Everyone needs access to financial advice: But how can we get there?

Financial troubles and instability can be a constant worry and source of stress for anyone.

While no magic bandage can cure all financial woes, fair and effective financial advice can help an individual meet their short-term needs, like rent, groceries, fuel, and health costs, and long-term goals, like retirement savings and home ownership.

Now, imagine a world where everyone, regardless of their income level, background or education, had access to sound financial advice personalized to their life stage or financial objectives. While currently an ideal albeit unrealized vision, innovations in the financial advice industry are making strides towards this goal.

The World Economic Forum’s new report, The Future of Financial Advice, reveals key trends that are reshaping the financial advice industry and helping to broaden access for all.

Financial advice is any recommendation, guidance, or expertise provided by financial professionals to help individuals make informed decisions about managing their finances. This can include budgeting support, saving or investment planning, retirement planning, or even debt management. Financial advice can also be provided via different channels—face-to-face or, increasingly, digital-first models.

Access to financial advice can help individuals make smarter financial decisions tailored to their specific circumstances and life stages. For example, it can equip people to avoid common pitfalls such as high-interest debt, poor investment choices and inadequate savings.

In fact, a study in the United States estimated that access to and use of unbiased financial advice and planning has helped the average household save 7.5% of their annual income per year.

Ultimately, access to financial advice has the potential to improve a person’s overall financial well-being, which matters at an individual level and for society.

Achieving financial well-being means an individual can meet current and ongoing financial obligations and feel secure in their financial future.

Research from Asia has found that individuals take several measures to secure financial well-being, two of which are the use of professional advisors and digital wealth management tools. Similar strategies to monitor expenses and set long-term financial goals are also employed in Europe.

We also know that improved financial well-being reduces stress and improves mental health. Access to financial advisors can help people develop strategies to manage debt, create emergency funds and plan for future expenses. Knowing that you have a solid financial plan in place and expert advice to turn to can reduce anxiety and improve the quality of life for many.

Broadening access to financial advice could also play a crucial role in reducing wealth inequality at a societal level. Often, those with lower incomes would benefit the most from financial guidance, but they are also the least likely to afford it or know where to seek it out.

There is sometimes a misconception about financial advice. What might come to mind is someone in a suit sitting across from you in a dark office, using unfamiliar terms and charging a lot of money for their time. This perception holds many people back.

Traditional financial advice models typically served wealthier individuals face-to-face. But this is changing.

Models of financial advice are now typically hybrid, and some are even digital-first. Financial advice is now accessible simply by downloading an app. Introducing new technologies, including artificial intelligence, offers significant opportunities to continue scaling and broadening access to different services.

Barriers also exist when it comes to individuals’ financial knowledge and comfort in seeking out information. Social media and community message boards like Reddit are playing a role in bridging some of this information gap.

More and more people now have access to financial influencers – “finfluencers” – who help them get comfortable with products, services, and language. While there are risks to this unregulated form of financial information, the broadened access in the abundant information era helps overcome this barrier.

The cost and opaqueness of pricing also hold people back. In particular, Gen Z and Millennials favour transparent pricing models and are more inclined to engage multiple advisors. The industry is responding to this demand. There is now an evolving breadth of advice models with a range of pricing structures to suit a gradient of customer needs.

Another significant barrier is a lack of trust in financial advisors and the advice they provide. For example, in Europe, 62% of the adult population is not confident that the investment advice they receive from their bank, insurer, or financial adviser is in their best interest. More must be done to build and maintain customer trust, particularly Gen Z and Millennials.

The future described here is one where financial well-being is within reach for all. It is a future where financial advice is not a luxury but an essential service accessible to everyone. The benefits of such a future are far-reaching, but we have a long way to go to reach this vision.

In the Forum’s Future of Financial Advice report, we lay out some calls to action for the financial advice industry, government, regulators, and social media companies to take up to lay the foundations for democratizing access to financial advice. These include:

Both traditional financial institutions and newer innovators can integrate technology within their models to widen the scope of financial advice they offer with the goal of meeting the diverse needs of individuals.

While access to financial advice for everyone may not be a current reality, expanded advice is on the horizon. The evolution of this industry is paving the way toward accessible and reliable advice to support all individuals.

You can find more information on the Future of Financial Advice and the World Economic Forum’s work on individual financial well-being here.