Taj-Mohamed Badrodien, Investment Positioning Specialist at PPS Investments explores how the rise of finfluencers within the financial landscape is gaining traction amongst younger investors, the potential risks and 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.
The Rise of Finfluencers
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 currently valued at $250 billion, 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.
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 decision to invest. Locally, South Africa’s rapid digital adoption has fuelled a similar movement. With 45.3 million internet users (~70% of the population) and 26 million active social media users, finfluencers are finding a highly engaged audience.
Source: The Finfluencer Appeal: Investing in the Age of Social Media, 2024
A research report conducted by Meltwater in 2024 goes further to highlight 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, 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. This, combined with financial desperation, creates a breeding ground for misleading or harmful financial advice.
The FSCA and Global Regulatory Efforts
Considering the growing impact of finfluencers, the FSCA has made it clear that it will closely monitor social media content related to financial advice. It acknowledges the positive role finfluencers have played in enhancing financial literacy and increasing market participation, but it also warns of the risks posed by unregulated content. The authority has raised concerns about misinformation and scams perpetuated by finfluencers, highlighting the need for regulatory oversight.
South Africa isn’t alone in addressing 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.
Bridging the Gap: The Critical Role of Financial Advisers.
While finfluencers are reshaping financial advice globally it is essential to be cautious of unregulated advice.
Even though social media provides instant access to financial tips and advice, the true value is built into the advisory relationship. An adviser doesn’t 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.
For advisers, this shift in consumer behaviour is a wake-up call. The real advantage they have isn’t just expertise, it’s the trusted relationship they build. The future of financial advice lies in balancing expert guidance with meaningful, tech-enabled relationships that keep clients engaged, informed, and on track for lasting financial success.
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