Client agency is potentially the most important factor for successful financial planning. This might seem a controversial statement when, I’m sure, your clients tell you that most important to them are things like financial security, peace of mind or just knowing they are going to be “okay”. But if clients don’t truly engage with you and interrogate your recommendations and advice, how do they truly know that they will be “okay”? Often that’s where trust comes in. Ironically, trust can negate the need for client agency and yet undermine sound financial planning.
My late father trusted his financial advisor. He didn’t question anything; his advisor was the “expert”. Yet, despite working as a professional engineer for his entire career, my father did not retire with close to “enough”. His trust was misplaced. But more importantly he had no agency in his own financial planning.
Contrast this with my 91-year-old father-in-law, who arrives at his regular meetings with his financial planner with his budget prepared and updated. It’s the first document they discuss. My father-in-law has full agency in his relationship with his financial planner. And his financial health reflects the benefit of this agency.
A study by Morningstar confirms that the more agency a client has, the financially healthier they will be.[1] This study assessed clients’ perception of their own ability to manage a sudden change in their financial circumstances, be that positive or negative. This accords with one definition of agency: “In essence, human agency is about the ability to be a causal force in one’s own life and environment, rather than being merely a reactive product of external forces or circumstances.”[2]
According to Morningstar, another aspect that contributed to a client’s financial health was the extent to which a client can look into the future with a long time horizon. They found that the longer a client can look into the future, the financially healthier they are. This aligns with another definition of agency as: “The capacity of individuals to act independently and to make their own free, purposeful choices that influence their own lives and the world around them.”[3]
With the explosion of AI across the board, there is a risk that the agency in many aspects of our lives will come under threat. As John Nosta says, thanks to AI we live in an age of “cognitive abundance”; never has it been so easy to access so much information quickly. But as he says, “Abundance can have a dulling effect. When knowledge is cheap, we can lose the desire to search for it, and in the final analysis, make it our own.” [4]
Nosta points out that agency is the antidote to the “dulling effect”. “It’s what turns abundance into opportunity rather than overwhelming us. It’s the skill that keeps us learning actively rather than passively, and thinking uniquely generative rather than derivative.” Nosta highlights that agency isn’t something AI can give us or take away from us, but he believes the real risk of AI is that it can make us forget to use our agency.
My father-in-law has shown the power of agency in his financial planning while my father experienced the downside of a lack of agency. As an engineer, my father was numerate but may have lacked the necessary financial literacy to show more agency and engage actively with his financial planner. But financial literacy may not have been the real problem. As Nosta argues, agency may be the most important literacy of all “and that’s not because AI is so powerful, but because we are”.
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References
- [1] Newcombe, Sarah; When More is Less – Rethinking Financial Health; Morningstar Behavioural Science Research
- [2] www.answers-in-reason.com
- [3] en.wikipedia.org – Agency (Philosophy)
- [4] Nosta, John; Human Agency in the Age of AI; Psychology Today, 13 September 2025
