New CIRO research offers practical insights to support DIY investors

How OEO firms can better support investor decision-making

When it comes to investing, more Canadians are choosing to manage their own investments. Many of them are turning to order-execution only (OEO) firms – put simply brokers that allow investors to trade securities on their own, without the benefit of recommendations or suitability assessments. They provide a lower cost trading option for Do-It-Yourself (DIY) investors who are comfortable making their own investment decisions. OEO firms offer a variety of tools and educational resources to assist investors, but they do not provide investors with recommendations or advice.

With easier access to cryptocurrency, margin accounts and options, as well as other high-risk investments via these OEO platforms, what would actually helps investors make more informed choices?

Canadian Investment Regulatory Organization (CIRO), in partnership with the Behavioural Insights Team, recently published research to dig deeper on this question. The findings share practical insights into how behavioural design – understanding how people think and act - can better support investors.

This research involved several components including a literature review, interviews with industry experts, a market scan, as well as prototyping and qualitative testing, and a randomized control trial. The randomized control trial involved nearly 3,000 Canadians which tested different “decision-making supports” designed to encourage investors to pause and think before opening higher-risk accounts.

What the research uncovered

One of the strongest takeaways was that investors responded well to real-world examples of risk than to abstract explanations. For example, showing how a market drop could translate into dollar value loss was more effective than simply describing volatility. Additionally, interactive quizzes were effective because they required investor engagement.

Together, these approaches reduced high-risk account openings by 16% and high-risk investing activity by approximately 10-11%.

Another important takeaway was that timing plays a key role in effectiveness. Decision-making supports introduced at key decision points, such as during account opening, had the greatest impact and ultimately influenced future investor behaviour in a positive way.

On the other hand, traditional checkbox confirmations like: “I understand the risks” had no measurable impact on investor behvaiour. Participants viewed them as administrative as opposed to a meaningful reflection point. Overly repetitive and generic messaging was ineffective.

What this means for OEO dealers

For OEO firms, this research shows how small, targeted changes can make a meaningful difference in how investors understand and act on risk.

Some highlights include:

making risk tangible using real examples
using interactive prompts to encourage engagement
introducing decision-making supports at key points
focusing on clear language
continuous testing to improve outcomes (i.e. A/B testing)

A modern approach to investor protection

As investing continues to evolve, there is an opportunity for OEO dealers to rethink how they support investors in real time and behavioural insights and user experience design play a central role.

Explore the full research report to learn more about the findings: Enabling DIY investors to make more informed, deliberate decisions