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Appealing or Annoying: What Features Do Online Investors Really Want?

Tips advisors can use to offer clients what they want most.

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With the rising popularity of online investment platforms, especially in recent years, more investors are looking to grow their wealth. Some have chosen to find a financial advisor to work with, while others are using online platforms like Robinhood (RH) and Webull, if not utilizing a combination of both strategies.

However, many have found that not every experience on these platforms is perfect. So, what do online investors find appealing about them? On the other hand, what do they find annoying?

We found that investors typically don’t enjoy gamification techniques like badges, celebrations for trading, and social networking features, based on a national survey. However, they do like being encouraged to learn about investment and receiving personalized recommendations.

As an advisor, understanding online investors’ preferences toward these features can help you find opportunities to add value to a potential or current client’s investing journey while reminding them that you can offer them exactly what they want and help them avoid what they don’t.

In our second of two papers, we’re looking closely at online investors’ behavior on digital platforms. Specifically, we examine investors’ use of digital investment platforms and preferences for the features available on them.

What Online Investors Don’t Want

Despite how often gamified features are marketed, online investors generally either don’t notice them on their trading platforms, or overwhelmingly have neutral or clearly negative feelings about gamified or social-networking features.

The majority of online investors (52%) are strongly opposed to high-risk investment strategies like options trading being enabled by default. They are also strongly against having their private information sold to advertisers or high-frequency traders, including their trading decisions (more than 75% are upset about these practices). Most of them (77%) would be upset if they were encouraged to buy investments for which the digital trading platforms did not disclose it was receiving a commission. These kinds of features that investors oppose mostly help the company or platform, not the investor.


  - source: Morningstar Analysts


  - source: Morningstar Analysts

What Online Investors Want

Standard features that are available on digital trading platforms were noticed by a majority of retail investors who use these platforms. The standard features that online investors mostly liked were investment ideas, detailed trade market data, push notifications, other curated lists of investments, and colorful displays and vivid imagery.

These standard features can be, and often are, used for multiple purposes, but have clear benefits to investors. For example, push notifications are used to alert people about “hot stocks” so that they can stay on top of trendy stock information. This allows online investors to make timely trading decisions with access to rich investment data, as well as to warn them that someone might be fraudulently using their account.

The features online investors would like to see on digital trading platforms are the ones that:

  • Provide educational modules about finances and investing (79%);
  • Automatically analyze their saving and investing history for potential areas to improve (67%);
  • Encourage them to save more money for the future (79%);
  • Tell them about hot or trending investments (58%);

Investors were even fine with having their personal and their investment data used with the caveat that it was for providing personalized investment recommendations to them (47%).

This is a complete opposite response to firms selling personal data about their trades to high-frequency traders, as mentioned above. Overall, retail investors seem to support features that are beneficial or neutral to them, but hostile to those that benefit the company at their expense.


  - source: Morningstar Analysts

Conclusion

Investors who use digital trading platforms want positive experiences that help them obtain the knowledge and information they need to make financial decisions in their best interests. Our research finds that the features for entertainment currently used by popular financial platforms--like games, badges, and leaderboards--are not desirable for the average user, even those on online trading platforms. Rather, online investors may perceive the entertainment offerings as distractions that are neither enjoyable nor help toward their financial goals.

This does not mean that gamification on digital trading platforms is inherently unhelpful. Rather, companies that host these platforms should consider games which support the goals that investors care most about. Investors desired encouragement toward saving, analyses of their investment decisions, and investing information. They would also welcome personalized recommendations and anonymous comparisons with other investors. Games transparently designed with these goals in mind may be invaluable for online investors.

However, investors should be cautious that even the features that they did like, such as push notifications, can have unintended consequences such as over-trading. Investors who mainly use online trading platforms tend to not have an advisor compared with those who don’t use these type of trading platforms, but still reported their investment objective as “to invest and save for the long term.”

It would be beneficial for advisors to inform their clients about how such seemingly harmless features on digital platforms can make investors deviate from their main objectives and further explore ways to help them stick to their long-term goals.

Yubin Kim does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.