CIRO’s Office of the Investor and the Behavioural Insights Team published important new research on decision-making supports (sometimes referred to as “speed bumps”) for DIY investors. The study looked at which tools help lower-risk DIY investors avoid opening higher-risk accounts or trading in higher-risk products.
Why It Matters
CIRO recently issued guidance that broadens the types of decision-making supports DIY investing platforms can offer, including educational resources, notifications, alerts, and self-help tools. Because DIY investing platforms provide easy access to higher-risk products (such as cryptocurrency, margin accounts, options and prediction markets), it is important that they offer tools that encourage DIY investors to pause, reflect, or learn before making investment decisions.
What The Research Found
The research found that two types of “speed bumps” were particularly effective in reducing high-risk account openings. Investors responded best to practical risk warnings that used real-world examples and explained risk in dollars and cents, rather than abstract concepts. Interactive quizzes were also effective, as they required investors to engage with the risks. Together, these approaches reduced high-risk account openings by 16% and high-risk investing activity by 10-11%.
The research also identified risk disclosure approaches that do not work. Traditional checkbox confirmations – where users tick a box to confirm “I agree” or “I understand these risks”- were largely ineffective. Even when written in plain language, participants treated these as administrative steps, similar to accepting terms and conditions, rather than as an opportunity to reflect. This finding has broader implications for how risk disclosures are designed and used.
FAIR Canada’s Take
FAIR Canada commends CIRO for this research. We will continue to advocate for stronger investor protections in the DIY investing channel and encourage platforms to use this evidence to put in place effective decision-making supports. These tools and “speed bumps” are essential to help investors better understand risk before trading. We also encourage regulators to consider how these findings could improve risk disclosure or be applied to other regulatory disclosures.
Find the full research report here.