Think about the last time you were lucky enough to come across a little extra money, even just $10. In the back of your mind, you knew the responsible thing would be to save the money for an emergency fund, pay off debt, or invest for retirement. However, if you’re like most of us, you probably spent it.

It’s not hard to understand why. There are numerous factors at play preventing us from responsibly saving and investing our money, most notably behavioral and institutional factors. While it is possible to overcome some of the behavioral factors, it is far more difficult to overcome the institutional factors working against us.

The difficulty is that most of us are just an afterthought to the majority of financial institutions that could help grow our wealth. As the industry has evolved, these firms have chosen to increasingly focus their attention on serving the wealthiest individuals rather than developing tailored services for the rest of us. Their business models are to blame — a firm’s fees are traditionally based on a percentage of the assets it manages, which forces financial advisors to focus on the wealthiest subset of the population.

A financial advisor would rather have one client with a million dollars than a million clients with one dollar each.

Fortunately, this focus on the wealthiest clients is quickly becoming obsolete thanks largely to the innovations introduced by online financial advisors. They have removed institutional barriers to investing by bringing increased accessibility, efficiency, and transparency to the industry. This means our families and friends will be able to start growing their wealth sooner and call themselves investors for the first time.

Time is your most valuable asset

Photo credit: Sonja Langford, http://unsplash.com/

Most individuals saving for retirement wish they had started earlier. Having more time to invest allows your money to grow for longer, making it easier to reach the same goals even while contributing less upfront. Those who cannot start until they’re older must save a much higher percentage of their monthly income to catch up. For most of us this just isn’t a feasible option.

It’s easy to blame ourselves, but most people can’t afford the unreasonably high minimums required to start with a professional (think anywhere from $100,000 to $1,000,000). It is possible to start investing on your own, but balancing work, school, family (or all of the above) with the time required to research and manage your investment options can make investing on your own frustrating and overwhelming to start. Ultimately, these barriers prevent those who would benefit the most by investing earlier from getting started at all.

By removing the barriers to start investing, online financial advisors are opening their doors to provide professional investment services to everyone. This will allow the next generation to start saving and investing much earlier and benefit from market returns and compound interest.

The $10 you found in your pocket no longer represents just a sandwich or a few drinks, but the ability to take control of your financial future.

Leveling the playing the field

Fees are every investor’s worst enemy, but they tend to have a disproportionately negative impact on people with less money to invest. For example, if you pay trading fees, the $8+ cost per trade negatively impacts a $1,000 account more than a $100,000 account.

Studies have shown that lower fees are one of the strongest indicators on how well your investments will perform in the long-term. The premise is simple: we cannot control where the market goes, but we can control how much we end up paying. As more of your money is paid to fees, the less money you have invested, which results in lower returns.

Thankfully, online financial advisors are leveling the playing field by driving management and trading fees down to zero. This means that investors with less money to start will no longer see their money eroded, but instead will maximize their investment returns. As a result, all of us will be able to reach our financial goals faster.

Everyone can achieve their financial goals

By not being able to invest our money sooner, the majority of us have unfairly missed out on one of the most effective ways to build our wealth. Not only has this contributed to the growing inequality between the most affluent and the rest of us, but also to the decline in the level of wealth of Millennials when compared to their parents at the same age.

For my younger readers, think about this: over the last five years the S&P 500 has increased in value by 130%, yet most of us were unable to participate. If we had the ability to invest just $10 a week over this period, we each could have had a portfolio worth $4,018 today!*

Everyone deserves the fundamental right to invest their money effectively, whether to save for retirement or save for emergencies. I believe online financial advisors will make this right a reality by empowering all of us to make the most of our money, regardless of whether we have ten dollars or ten million dollars.