(888) 234-7982

Many years ago, I volunteered one morning per year at an area school with other financial types playing what can most simply be described as a stock market game. The goal of the game and the ensuing discussion was to teach children how saving and investing can help grow your money over time. I should say the organization that carries out this event does a wonderful job, has the very best intentions and has created an impactful way to get across incredibly complex concepts to young students in the few hours they have to share. Over the years, I’m sure there has been a positive impact on many students who went on to consider paths for their future they might otherwise have not.

All of that said, I stopped volunteering for this event some time ago because something just didn’t feel right. We were rolling dice to determine outcomes. The game was designed to ensure that most every team had some degree of a positive investment experience. We weren’t doing enough to explain the potential downside or the acumen it takes to assess the risk.

It felt more like teaching the students how to gamble than a lesson on investing.

One of the concepts involved in the activity described above is gamification, or using game-style mechanics to enhance participation and engagement to achieve a desired outcome. Standing up in front of students and explaining the ins and outs of the market is typically met with eye rolls and light snoring. Designing a game around it, adding elements like competition, winning, losing and even prizes (candy, in this case) really helps keep participants engaged and enhances their learning.

Today, gamification is everywhere you turn. Whether using a points-based credit card, participating in a workplace sales contest or trying to get enough steps to win a badge on your fitness app, gamification has a deep and powerful grasp on many areas of our lives, often driven by technology and delivered to us via our phones, tablets and smartwatches.

There’s no doubt this can have a positive impact. It helps those looking to improve diet or fitness regimens, helps companies run more efficiently and can even help people spend less and save more.

Focusing on finance, in an era of low to no trading costs, the ability to buy fractional shares of stocks, etc., gamification has become a HUGE part of the financial services industry. Companies like Robinhood have created apps heavy on gamification which open the investment world to large swaths of the population that haven’t necessarily had easy access in the past. According to noted expert Kara Swisher, since its founding in 2013, Robinhood has attracted $1.2 billion in venture capital, carries an $8 billion valuation and counts 13 million accounts on its platform, three million of which came in just the first quarter of 2020.

Again, to the extent this provides an avenue to help people save more for their future and nudges them to do so in a constructive manner, great. But there’s a darker side to these tools as well.

Users say they sometimes check their app as often as social media, find themselves trading out of boredom or just to see if they can make a quick buck. Instead of using these tools for savings and long-term investing, many have turned them into mini-casinos, using leverage and complex trading strategies to place increasingly risky bets on what the market might do next.

The apps provide constant notifications and reminders on users’ devices letting them know when they’re up, down or suggesting an action they might want to consider. When you add impressive colors and graphics used with these tools, it gets more and more difficult to tell the difference between investing, a video game or pulling on the arm of a virtual slot machine. Best-selling author and professor of marketing at NYU’s Stern School of Business, Scott Galloway wrote an excellent piece on just how addicting some of these tools can be (warning: Galloway employs some colorful language in his writing).

The pandemic hasn’t helped as some arrive at these tools specifically for the gambling-like experience. It’s widely speculated that many of Robinhood’s new users in early 2020 are sports gamblers looking for a dopamine replacement while live sports are on hiatus. This New York Times article portrays just one example of someone doing just that. Keep in my mind, sports gambling is a $13 billion, mostly dormant industry, and that’s just legal gambling.

Perhaps the most tragic story occurred in June, when Alex Kearns, a 20-year-old University of Nebraska student, committed suicide after placing what most believe to be some kind of option trade in a small account he had started to learn more about investing. While all the facts aren’t known, the upside and downside on the trade he placed was likely only a few hundred dollars. However, because of the way each side of the transaction settles and is reported in accounts, for a few hours it looked as though he’d turned a small bet into a loss of more than $700,000. He left a note to his parents stating he didn’t know what he was doing and wondering why anyone would allow him to take that kind of risk in such a small account.

As with many things, it is vitally important to find balance and ensure we are using tools to help enhance your life, not allowing tools to run our lives instead. If a nudge on a diet, fitness, savings or other regimen is needed, by all means look for ways to help provide incentives and meet your goals. But, if we start to sense things are getting out of control or that the tool might be using us more than not, engaging with an advisor, coach, partner or friend to create some accountability and employ some checks and balances can add financial and emotional value.


Note: It’s important to mention the following in any writing that touches on suicide, gambling or other addictions. The first is borrowed from Prof. Galloway’s article referenced above and the second comes from the National Council on Problem Gambling.

  • If you are struggling with thoughts of self-harm or suicide, please do not hesitate to contact the National Suicide Prevention Lifeline at 1–800–273-TALK (8255). This is a free 24/7 confidential service that can provide people in suicidal crisis or emotional distress, or those around them, with support, information, and local resources. For more information, call or visit SuicidePreventionHotline.org
  • The National Council on Problem Gambling operates the National Problem Gambling Helpline Network (1-800-522-4700), a single national access point to local resources for those seeking help for a gambling problem. The network consists of 28 call centers which provide resources and referrals for all 50 states, Canada and the US Virgin Islands. Help is available 24/7 and is 100% confidential. The National Problem Gambling Helpline Network also includes text and chat These features enable those who are gambling online or on their mobile phone to access help the same way they play. One call, text or chat will get you to problem gambling help anywhere in the U.S. 24/7/365.