Alert for Alerts: How Investment Price Tracking Alerts Affect Retail Investors1

The burgeoning innovations in financial technology (fintech) are bringing powerful investment tools from Wall Street to Main Street. Among these tools, digital engagement practices (DEPs), such as price tracking alerts, have seen widespread adoption across online investment platforms. While the fintech industry positions these alerts as neutral, informational tools that enhance investor autonomy, the U.S. Securities and Exchange Commission (SEC) has raised concerns that such features may exploit behavioral biases and unintentionally harm retail investors. Motivated by this regulatory challenge, we introduce a regulation-centric framework (“what – why – who – how”) that explicitly links empirical analysis to the policy questions confronting regulators. This framework structures our analysis around four sequential questions: What is the effect of alerts on investor outcomes? Why do these effects arise—specifically, through which behavioral mechanisms? Who is most affected, based on investor characteristics and context? How should regulation respond in a targeted and enforceable manner? Using detailed account-level data from a major digital mutual fund platform, we found that alerts tend to reduce investor performance by increasing trading frequency and observed no evidence of increased risk-taking. With tracking alerts, investors are more likely to sell when prices rise with no corresponding change in selling when prices fall, a pattern consistent with the disposition effect. These effects were most pronounced among inexperienced and financially less literate investors, particularly when tracking volatile or unfamiliar assets. Our findings support a regulator-led model in which digital brokers are required to monitor, report, and refine DEPs under auditable, behaviorally informed standards. We offer evidence-based policy recommendations that balance investor protection with the continued advancement of fintech innovation.