Note: This blog post is not a substitute for professional financial advice and is for informational purposes only.

The goal of investing for many is to generate financial security. The recent rise of brokerage apps such as Robinhood and Acorns has democratized investing by making trading accessible and ‘fun.’

But with this, comes the question of whether or not these brokerage apps are capitalizing on their users' lack of investment knowledge.

Robinhood, for example, has free stock incentives and a visually appealing layout, making the friendly user interface seem like the perfect one-stop-shop for new, active investors.

However, what goes unseen is the fact that these interfaces have the ability to exploit the barriers of successful investing.

It is human nature for us to adjust our choices based on our user experience. For example, if we were shopping online for an item, and a 50% off code popped up, we would be more likely to make a purchase from the site because the sale code was provided.

Similarly, Robinhood and other apps can subconsciously control user behavior by leveraging strategic design patterns. This form of asymmetric information can create dark patterns and can unleash unforeseen nightmares for novice investors.

While a simple screen display might lower information overload for users, it causes them to subconsciously trade more frequently and makes it harder for them to cancel their orders. And according to Wall Street Journal Reporter, Michael Wursthorn, 'The more frequently a person trades, the more likely they are to lose money in the longer-term.'

I opened my Robinhood account in 2016 to learn more about the investment realm first-hand and I can say that since then, the user interface has changed significantly. While it has allowed me to learn about the different trading terms and strategies, it has also taught me the immense value of investing long-term.

So, as an individual what can we do to generate financial security?

• Use reliable sources to educate yourself, outside of brokerage apps

• Consider long-term investment strategies

• As you use these brokerage services, be cautious of your ability to fall victim to dark patterns

• Consult a financial expert for advice

• Remember, investments on these brokerage apps are likely taxable!

If all else fails, remember the wise words of Warren Buffett, “If you aren't thinking about owning a stock for 10 years, don't even think about owning it for 10 minutes.”

Source:

Does Robinhood Make It Too Easy To Trade?