How 'gamifying' investment can help younger clients

The big question is how do we work together to show the importance of investing to this new generation? Gamification, defined as “the process of adding games or gamelike elements to something (such as a task) so as to encourage participation” may be one way to engage and educate future investors.

The principles of gamification have been used successfully in a range of scenarios. Although many of us would not consider ourselves ‘gamers’, we have probably encountered gamification techniques in various guises throughout our daily lives; from walking that bit further to reach our Fitbit reward to moving up levels on retail or airline loyalty programmes.

Gamification principles are not restricted to recreational activities; tangible business problems have also been tackled using this approach including improving security awareness (by improving employees’ filtering of phishing emails) and enhancing stakeholder engagement (by facilitating ‘tailored story-telling’ by external stakeholders and employees as they explore the firm’s vision and culture platform).

The potential of gamification is significant when it comes to both raising the profile of a variety of investment options for the younger generation.

But how does this relate to personal investing? And what specific techniques can individuals and wealth advice firms adopt to make long-term saving more appealing to the younger generation?

The potential impact of gamification

Gamification can lead to the following outcomes:

1) Encourage investment

To attract millennials, you must be able to demonstrate the potential reward as well as the risks of investing. For example, allowing potential investors to learn about investing through fun, game-like processes rather than overwhelming them with technical requirements and phrases.

There is a knowledge gap when it comes to financial terminology, especially among young people, so any communication must be simple and relatable. Once they feel confident, they can then transition to trading real stocks.

By providing first-time investors with no-risk educational tools prior to making real investment decisions, asset managers could encourage participation amongst this generation of historically cautious investors. Better education can also improve investment strategies and outcomes, all of which improves asset manager profitability.

2) Assess risk and reinforce positive behaviour 

Although many millennials are conservative, they are not completely immune to risk. However, in an age where lives can be managed on smart phones, few younger investors appreciate filling in lengthy risk appetite questionnaires. This is one area where gamification could not only vastly improve engagement, but also the accuracy of outcomes. 

Current questionnaires can be flawed and rely on individuals understanding their own inherent biases and motivations which paves the way for inaccuracy. In comparison, games can be instinctive, simpler and better at simulating real life experiences. Furthermore, they can be repeated with higher frequency and ease than questionnaires.