Video: What’s your investing personality? Providing gamified coaching using behavioural insights

Doug Sarro: So as a lawyer, I always like to start my remarks with a disclaimer. Any views I might express today are my own and do not necessarily reflect those of the Ontario Securities Commission. (Laughter).

So with that, let me start by talking a bit about what the OSC is and about the branch that I work at. So the Ontario Securities Commission regulates the capital markets in Ontario. I work in a relatively new branch of the OSC called the Investor Office. It launched in 2015. We lead the OSC's efforts in investor engagement and outreach as well as research. And here's where you'll have the first of two shameless plugs that will be part of my presentation. Tomorrow we will be releasing the results of a national investor survey looking at topics from cannabis investments to retirement preparedness to conversations about finances as we age, a lot of interesting findings, so stay tuned for that coming out tomorrow morning.

The Investor Office also has a policy role, and we provide leadership in the area of behavioural insights at the OSC. And the reason for that is because our focus, our historical focus, us and the – the sort of branches that have had similar mandates to us, that have preceded us, has really been on retail investors. And behavioural insights have such a powerful influence on retail investor behaviour.

Now, in terms of investor engagement and outreach, we reach retail investors through a number of channels. Our key online channel is GetSmarterAboutMoney.ca. It's one of the country's most visited financial literacy websites. We just got the numbers for the 12-month period ending on October 31st, and I'm pleased to say that we received over five million hits over that period at GetSmarterAboutMoney and related resources. Now, that's – that's great. We love these, having these kinds of web stats, but we're always focused on continually improving. How do we adapt our content to changing realities and changing trends? And how can we try new ways of delivering content to our readers?

We learned partly through our web traffic data, just through experience, but we're also informed by research. This past summer – remember summer? I miss summer. (Laughter). The – this past summer, we – we published two behavioural insights research projects, very different areas of focus. One focused on how can we help older Ontarians plan for retirement. The other one was focused on how – how can we – how can we design products, programs, and services that better engage millennials in investing. Despite the different areas of focus, there were common themes from the research. One was that people want personalization. They don't want just sort of resources pushed to them in abstract. They want to – they want the resources designed in a way that it feels like it's for me. We also know from the broader literature that gamification is a great way to increase engagement. So we started thinking how – what are some ways we can apply that to how we present content.

Well, looking back to learning from experience, some of our most visited resources are our most interactive, our tools and calculators. You can see personalization and gamification in there because the output that you get depends on the input that you put in, and you get an answer that's essentially personalized to that person. So we thought, you know, how can we adapt those elements to help promote some of our just sort of written content on concepts relatively to people as – as they invest.

So our target was our resources on behavioural biases and heuristics. We had a lot of resources on different biases that influence investor behaviour, but it's presented in the abstract. So you're – you're counting on people to come in wanting to learn about biases and heuristics and how they might influence their behaviour. But we know that we face a couple of challenges with that. First, there are tons of biases and heuristics. It's overload. And second, they're very difficult to explain in writing. They're complicated to understand. So we thought, you know, how can we use behavioural insights to better engaged people in behavioural insights.

So what we tried to do was we thought, well, instead of just giving people a list of biases that might be relevant to their behaviour, let's gamify it. Let's make a quiz, a series of questions that people can answer. And based on those answers, we talk a bit about what their investor personality looks like, or what it might look like, and here are some biases that might be especially relevant to you. Instead of feeding people ten different biases they can click through, we can say here are three that might be especially relevant to you.

We didn't just make up the quiz on our own. We drew extensively from academic literature. Now, of course we simplified it, and we made clear throughout the quiz what the purpose of this was, that the idea is not to reach a diagnosis about what behavioural biases are clearly most relevant to an investor, because people's personalities change over time. Their behaviour changes from day to day based on how they're feeling. All we're trying to do is start a conversation and get people engaged in the content that we already have.

So – so, as I mentioned, it's presented just as a series of questions, one by one. We're measuring: A) whether people take an active attitude towards investing, and they want to be directly involved in decisions and they want to feel like they have control over everything that's happening with their investing decisions; or whether people take a more passive attitude and they want to rely on other people – rely on an advisor, or rely on friends or family, and – and sort of tag along with whatever advice happens to be top of mind for them in that context.

The other axis we looked at was their subjective attitude towards risk, whether they're of a mindset where they feel really comfortable taking risks, and maybe even seek out risks, or whether, when they see risk, they sort of clam up and don't want to deal with anything. Now, of course we aren't measuring people's objective risk tolerance; it's just about how they subjectively feel. Because we're just trying to figure out what's their – what's their personality type, at least in the context of their responses to this quiz at a point in time.

So we sort people into four different categories based on where they're placed. And this – this comes right from the literature that we used to design the quiz. First, a passive preserver, somebody who both doesn't really want to be involved in investing decisions, and also really, really doesn't like the idea of risk. This might be someone who built most of their wealth through employment earnings, isn't all that comfortable with investing, and is really – really just wants to hold onto what they have.

The second type is a friendly follower. They also don't like to make active investing decisions day to day, but they're influenced by trends. These might be the type of people who see a headline about a trendy investment and sort of start asking, oh, how do I get in on this and how do I avoid missing out. So they're – they're more passive, they rely on others, but they're also more tolerant towards risk.

You have your independent individualists. Again, sort of lower risk, might resist following a financial plan, but more of an active attitude towards investing. Active accumulator, same sort of active approach to investing: they want to be directly involved. Maybe this is someone who've started a business and has made a lot of their wealth through that business, and feels like they want to be able to control all aspects of how they generate wealth.

So here's where we get to the existing content. We say OK, here's your personality type, here's the description of what it is, and here are a few questions looking at different biases. And we don't try to judge people. So no matter what they click, they get the same answer. We just tell them which answer reflects a behavioural bias, and we allow them to click through to learn more about that bias and how they might be able to overcome it.

So looking forward, you know, this – this is just a prototype. We don't know whether people are going to be engaged by it. We just launched it on Friday. It'll be interesting to see how people engage with it, whether people like it. If they do, maybe this is something that we can use in other contexts. And maybe this is a way – you know, people are overwhelmed by information on their finances, and, because of the way the world is today, people are more responsible for their own financial futures really than ever – than ever before in modern history. So how can we use personalization, how can we use gamification, to help take some of the onus off of people to find the resources they need for their financial futures?

Now here's where the second plug comes in. If this is something you find interesting, if it's something you want to be engaged in, we're hiring. We're hi—(laughter). We're hiring a new senior advisor for behavioural insights. Applications close Friday. If you want to be involved in designing our behavioural insights research agenda, head to the OSC website and – and fill out an application. Thanks so much, everyone. (Applause).