Has “Democratizing Access” to Markets Actually Increased Inequality?

Over the last century, financial markets have become dramatically more accessible. First came public equities. Then came online brokers and ETFs. Then fractional shares and retail-friendly apps. More recently, access has expanded to private markets, startups, and pre-IPO shares.

At face value, this sounds like progress — and in many ways, it is. But there’s a provocative counterpoint gaining traction: what if expanding access to markets has actually worsened inequality?

Let’s unpack that idea.

Access Isn’t the Same as Equality

Opening the gates to public markets didn’t mean everyone entered equally. Those with capital, education, and connections had a massive head start — and still do. Fractional investing may let anyone buy $5 of Apple stock, but owning 0.0001% of a company doesn’t build the same wealth (or power) as owning a board seat.

Similarly, opening private markets to “accredited investors” technically expanded access, but still excluded most people. Even new platforms that promise democratization often require high minimums or restrict access to only a select few.

Retail Takes on More Risk — With Less Cushion

There’s also the issue of risk transfer. As pensions gave way to 401(k)s and defined benefits faded, individuals were asked to be their own investment managers — often without the tools or knowledge.

Apps like Robinhood made markets fun and social, but also turned high-risk trades into viral content. Many retail investors carry exposure without diversification, tax strategies, or downside protection.

Compounding Favors the Wealthy

Even when access is equal, outcomes are not. A wealthy investor can reinvest, harvest tax losses, and let compound interest work for decades. Someone living paycheck to paycheck might have to sell at the first downturn to pay rent.

Markets grow wealth — but only if you can stay in them long enough to reap the benefits.

But It's Not All Bad News

To be fair, there have been meaningful wins. Index funds, zero-commission trading, and robo-advisors have leveled the playing field somewhat. During the pandemic, many first-time investors found new confidence — and in some cases, real returns.

Some early adopters of crypto or startup investing changed their financial lives through platforms that didn’t exist a decade ago.

The Bottom Line

The controversial (but compelling) argument is this:

While expanding access to financial markets has increased opportunity in absolute terms, it has often increased inequality in relative terms.

Access alone isn’t enough. Without structural supports — like financial education, capital, and safety nets — broader participation can end up amplifying the gap between the wealthy and everyone else.

If we want markets to be truly democratic, we need more than just open doors. We need to make sure people can walk through them — and thrive on the other side.