A tool to help investors understand how hype can influence their decision-making has been launched by the City regulator.
The Financial Conduct Authority (FCA) worked in partnership with behavioural science consultancy Influence At Work to create the “hype type revealer”.
The tool, which has been designed for mobile use, mirrors group chat-style discussions that investors have with their peers.
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Users see fictional messages containing chatter on investment opportunities, creating the feel of a real group chat discussing the latest “hot stock” tip.
Steve Martin, CEO of Influence At Work, said: “The number of investors being lured in by the hype is concerning.”
The tool is part of the FCA’s InvestSmart campaign to encourage people to make better-informed investment decisions that are suited to their financial circumstances and attitude to risk.
The responses entered by the user indicate whether their “hype type” is a calm, informed or rational investor and, upon completion, users are driven to the InvestSmart website to complete training involving investment-based tasks.
Calm is defined as not giving in to the context of urgency surrounding hyped investments; informed is seen as scrutinising information about investments; and rational is defined as doing due diligence instead of going with gut instinct.
The hype type tool can be accessed by on the FCA website at fca.org.uk/investsmart/hype-type-revealer.
