New research finds that while securities regulators may be able to use insights gleaned from behavioural economics to encourage better decision-making by investors, what’s really needed is robust industry conduct standards.

The umbrella group of global securities regulators, the International Organization of Securities Commissions (IOSCO), issued a report on Tuesday that reviews regulators’ efforts to utilize behavioural economics to enhance investor protection.

Overall, it concludes that while these sorts of efforts can be helpful in certain respects, they aren’t sufficient to adequately protect retail investors.

As a result, it finds that it’s “important that regulators continue to impose standards of conduct on investment professionals and regulate the sale of investment products” to ensure strong retail investor protection.

Among other things, the report finds that the diverse needs of the retail investor population make it difficult for regulators to adopt any simple, universal disclosure rules that can benefit all investors; that disclosure can have unintended consequences; and that what works in the lab doesn’t necessarily work with live investors.

“As a result, the challenge for regulators may not necessarily be to find solutions that work equally well for all investors, but to find solutions that work well for a plurality of investors and that minimize potential perverse effects on other investors,” it says.

For instance, the review finds that investors may react differently to new disclosures and products over time, and that shorter disclosure is not necessarily simpler or better.

“Even short, one-to-two page disclosures can be complex and confusing for investors. Elements that ease comparison between different products, such as pie charts or ratings, could be easier for investors to process, but behavioural biases may lead investors to interpret or use these elements in different ways from what was intended,” the report cautions.

Additionally, the report notes regulators’ research finds that “seemingly intuitive assumptions about investor behaviour may not reflect actual investor behaviour.”