Is the Financial Services Industry Speaking to Our Youth?

As the focus turns to South Africa’s youth in the month of June, questions arise on whether today’s young people have it tougher than previous generations in learning how to manage their money. Has the proliferation of social-media “finfluencers” and the emergence of AI chatbots been particularly harmful? And is the financial services industry doing enough to counteract harmful forces by providing advice in ways that speak to younger generations?

Pedri Reyneke, CEO of independent advisory practice Multilink Financial Services in Mpumalanga, believes the industry is failing young people because it has not kept up with how they consume information. “Two-thirds of Gen Z globally now use social media and online resources to make financial decisions, and roughly 14% rely on AI tools to answer their financial questions,” he says.

Reyneke says one cannot equate finfluencer content with regulated financial advice. “Licensed financial advisers in South Africa operate under the Financial Advisory and Intermediary Services Act. They have a fiduciary duty to act in a client’s best interests and face real enforcement consequences if they fall short. A finfluencer with 200 000 followers faces none of that – the regulators have no meaningful jurisdiction over the content they produce,” Reyneke says.

He argues that the problem becomes worse when you add AI. “AI has no fiduciary duty and no accountability if, for example, it leads you to make a catastrophic decision about your retirement. AI tools are designed to generate plausible-sounding responses. They hallucinate and generalise. Young people who would hesitate to hand that information to a stranger are willingly typing it into a chatbot, because the interface feels familiar and non-judgmental.”

Honest Money’s Warren Ingram, co-founder of nationwide advisory group Galileo Capital, says that irresponsible finfluencers and AI-generated financial content are certainly a big problem. However, partly through feedback from the podcast series he hosts with financial planner Pieter de Villiers, Ingram says he is seeing signs of a turnaround in young people’s behaviour, where they are beginning to be more selective in consuming information online. 

There are a couple of reasons for this. First, there has been an increase in social-media content producers qualified to give responsible guidance on financial issues. “You are now getting ‘educated influencers’, so it’s not just the finfluencers punting rubbish. For example, there are a couple who are very good with tax and have a background in tax. And there are a few doing what we do, podcasts on financial planning, but they actually have a background in it,” Ingram says.

The second reason, Ingram says, is that the poor-quality and AI-generated content now flooding social media is forcing people to become more discerning about what they consume. “Youngsters who have grown up in this social media world and have followed influencers from the beginning are starting to figure this thing out. I think the market’s starting to mature. It’s starting to understand that many of these guys are spouting garbage,” he says.

Ingram is also seeing a migration to longer-form, more in-depth content, which is more likely to be delivered by a human, as opposed to short sound bytes likely to be generated by AI.

Both Reyneke and Ingram agree that more can be done by the industry to communicate with young people at their level and to promote financial literacy generally.

“The answer is not to tell young South Africans to put their phones down and book an appointment with a financial planner; it is to close the gap that drove them to unregulated spaces in the first place,” Reyneke says. “That means the financial services industry meeting young people where they are – with accessible language and tools that inform rather than overwhelm. It means recognising that AI has a legitimate role as a starting point for demystifying concepts and explaining terminology. We need to let the youth build their own ways of communicating, with the older hands in the industry acting as mentors, not as instructors wanting to control outcomes,” he says.

Ingram encourages financial planners to develop a presence online with useful, accessible educational content, and to persevere in maintaining and growing that presence. He says the key word is trust. “For a planner to build up trust over time becomes quite valuable, because in a trustless world, people who are trusted are rare,” he says.

He says it’s less easy for the big corporates to operate successfully in this space. “They don’t get as much traction as a human, because people want to trust a person, even if it’s just online. The biggest personal finance podcaster in America is Dave Ramsey, a man, not an organisation.” 

And the channel cannot be used to promote a brand or product. “That’s not going to work – people see through it,” Ingram says.

Reyneke agrees that the legitimate advice industry needs to be more visible on social media. “The problem is that much of the advice coming from the corporates is product-specific,” he says.

He believes the industry could at least come together to set guardrails, making it easier for consumers to identify high-risk content. “People will still be free to make their own decisions – we can’t decide for them. But at least if we have the guardrails we can say ‘these are the outliers: be careful’.

“So, it’s a big problem, and we aren’t going to solve it overnight. But every little push helps. Maybe we can give things a little push in the right direction,” Reyneke says.