Warning for South African investors

An increasing number of investors are turning to social media for financial advice, leaving them open to fraud and misinformation.

This is feedback from Accenture Strategy Manager Sofia Eckrich and Senior Strategy Consultant Aru Bhat. 

“Social media has made learning about financial topics more engaging and accessible for new retail and non-professional investors,” Eckrich and Bhat said.

“This is done through short, entertaining videos that use creative ways, such as memes and metaphors, to explain financial concepts.”

“While this trend has brought increased access to financial literacy and advice to many people, the quality can be inconsistent, surface level and susceptible to fraud and misinformation.”

South African investors are increasingly using social media as a source of information. 

Daily Investor’s 2023 South African Investor Report, based on responses from 1,443 retail and institutional investors, revealed that 32% of investors get information from social media, and 37% get information from podcasts and online videos.

There was an increase in 2024, with 46% getting investment information from social media and 43% using podcasts and online videos.  

Twitter was the most popular social media platform for financial information and market updates, while YouTube was widely used for interviews with CEOs, analysts, and other investing experts.

Since this trend is so new, investors have few protections regarding financial advice from social media influencers. 

“Left unaddressed, this could have long-standing implications for many in the capital markets industry,” Eckrich and Bhat said. 

The World Economic Forum, Accenture and the Future of Capital Markets Steering Committee and Working Group investigated the financial advice on digital channels.

They found that people use social media investment advice for several reasons, the first one being that it is more accessible partly due to the rise of influencers.

“So-called ‘finfluencers’ or influencers who share financial advice on social media may supersede traditional advice mediums in terms of popularity,” Eckrich and Bhat explained.

“Access to digital channels is becoming increasingly widespread around the globe, with around 60% of the global population using social media.” 

“Financial advice content shared on social media is contributing to the growth of the ‘creator economy’, which is valued at $127 billion (R2.31 trillion) globally.”

Social media also makes financial advice feel inclusive and accessible. 

A Forbes survey found that 78% of respondents believe they have more access to financial advice than previous generations would have because of their identity, such as gender, race or income level.

“For many people, these online communities may be the one place they can go to discuss these important personal finance topics.”

As many as 76% of millennials and Gen Z polled believe that financial topics have become less taboo due to the prevalence of financial advice on social media.

The risks

While social media may increase accessibility and access to information, Eckrich and Bhat warned that using it to get investing advice can be risky. 

“Social media is often one of the first landing points for younger generations when researching how or where to invest.” 

“Platform content, however, is influenced heavily by proprietary and opaque algorithms, meaning catchy posts may be prioritised over quality.” 

“Our research found that advice posted on social media is non-linear and unstructured, with videos being surface level, inadequately representing the riskiness of the investments they promote.”

They found two key risks associated with influencers: the quality of advice and the lack of disclosures on their social media posts.

“Finfluencers’ credentials vary significantly – from self-taught to formal accreditation, making the quality of advice hard to distinguish for a novice investor.” 

“In addition, finfluencers can earn six figures or more annually from brand partners or advertisements, presenting conflicts of interest between creators and their audiences that are typically undisclosed or difficult to distinguish.”

Some platforms have added disclaimers or warning labels to financial advice content, but these labels might only appear for certain search terms and can be hard for viewers to see.

“With the lack of consistent global regulations around this content, the risk of making misguided investment decisions due to misinformation and fraud is greater than the risk would be if the advice was taken from traditional advice channels.”

Investment-related fraudulent scams initiated on social media are becoming a big problem in South Africa and can take on many different forms. 

In a MoneywebCrypto podcast, Gerhard van Deventer, the FSCA’s head of enforcement, said scammers who use social media to promote their schemes are a significant problem.

“It is a big issue because that information goes out so quickly, and so many people can be pulled in so quickly before a regulator can even react,” he said.

He said there is a strong trend in using fake celebrity endorsements, with scammers even impersonating the FSCA’s Commissioner, Unathi Kamlana. 

“We’ve had a streak of that happening. You know, Johann Rupert was there, Leanne Manas was there, Francois Pienaar, Elon Musk, with their photos.” 

But when his team contacted these people, they had no idea of the financial products they were allegedly endorsing. 

Deepfakes have become another method of promoting fraudulent financial products on social media, with companies like Allan Gray and Nedbank warning investors against these AI-enabled scams. 

“Innovations in social media content and delivery, the rise of finfluencers, and increasing access to engaging content are exciting developments in the capital markets industry,”  Eckrich and Bhat said. 

“However, traditional financial advisors and institutions still have a large and important role to play to ensure people have access to holistic, personalised advice, risk management and education to enable successful investor outcomes.”

The table below breaks down the most popular sources for getting investment information over the last few years.

	2022	2023	2024
Online news publications	100%	89%	99%
Company reports	61%	53%	50%
Podcasts and online videos	45%	37%	43%
Social media	38%	32%	46%
Television	27%	24%	31%
Books	26%	20%	22%