FSCA moves in to clamp down on social media advice

Cape Town - Would you let a stranger on the internet teach your teen how to invest? It's a question worth asking as increasing numbers of children take financial advice from online 'finfluencers'. The Financial Sector Conduct Authority's (FSCA) April 2025 investigation into whether these influencers operate with proper authorisation sends a warning to be careful where young South Africans get financial guidance online

Lee Hancox, Head of Channel and Segment Marketing at Sanlam, says many young people rely on platforms like TikTok, Instagram, and YouTube for investment advice, often from voices who lack the qualifications and regulatory oversight expected of financial professionals.

"In today's digital age, Gen Z and Alpha learn about money very differently," says Hancox. "But the FSCA investigation highlights that convenience can't replace credibility. Young people need to understand the potential biases, lack of personalisation, and significant regulatory gaps when getting advice from finfluencers."

Hancox offers guidance for parents navigating this digital landscape, stressing why qualified advice remains essential.

The double-edged sword of finfluencer advice

It's vital to be discerning about who young people follow online. Hancox says, “Parents and young adults should look beyond follower counts; check finfluencers’ qualifications and background. Just because someone is popular doesn't mean their advice is sound. The FSCA is looking into finfluencers because giving financial advice is regulated – it requires specific knowledge and authorisation – safeguards that many online personalities lack.”

She points out several red flags for parents and young adults to watch for:

1. Get-rich-quick schemes: If it sounds too good to be true, it probably is. Be sceptical of promises for unusually high returns quickly. “Legitimate investing takes time and patience. Offers of getting rich quick with little risk are often scams or high-risk ventures.”
2. Promises of 'secret' strategies: Why would someone share a foolproof money-making secret for free? “Be wary of claims about exclusive knowledge. Sound financial principles are widely known, and valuable strategies aren't usually secret,” she cautions.
3. Lack of proper qualifications or experience: Check the finfluencer's background. “Many popular figures lack formal financial education or professional experience. While this doesn't automatically disqualify them, it's crucial to consider the source, especially for complex advice.”

Hancox adds, "Don't just take online advice at face value. Investing based on a TikTok video without doing your own homework could be a costly mistake.” She encourages young people to follow finfluencers who are transparent about their qualifications, offer balanced views, and importantly, recommend consulting professional financial advisers before making big decisions.

Balancing digital and traditional financial education

While digital tools are part of modern life, they shouldn't replace parental guidance in financial education. Hancox suggests, “Look for teachable moments in everyday life. This could mean setting up a pretend store with younger kids or playing board games like Monopoly. For older children, involve them in age-appropriate family financial discussions or help them set up their first budget.”

She says parents should try to foster open conversations about money with their kids. “We need to get better at talking to our kids about finances from a young age. This openness isn't just about teaching – it's about building a healthy relationship with money. Ideally, you reach a point where your kids feel comfortable asking about an influencer they're watching, allowing you to explore and scrutinise the content together as a family.”

The value of professional advice and building good habits

Digital resources have their place, but Hancox emphasises that professional financial advice remains vital. “You'll always need the human element – a financial adviser's empathy, understanding, and personalised guidance are things algorithms can't replicate. This is especially true as young people face complex financial decisions entering adulthood.”

The goal is to help children develop good money habits. Hancox suggests:

1. Start early: Introduce basic concepts once children understand basic math.
2. Be consistent: Regularly reinforce good habits.
3. Lead by example: Demonstrate responsible financial behaviour.
4. Encourage saving: Help set savings goals and work towards them.
5. Teach delayed gratification: Help them understand saving is needed for some purchases.
6. Discuss money openly: Create a family environment where money talk isn't taboo.

Hancox concludes, “Teaching good money habits is ongoing. It takes patience, persistence, and repetition. By combining responsible digital awareness with the proven expertise of regulated professionals, we can build a solid foundation for financial success and help more South Africans live with confidence.”