AFM: Online investment platforms must provide better advice to investors

Online investment platforms need to provide better advice to investors. That's the opinion of the Dutch Authority for Financial Markets (AFM), which examined several platforms to get an idea of how they are structured. The problem, according to the regulator, is that investors are sometimes steered toward certain decisions that have yet to be proven to make sense. On the other hand, steering can also help investors move a little more in the right direction.

The AFM cites the use of default settings for depositing money into the investment account as an example. Some platforms offer direct bank transfer via iDeal as a default method for depositing money. This encourages investors to trade with money they actually have. Other platforms, however, offer credit card payment by default, which the AFM believes encourages investors to invest with borrowed money.

The regulator believes there is a need for platforms to be "more consciously designed". This could be done, for example, by not displaying all asset classes initially. In this way, a platform can avoid drawing investors' attention directly to riskier investments. Some platforms already do this.

The AFM calls on industry stakeholders to pay more attention to this. "The way an online investment platform is structured influences investor behavior," it stressed. The financial regulator has also shared the exploratory report with other European regulators and policymakers. In this way, the AFM wants to ensure that more discussions are stimulated on this topic.