Are wealth rankings the thief of joy or a savings booster? | Canada Voices

There’s a tab that cropped up this year in my Wealthsimple app that tells me how my savings stack up against those of people my age.

One day, the numbers are tilting in my favour, and I can’t help but feel a tingle of pride. The next, I’ve slipped in the charts.

But wait! A banner tells me I’m only $1,642 away from moving to a higher wealth percentile. I can catch up by diligently saving and watching my investments grow, of course.

Or I can take one of many shortcuts that either involve doing more banking with Wealthsimple or making riskier trades, although, to be clear, neither of these options are explicitly recommended by the app.

Competitive incentives have become more prevalent on the platform, which also released a new “Portfolio Pulse” that offers access to information about other investors’ holdings and performance when you opt in to share yours.

Gamifying investments through competition is nothing new. Investing is a full-on blood sport on platforms such as Robinhood. Blossom offers social incentives by letting users connect their brokerage accounts and share their trading activity and performance.

But there’s a difference between apps that draw in users looking to compete and Wealthsimple, a platform that oversees my everyday banking and retirement savings, sharing how my finances stack up against others in real time, using real user data.

The question is, does gamifying finances in this way help or hurt our savings?

A 2021 City St George’s University of London study found participants were 20 per cent more likely to reach their saving goals if motivated by psychological rewards – leaderboards, achievement badges, progress bars – by their financial institutions.

The benefits were the biggest for those who found digging into their finances unpleasant, said Janina Steinmetz, a co-author of the British study. “Gamification can be helpful for things that people otherwise find either too dull or too tedious, or maybe a bit painful.”

Positive reinforcements can motivate those who dread looking at their balance, for example, to track their spending more, she said.

Wealthsimple’s chief growth officer Simon Lejeune said the company built the incentive programs and features “to give people the context and encouragement they’ve been missing.”

Wealth rank can “be a real motivator,” for people who like having a goal to work toward, he said in a statement.

Language-learning app Duolingo is a classic example of gamification making tedious tasks more engaging – while keeping you hooked – by rewarding frequent users with streaks that they can boast about to friends when learning a new language. Workout apps push people to exercise more by using sharable progress trackers.

But that logic only applies to an extent, with those falling behind likely to feel more anxious and eventually disengage. In fact, research specifically looking at rankings suggests that people near the bottom may be negatively affected because the comparison is discouraging, said Irene Scopelliti, also a co-author of the British report.

Gamification also tends to have fewer benefits for those already indulging in riskier competitive behaviour.

A 2022 Ontario Securities Commission report found that in a simulation, people made nearly 40 per cent more trades when rewarded by points than those who didn’t receive the gamified incentives. Telling, given that how often someone trades and their returns tend to have an inverse relationship.

Do you find it helpful to track how your finances stack up against others your age group? Tell us by taking this short poll.

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