While the general public may have had a first taste of the worrying and addicting nature of trading apps like Robinhood this week, gambling experts, financial watchers, and even competing trading apps have pondered how these issues could be addressed.

“The problem online daytrader is indistinguishable from the online gambling addict,” said Keith Whyte, executive director of the National Council on Problem Gambling, referring to graphics like the iconic green confetti that appears on a user’s phone when a robinhood trade is executed. “Much of this comes straight from the casino user experience: it encourages immediacy and engagement.”

Robinhood declined to comment directly on the app’s design elements, which critics say includes playful features.

“We designed Robinhood to be mobile and intuitive, with the aim of making investing more familiar and less daunting for a generation of people previously cut out of the financial system,” wrote Nora Chan, a spokeswoman for Robinhood, by email.

However, industry experts say the addicting elements of Robinhood were such a well-known issue that competing startups like Public and Titan posed as abbreviated or even completely opposite versions of Robinhood. Both companies hope to make different types of design decisions to steer their users in a more thoughtful direction.

Joe Percoco, Titan co-CEO, said in an email that his company is “the complete opposite of Robinhood” and likened inexperienced Robinhood investors to getting into a “fast new car with no instructions.”

“Robinhood was designed and made money by being addicting customers,” he wrote. “That’s awful.”

GAMBLING MINDSET

Players and investors have always had a lot in common, Whyte said. He noticed that they often draw young men who self-destruct and who take their obsessions too far.

In one extreme example, a 20-year-old Robinhood trader took his own life last summer after seemingly misunderstanding his financial statements and blaming the company for his circumstances.

Robinhood told CNBC at the time that it was “deeply saddened to hear this terrible news,” adding that it had reached the family.

“In both online gambling and online commerce, the inability to set and comply with limits and the consequences are incredibly similar,” added Whyte, emphasizing that he would like these apps to have self-imposed limits and self-exclusion introduce lists like casinos do.

The latest versions of these trading apps can trigger similar behaviors. Other digital experts have come to similar conclusions about the choice of in-app design, including Dave Guarino, an Oakland, Calif.-Based product manager at the California Office of Digital Innovation, a relatively new agency that opened under Governor Gavin Newsom . Run websites that are easier to use.

“If Robinhood’s goal had been to fuel wealth creation and put capital gains into the hands of everyday people, they would have created an experience where the big hits on dopamine came from regular contributions to index funds,” he wrote on Twitter on Thursday . “The point here was to monetize game impulses.”

Cesar Albarran-Torres, Lecturer in Media and Communication at Swinburne University of Technology in Melbourne, Australia, concluded in a 2018 book that apps like Robinhood are better understood as “gambling” where “a life changing event “Is apparently within reach. “

“There’s a reason professional stock traders exist,” he said in a phone interview. “You need to know how to evaluate risk. Risk is very tempting. We all like to take small risks – there is dopamine and endorphins. “

However, as he pointed out, many people who trade on Robinhood may not fully understand the intricacies of options trading, a much riskier strategy when compared to a slow and steady exchange-traded fund or ETF. Robinhood is also promoting cryptocurrency trading on the app’s home screen, which is featured just below a number of major stocks including Snap, Apple, Twitter, Tesla, and more.

“Information itself is presented in a very simplified way, making it look like a video game or a fantasy sports league,” he said, noting that he has an entirely separate phone with nothing but gambling and finance apps for research purposes. “The number of notifications I get on this phone is just insane.”

FIND ALTERNATIVES

However, other trading apps are learning that creating an alternative to Robinhood is not easy. Public, which was launched in 2019, promotes its mission to “open the stock exchange to everyone by making it inclusive, educational and entertaining”.

In an email, his co-CEO, Jannick Malling, wrote that his company intends to “change the culture of the stock market” by not including features like eliminating day trading as an option and more advanced features like options and margin accounts.

However, the app also follows some features that are just as enticing as any gambling app. It has a Twitter-like interface that allows users to see what their friends are buying and selling. Malling promoted this as a bonus because “In public, you can connect with creatives, healthcare providers and educators in the same place as trusted voices in business and finance.”

However, Nerissa Brown, professor of accounting at the University of Illinois at Urbana-Champaign, said any type of social media investment can be dangerous.

“The idea arises that this crowd knows something I don’t know and that I have to get into it,” she said. “The stock you are investing in may not be such a good investment. Just because the herd is moving towards it can you develop this fear of missing out. “

In the public eye, there are also celebrities like skateboard star Tony Hawk and supermodel Iskra Lawrence who openly show what they’ve invested in. However, some experts say that celebrities are not the best vehicle for steering trading or financial strategy.

“It is very personal what you might invest in and what your motives or goals are in investing your resources, your risk profiles are all very subjective and therefore what your friends or acquaintances do seems somewhat irrelevant,” said Andrew Jennings. Lecturer in Law at Stanford University, expert in securities regulation.

In response, Malling noted that the celebrities featured in the app are “about diversity of thought, not influence.”

DO NOT CELEBRATE WELCOME

Perceived design flaws by Robinhood have spawned other types of attempts to help millennials make better investment decisions. Some newcomer investors have tried Titan, the rival of Public and Robinhood, which debuted in 2018.

“We are telling our customers not to act as it is detrimental to their long-term financial health,” Percoco, Titan Co-CEO, wrote via email. “We are your elite investment manager in your pocket – we make the decisions for you. But unlike a hedge fund, we are not a black box. We put them right in the front row so they can learn everything in real time. “

According to Percoco, who is based in New York City, the market miasma revolving around GameStop was “tailwind for us” and resulted in record filings. He estimated his company would be worth more than $ 500 million in weeks, and expects to double that number “this summer.”

However, Titan also uses its own algorithm to automatically manage users’ funds. The fee is 1 percent for assets over $ 10,000. Otherwise, users will be charged a $ 5 monthly fee.

“We believe we are experiencing a major reckoning that could affect asset management for years to come,” Percoco emailed, pointing out that most mainstream retail investors lack the tools necessary for hedge funds and other species complex systems have been available for decades, something that his company wants to repair.

But these app creators also know that they are grappling with a rapidly changing financial world.

“Retail investors are finally realizing that there is another menu that they cannot access,” Percoco continued. “They realize that they can mobilize in new ways to express their frustration and anger. We expect such situations [GameStop] not just in stocks, but across asset classes. What if retail investors find they lack venture capital? “