On Youth Day, we explore the financial challenges faced by South Africa's youth, highlighting the importance of financial literacy and the role of registered financial planners in making informed decisions.
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As South Africa prepares to commemorate Youth Day on June 16, the Office of the FAIS Ombud has highlighted the financial habits of young consumers, revealing that funeral insurance remains the dominant financial product among the country's youth.
According to the Ombud's latest figures, South Africans aged between 15 and 34 – a demographic that accounts for roughly one-third of the national population – lodged only 18% of all formal complaints received by the Office during the 2025/26 financial year. Of those complaints, a significant 67% related to funeral insurance policies.
The figures reinforce broader industry research showing that funeral cover remains the most widely held insurance product among young South Africans. The trend is largely attributed to cultural and family responsibilities, with many young people prioritising financial protection for parents, relatives and extended family members.
However, the FAIS Ombud believes that many young consumers may be overlooking other important financial tools that could help them build long-term financial security.
"Life cover policies, savings, and investments are tools that can help those starting out to effectively utilise their scarce resources to acquire assets and protect their income against unforeseen life events," the Office said.
Despite their potential benefits, uptake of these products remains relatively low among younger consumers. The Ombud attributes this largely to limited financial literacy and a lack of awareness about available financial planning options.
The Office is encouraging young people to seek guidance from qualified financial professionals but cautions that consumers should first ensure that any adviser they engage is properly licensed.
"The most important aspect is ensuring that the financial planner you are dealing with is registered with the Financial Sector Conduct Authority (FSCA) to provide advice and intermediary services," the Ombud noted.
Registration with the FSCA provides consumers with an important layer of protection. It confirms that an adviser has met the required competency standards and also gives consumers access to recourse mechanisms should problems arise.
The FAIS Ombud stressed that licensed financial advisers fall within its jurisdiction, allowing the Office to investigate complaints where consumers believe they have suffered financial loss as a result of unsuitable advice.
This includes situations where insurance claims are rejected because of poor advice, or where savings and investment products were recommended without proper consideration of a consumer's personal circumstances and financial needs.
The Office also warned that the rapid growth of digital financial platforms presents both opportunities and risks for younger investors.
"It is important to ensure that the entity one is dealing with is a registered financial services provider with the FSCA," the Ombud said.
The warning comes as more young South Africans turn to mobile-first investment applications, micro-investing platforms and other technology-driven financial products to build wealth. While these innovations have broadened access to investing, consumers who use unlicensed providers may find themselves without recourse should disputes arise.
The Ombud emphasised that it cannot investigate complaints against entities operating outside the regulatory framework.
Another key consideration for young consumers is understanding how financial advisers are compensated. Advisory fees, commissions and other charges can significantly affect long-term investment growth if not properly understood from the outset.
Consumers are advised to establish whether an adviser earns commission-based income or charges a flat fee, and to understand the long-term impact these costs may have on their savings and investment returns.
The Office also recommends that young investors determine whether an adviser is a tied agent, who can only recommend products from a single institution, or an independent adviser with access to products from multiple providers.
Ultimately, the Ombud believes financial empowerment begins with consumers taking an active interest in understanding the products and services being recommended to them.
"What will make the biggest impact on young consumers and those utilising financial services for the first time is for those consumers to empower themselves with basic information about the financial services and products recommended to them," the Office said.
The Ombud added that informed consumers are better positioned to select advisers who focus on their specific needs, whether that involves budgeting, maximising tax-free savings opportunities, investing for the future or protecting income against unexpected life events.
PERSONAL FINANCE