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Although finfluencers look like they know everything there is to know about finance, consumers must beware of bad advice.
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With the rise of influencers on social media, we now also have finfluencers who dish out financial advice to consumers.
While it shows how desperate consumers are for financial advice, this free advice at the tips of your fingers should rather be taken with a pinch of salt, as most of them are not qualified and registered financial advisers.
The Financial Sector Conduct Authority (FSCA) is cracking down on the growing legion of unregulated social media financial influencers, or finfluencers. The FSCA has an issue with some finfluencers apparently providing financial advice with reference to financial products, something which requires a license to practise in the financial industry.
Suhail Gani, head of agency and wealth advisory at Liberty, says the growth of finfluencers can be considered a sign that ordinary people are reaching out for financial advice, but do not always know how to get it.
“The rapid rise of finfluencers on social media shows that ordinary people out there are actively seeking financial guidance. It confirms that navigating your lifestyle and money successfully through the complexities of the modern world is not surprisingly a bewildering task for many people.”
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However, Gani says not all finfluencers should be regarded as amateurs, while increasingly many professional accredited advisers are turning to social media as a way of engaging with clients who are interested in personal financial advice.
“If you are following financial advice online, it is always worth it to explore that person’s qualifications and experience.”
Financial advice has traditionally been the realm of qualified and licensed professionals who are trained to offer personalised advice to clients from every possible background and situation.
Gani says professional advice usually starts with an individual financial needs analysis, focusing on current life goals through to retirement. Advisers are personal financial coaches who can listen to clients and who have the experience to compare different lifestyle strategies.
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This professional approach has certainly been successful, as there is no shortage of studies that show having a financial adviser will help make you better off in terms of your investments and long-term goals.
“Financial advice is about a personal journey with your adviser. It is your wealth and future we are talking about here, and therefore, making decisions should be taken seriously. While some finfluencers do have relevant views and qualifications, some also appear to be repackaging common financial knowledge with a dash of dramatic flair.
“While the rise of finfluencers arguably provides a gateway to fully fledged personal advice, it also suggests that the modern financial world is daunting for individuals looking to secure their futures and for this reason, one-to-one human advice has never been more important than it is right now.”
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Taj-Mohamed Badrodien, investment positioning specialist at PPS Investments, points out that finfluencers are gaining traction amongst younger investors, saying there are potential risks and a need for regulatory oversight to manage concerns around misinformation.
“In a world where social media is rapidly shaping consumer behaviour, financial influencers, commonly known as ‘finfluencers’, are redefining how people access and consume financial information.
“As South Africa’s digital landscape matures, finfluencers are gaining traction, offering concise financial advice to an audience desperately hungry for knowledge. While this trend presents new opportunities for financial institutions and younger investors, it also raises serious concerns about misinformation and the lack of regulatory oversight.”
Badrodien says the influencer economy has become a multi-billion-dollar industry, with marketing budgets shifting from traditional media to digital platforms. According to Goldman Sachs research, the influencer industry is currently valued at $250 billion and is expected to nearly double to $500 billion by 2027.
“Within this space, finfluencers have emerged as key players, democratising financial knowledge and encouraging a new generation to start investing. Emplifi, a leading customer engagement platform, announced in its findings that finfluencers had the highest follower growth compared to other content creators on platforms such as Instagram and YouTube.”
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He says globally, this shift has been profound, especially considering their ability to influence younger generations. According to the FINRA Investor Education Foundation and CFA Institute, 51% of Gen Z investors in China, 38% in the UK and 37% in the US say social media influencers played a major role in their decisions to invest.
South Africa’s rapid digital adoption has fuelled a similar movement, with 45.3 million internet users (approximately 70% of the population) and 26 million active social media users. Finfluencers are finding a highly engaged audience, Badrodien says.
A research report conducted by Meltwater in 2024 further highlights that a notable 60.8% of internet users in South Africa access education content online, with half conducting some form of financial services online.
While finfluencers help make financial concepts more accessible, Badrodien warns that South Africa’s low financial literacy remains a significant challenge. A survey by the Financial Sector Conduct Authority (FSCA) and the Human Sciences Research Council (HSRC) found that only 51% of South Africans are financially literate.
He says this, combined with financial desperation, creates a breeding ground for misleading or harmful financial advice.
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“Considering the growing impact of finfluencers, the Financial Sector Conduct Authority (FSCA) has made it clear that it will closely monitor social media content related to financial advice. The FSCA acknowledges the positive role finfluencers play in enhancing financial literacy and increasing market participation, but it also warns of the risks posed by unregulated content.
“The FSCA has raised concerns about misinformation and scams perpetuated by finfluencers, highlighting the need for regulatory oversight.”
However, he says, South Africa is not alone in tackling the challenges posed by unregulated financial advice. “Global regulators, such as the UK’s Financial Conduct Authority (FCA) and the US Securities and Exchange Commission (SEC) have also taken steps to tackle the rise of misleading financial content online.
“These agencies have implemented stricter rules and monitoring to ensure that influencers comply with established financial advisory standards.”
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Badrodien emphasises that while finfluencers are reshaping financial advice globally, it is essential to be cautious of unregulated advice. “Although social media provides instant access to financial tips and advice, the true value is built into the advisory relationship.
“Advisers not only provide financial advice, they walk the investment journey with you, offering tailored guidance, accountability and a long-term strategy suited to your personal goals and circumstances.
“Although finfluencers often promote trends without knowing your financial reality, an adviser can help you navigate complexities, avoid pitfalls and stay the course through different market cycles.”
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