The Ontario Securities Commission (OSC) released a report highlighting a behavioural science experiment on the role of artificial intelligence (AI) in retail investing, finding that Canadian investors may be open to relying on AI-generated investment advice.
The OSC’s new report, “Artificial Intelligence and Retail Investing: Use Cases and Experimental Research,” highlighted the results of a behavioural science experiment examining the impact of artificial intelligence (AI) on retail investor decision-making. The report explored how AI tools may influence investment choices and identifies potential benefits and risks associated with their use in the financial industry.
The OSC partnered with the Behavioural Insights Team (BIT) to conduct an online investment simulation, testing how Canadian investors would follow investment advice depending on its source. Participants were given a hypothetical $20,000 to invest, with suggestions coming from either a human financial advisor, an AI tool, or a blended approach combining a human advisor using AI. Researchers then measured how closely participants adhered to the provided investment advice.
The findings showed that participants adhered most closely to the investment advice from the blended human-AI approach, although the difference was not statistically significant. There was also no substantial difference in adherence between the advice provided solely by a human or an AI tool, suggesting that Canadian investors may be open to relying on AI-generated investment advice.
“This research highlights the opportunities AI can create for Canadian investors and market participants,” said Leslie Byberg, executive vice president of strategic regulation at the OSC. “It is important that we are agile and able to harness these opportunities while ensuring investor protection remains at the forefront of how we regulate.”
The report also explored current use cases of AI in Canada and globally, identifying three key areas: decision support, automation, and the role of AI in facilitating or mitigating scams and fraud targeting retail investors. While AI has the potential to make investment advice more affordable and accessible, there are risks that these tools may offer biased, inappropriate, or inaccurate guidance.
Given the potential for AI to contribute to investment fraud, the OSC emphasized the importance of continued research into AI's role in protecting investors and mitigating risks. The report reinforced the importance of using behavioural science to inform policy and regulation as AI technology continues to evolve.