Digital investing platforms have made it easier and cheaper for individuals to participate in financial markets, expanding access for a new generation of investors. But experts warn that features designed to increase engagement may also encourage excessive trading and risk-taking.
BNN Bloomberg spoke with Preet Banerjee, founder at Your Money Degree, who says while democratization has improved financial inclusion, trends like gamification and prediction markets risk blurring the line between investing and gambling.
Key Takeaways
- Digital platforms have lowered costs and barriers, bringing more retail investors into financial markets.
- Gamification features can increase trading frequency, which is often linked to lower long-term returns.
- Research shows retail investors may face lower returns and higher risk while brokerages benefit from increased activity.
- The rise of prediction markets and social media influence is blurring the line between investing and gambling.
- A prolonged downturn could expose risks for newer investors and erode trust in do-it-yourself investing platforms.
Read the full transcript below:
ANDREW: Digital investing apps have opened the door for millions of new investors, offering, in many cases, low fees and easy access. But can they push people to take on more risk and trade more often than they normally would — and could that hurt returns? We’re joined by Preet Banerjee, founder of Your Money Degree. Thanks very much for coming on, Preet. Just to clarify, we’re talking about Wealthsimple, Questrade, the big banks and their direct investing programs — just about everybody has an investing app these days.
PREET: Well, certainly it’s become very popular, especially with more investors eschewing traditional financial advisors and wanting to do things more on their own. Not only can they do that, but they are also turning to social media as a substitute for traditional financial advice — and sometimes that advice may not be in the best interest of all investors.
ANDREW: What are your main concerns here?
PREET: In the column, I flagged this idea that we wave the flag of democratizing finance as being better for everyone. But what the research has shown is that it’s traditionally better, mostly for the brokerages. While lowering barriers to entry and increasing financial inclusion are positive developments, it’s not a panacea.
For example, studies have found that when you lower trade minimums and introduce fractional share and zero-commission trading, people start investing earlier — but they continue investing small amounts. As a result, they may not contribute as much to their portfolios over time because of an anchoring effect tied to those low trade amounts. That’s one example of how not all democratization is necessarily a good thing.
ANDREW: You do say there are some positive effects. Digital platforms have cut costs and enabled people to invest who might otherwise have found it difficult. You also talk about “gamification,” where features resembling video games are introduced to investing apps. Tell us about that.
PREET: Yes, the key research paper I referenced looked at the introduction of gamification elements across a number of U.S. brokerage platforms over several years. The findings showed that investors earned lower risk-adjusted returns — so lower returns — while also taking on higher risk in their portfolios.
In other words, they experienced the worst of both worlds. Meanwhile, brokerages captured most of the benefits, and investors were worse off overall. This is part of a broader trend. It suggests we need to think about how to ensure investor outcomes are rewarded, not just trading activity.
ANDREW: We’ve also seen so-called prediction markets emerging in Canada. People can bet on things like whether 2026 will be the warmest year on record. That sounds a lot like gambling.
PREET: Yes, I think it is gambling. Research tied to the expansion of sports betting and other forms of gambling has generally been negative from a personal finance perspective. People are gambling more and contributing less to traditional retirement accounts.
This also feeds into the gamification of personal finance. As more people are enticed to make bets — whether on sports or broader events — it shifts behaviour. In the U.S., there’s more ability to bet on various outcomes. Canada is taking a slower approach, but prediction markets are still growing.
It risks turning investing into something closer to gambling for an entire generation, which is not a good message. The traditional approach — buying quality investments and holding them for the long term — is being eroded.
ANDREW: In your Globe column, you say one issue is that many younger investors haven’t experienced a prolonged downturn.
PREET: Yes. As the saying goes, a rising tide lifts all boats. For many newer investors, markets have performed well for most — if not all — of their investing lifetime. They haven’t been tested by a prolonged and severe bear market.
Some of the strategies being used today may prove riskier than expected when conditions change. To extend the analogy, when the tide goes out, you see who’s been swimming without trunks.
With more people using do-it-yourself platforms and less guidance available, a downturn could lead to significant losses and potentially an erosion of trust among this generation. That’s why it’s important to provide guidance in ways investors are willing to engage with.
ANDREW: Preet, thank you very much. Preet Banerjee, founder of Your Money Degree.
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This BNN Bloomberg summary and transcript of the April 10, 2026 interview with Preet Banerjee are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
