investor attitudes, and the role of social media to encourage more engagement.

Paul Andrews, Managing Director for Research, Advocacy, and Standards at CFA Institute comments:

“Gamification in our industry has clear pros and cons. We need to develop and enforce policies that support positive investor experiences. We support innovation, but without appropriate safeguards and design frameworks, gamification and other behavioural nudges may fuel future bouts of volatility and increase market risks, particularly among inexperienced investors. Young investors have profoundly high levels of trust in digital nudges and have reported greater trading frequency compared to older cohorts. These findings have important implications for market integrity and investor outcomes.”

The report additionally draws on key findings from the CFA Institute Investor Trust Study* that explores investors use of digital platforms and associated levels of trust and views on gamification. Technology is a significant driver of trust, with younger investors more likely to use digital trading platforms.


  • App design should include features that allow users to review and reflect.  For instance, moving away from one-click transactions toward an order, review, and confirm process.


  • Reward and feedback systems, if any, should focus on long-term investor outcomes and not on transactions or short-term outcomes. The concern around the use of visual confetti in trading apps is that transactions, rather than long-term outcomes, are rewarded with instant gratification. Apps should measure and report on long-term performance, along with risk, and calibrate reward systems accordingly.


  • Research on equities and other asset classes must be based on reputable sources and sound research. Since trading is, at least partly, a social activity, there is an inclination for market intermediaries to curate the news and information their users see based on their social profiles, network, and prior transaction history. Users should be guided toward reputable sources, such as research from recognized and regulated firms.


  • Point-of-transaction disclosures should be in plain language. Since users are most attentive at the point of transaction, market intermediaries should be encouraged to provide plain language disclosures to enable investors to pay attention to the investment risks involved in the transaction.


  • Disclosures must take into account the medium through which they are consumed. Presenting very lengthy information on a screen in a vertical or portrait format causes readers to skim through the information. App design should be optimized for mobile devices.


  • Platforms should provide full transparency around remuneration to social influencers. Influencer payment disclosures can help investors distinguish between clear product advertisements or placements and pure gossip.


  • Investor education materials and other public communications must not mislead or downplay the risks and complexity inherent in investing. The rise of self-directed trading has been accompanied by cheerleading by market intermediaries, platforms, and influencers, conflating self-directed trading with the democratization of investing.


  • Warning labels should be included on brokerage communications, including advertisements, alerting investors to the potential financial health dangers of excessive trading. Brokerages that derive revenues from payment for order flow driven by retail investor transactions must prominently mention that fact.


  • Licensing requirements for social influencers should distinguish between general and personal advice, with limited licensing requirements for the former. Licensing requirements should be agnostic to platforms.

Sivananth Ramachandran, CFA, CIPM, Director of Capital Markets Policy, and author of the report, comments:

“There are ethical and investor protection concerns about gamification. Gamification can be a powerful tool for increasing financial literacy and attracting new and younger audiences to investing. However, the techniques that are so adept at increasing user engagement are often leveraged to drive excessive or high-risk trading, or to encourage other harmful behaviours at the expense of investors. To maximize the benefits of gamification in the investing context, our recommendations are three-pronged, comprised of principles, conduct, and disclosures. Our recommendations offer an approach that can help manage the associated risks of gamification, while enabling users to continue to benefit from its positive features.”


Notes to Editors

*Enhancing Investors’ Trust – the 2022 CFA Institute Investor Trust Study, is the fifth in the Investor Trust Study series, and addresses levels of trust among retail and institutional investors in financial services in 15 global markets. Among the findings, retail investors under the age of 35, were found to be nearly three times more likely than investors aged 65 and over, to trust in digital nudges (92% versus 33% respectively).

About CFA Institute

CFA Institute is the global association of investment professionals that sets the standard for professional excellence and credentials. The organization is a champion of ethical behavior in investment markets and a respected source of knowledge in the global financial community. Our aim is to create an environment where investors’ interests come first, markets function at their best, and economics grow. There are more than 190,000 CFA charterholders worldwide in more than 160 markets. CFA Institute has nine offices worldwide and 160 local societies. For more information, visit www.cfainstitute.org or follow us on Linkedin and Twitter at @CFAInstitute.





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