Who do you trust to give you financial advice?

We've never had more access to financial information. Social media overflows with advice on how to invest, what to buy, and what you're doing wrong. Yet despite all this information, most people's financial outcomes haven't improved. And it's not just investment decisions that suffer; the same impulses distort how we think about protection, too.

The investment behaviour gap

For over three decades, research firm Dalbar has tracked the gap between what markets return and what average equity investors earn. In 2024, the S&P 500 returned 25%, but the average equity investor earned 16.5%. That 8.5% gap is the cost of what Dalbar calls “investor behaviour”, which is not simply about buying and selling at the wrong time. It’s also about not staying invested long enough to reap better returns. On a R1 million portfolio, that's R85,000 in lost potential over one year.

We buy when markets feel safe, which is usually after share prices have already risen; and we sell when markets feel dangerous, which is usually after they've already fallen. The result is that we miss the best-performing periods. Time in the market beats timing the market and the data is consistent on this. In fact, Dalbar’s research shows that the average equity investor has now underperformed the market for fifteen consecutive years.

Why confident advice isn't always good financial advice

So-called "finfluencers" aren't new, but social media has amplified their reach. According to a WEF Centre for Financial and Monetary Systems study, over 60% of US investors under 35 now use social media as a source of investment information more than they seek advice from financial professionals.

And while there's genuine value in making financial education accessible, research consistently shows that financial advice on social media isn't always what's best for you.

In a 2024 study, 74% of short-form financial videos contained advice that was incorrect, misleading, or dangerous. And in a Swiss analysis of over 29,000 social media financial influencers, 56% consistently generated negative returns for those who followed their advice. That’s more than half, which means you'd have been better off doing the opposite of what most of them said. Algorithms optimise for engagement and views. Your retirement is not their concern.

Protection and the behaviour gap

The behaviour gap shows up in both protection and investment decisions. As we've explored previously in this series, South Africans tend to over-insure for death and under-insure for what's more likely: disability, severe illness, the loss of income that follows.

When most people think of disability, they imagine a wheelchair and something permanent and visible. But temporary disability is far more common and often more financially disruptive: a back injury that keeps you home fora few months, a cancer diagnosis requiring extended treatment, or recovery from a heart attack. You're eight times more likely to experience a temporary disability during your working years than to die but most people's cover doesn't reflect this.

A good adviser challenges these assumptions. The person most likely to disrupt your family's financial security might not be the one who dies. It might be the one who survives a heart attack but can't work for eighteen months.

Why protection and investment advice belong together

Your investment strategy is only as good as your ability to keep funding it. What happens when you can't?

Life insurance and investment advice are often treated as separate conversations but they shouldn't be. Money that goes toward excessive protection premiums isn't compounding in your retirement fund. Insufficient cover means your investments might get depleted in an emergency or abandoned entirely if you lose your income. A good adviser sees both sides. They ensure your protection is adequate to support your wealth-building over time because protecting your salary matters as much as growing your portfolio.

A good adviser challenges these assumptions. The person most likely to disrupt your family's financial security might not be the one who dies. It might be the one who survives a heart attack but can't work for eighteen months.

Why good financial advice can seem “boring” 

The most valuable investment advice sounds boring: stay invested, diversify, rebalance periodically, don't try to time the market, keep contributing through downturns. It won't go viral, but it’s more likely to work. Dalbar's report includes something called the "Guess Right Ratio": the frequency with which investors correctly time their market moves. In 2024, that ratio was 25%. In that way, a coin flip would have done better on average.