Myth-busting for the DIY financial planning crowd
If South Africa is serious about expanding access to financial advice, we will have to start countering some of the myths holding the advice profession back. This was the focus of a recent Financial Planning Institute of Southern Africa (FPI) MyMoney123™ webinar, titled ‘Myths busted: Why DIY financial planning might not be enough’. Riana Badenhorst, Consumer Affairs Coordinator at the FPI, introduced two CFP® professionals to talk to an audience of consumers about the risks in being self-advised.
Empowering through financial advice
Zanele Zungu, CFP® and Advisory Associate at Citadel Investment Services was introduced as having a deep passion for financial empowerment and innovative financial solutions. She was joined on the virtual stage by Sean Johnston, CFP® and Wealth Manager at Centric Advisory Services, who seeks to help clients gain a comprehensive understanding of their financial needs, and guide them towards long-term financial goals through education and mentorship.
Johnston opened proceedings by commenting on the growing number of consumers who believe they can use financial applications and other online tools to manage their finances independently. “Is relying on DIY financial planning sufficient to safeguard your financial future?” he asked. He promised that the ensuing discussion would shatter various myths that prevent consumers from seeking financial advice as well as raise awareness of the value that professional financial advice introduces to the equation.
Before charging headlong into myth-busting, Zungu explored why your potential clients may be reluctant to seek out your services. She singled out cultural and social influences, learned behaviours, misinformation or poor information and unchecked biases as key obstacles that would have to be overcome. “Consumers do not always make logical money decisions; emotions and habits play a very big role,” she said. She warned that bias-related behaviours often influenced consumers’ perceptions of risk, investment decision making and outcomes.
Beware the wrong money posture
Johnston singled out the money posture learned from parents and other family members as one of the major behavioural biases impacting financial decision making. “How [your parents] discuss money and how they interact with money throughout their lives really does impact on how you see money, and your behaviour towards it,” he said. This poses challenges for financial planners, who must accommodate behavioural finance alongside technical product and service aspects when devising holistic financial plans.
Moving on, the discussion turned to the first myth that drives the DIY financial planning trend, being the statement: I can save money by going the self-advised route. “A lot of people feel that they can save money by doing it themselves,” Johnston said, before warning about the hidden cost of potential mistakes. The self-advised may not have the experience or knowledge to understand investment time horizons or the return and tax implications of different investments. “The advantages of having a professional to manage your investment is that they can give you expert guidance on how to diversify your portfolio and implement strategies to mitigate risk as well as maximise returns,” he said.
Appetite v capacity v tolerance
Zungu agreed wholeheartedly, saying that financial planning professionals brought an understanding of the all-important interplay between risk tolerance, risk appetite and risk capacity. “Your tolerance speaks to how much risk you are emotionally comfortable with; your appetite, speaks to how much risk you are willing to take to pursue your goals; and your capacity speaks to how much risk you can afford to take based on your current financial situation,” she said. A DIY financial plan may not appreciate that risk management goes beyond avoiding losses, to matching liabilities and return.
The second myth to surface during the presentation is that consumers, thanks to the wealth of resources available online, have all the information they need to make financial decisions without professional help. “The amount of information [available online] can be overwhelming, and not all the information is necessarily true,” Zungu said, arguing that consumers should seek professional guidance when consuming financial information. Sticking with this theme, the presenters warned that social media was a minefield of fact and opinion that contributed to confusion and perpetuated biases around financial and investment products.
“Finfluencers, or individuals who give advice or promote financial products on social media platforms, do not have any accountability for the information that they are sharing,” Johnston said. He shared an article from The Citizen, published April 2025, in which the Financial Sector Conduct Authority (FSCA) hinted at investigating these financial influencers to determine whether or not they were legitimate sources. In another study, the Chartered Finance Institute (CFA) identified TikTok as the preferred social media platform for guidance and recommendations on financial products.
Warning flags around finfluencers
There are four serious warnings for your clients to onboard here. First, 90% of financial advice shared on TikTok is from influencers without any accreditation in the financial industry; second, it is impossible to adequately explain a complex financial product in a 60 second video; third, these videos do not address individual circumstances; and fourth, the influencers are remunerated through engagement whether or not the advice they peddle is accurate or suitable.
The third myth unpacked by the financial planning experts was that financial planning is only for the wealthy. Nothing is further from the truth. “It does not matter who you are, where you come from or how much you earn; you need to engage a financial planner on how to maximise your money as your life progresses,” Zungu said. One of the key outcomes from the financial planning process is that consumers have clear financial goals that they can build towards through their various life stages.
Johnston said it was absurd to view financial planning as something that only happens after you accumulate wealth, lamenting a statistic that showed only one-in-three South Africans in the 18-49 age bracket have a ‘go to’ financial adviser. Why? “Individuals with financial planners are two and a half times more likely to save enough for retirement; the [financial planning process] provides you with a roadmap to be able to understand how much you must save, for how long, and in what investment vehicles,” he said.
Going 18x your initial investment
The presenters drew attention to a chart showing the long-term benefits of compounding interest and returns from various asset classes. R100 invested in the JSE All Share Index back in January 2000 would have grown roughly 18-fold by December 2022, to R1846,02; even cash would have grown nearly five-fold, to R552,74. “There are no shortcuts to accumulating wealth; the process requires discipline, small steps and constant revision to make sure that you are contributing what is needed to reach your financial goals,” Zungu said.
To illustrate the mindset required for long-term investing, the presenters pointed to the world’s most renowned investor, Warren Buffett, who is regarded as a leading proponent of choosing long-term gains over short-term gratification. Today worth over USD147 billion, Buffett has lived his life in simple fashion, having reinvested nearly all of his wealth into his investment holding company, Berkshire Hathaway. “Buffet is the epitome and personification of discipline and consistency over extended periods of time,” Zungu said. And he helps dispel another myth, that you have to realise your wealth goals by a certain age.
This newsletter concludes with the fourth myth around DIY financial planning, being that financial planners do not add any value. Zungu defended the profession, saying that a CFP® was not a salesperson, but a strategic partner across an individual’s life financial planning journey. Johnston took the debate to the next level, illustrating the financial impact of the 3% per annum boost in compound annual return that an advised client benefited from. A typical DIY investment plan would grow R1 million to R1.96 million over 10 years compared to R2.6 million in an advised solution.
Better outcomes than going it alone
The value of professional advice is illustrated in the Financial Planning Standards Board (FPSB) Value of Financial Planning Index, which shows significant benefit to professionally advised consumers in areas like quality of life, financial confidence and financial satisfaction. “Financial planners bring the experience, knowledge and insights that a client might not have,” Johnston concluded. “They can justify their value through consistent long-term returns that outperform what clients would normally achieve if they went it on their own.”
Writer’s thoughts:
DIY planning may feel empowering, but unchecked bias, misinformation and missed opportunity can derail even the best intentions. How do you engage with potential clients who believe they can design and implement their financial plan on their own? Please comment below, interact with us on X at @fanews_online or email us your thoughts [email protected].
