Vera Nagtegaal, CEO at Vouch.
AI cannot replace human financial advisors, and while the technology’s speed and accessibility make it appealing, relying on it completely for financial decisions carries significant risks, according to industry experts.
Vera Nagtegaal, CEO of financial advisory firm Vouch, says more South Africans are turning to AI tools for financial guidance. She attributes this to broader challenges, including limited access to affordable financial advice and low levels of financial literacy.
According to Vouch, only 51% of South African adults are considered financially literate.
“Financial literacy is about having the knowledge and confidence to make informed decisions about your money,” says Nagtegaal. “This includes understanding concepts such as budgeting, debt, saving, investing, insurance and retirement planning, as well as knowing how financial products work and what risks they carry.”
In addition to low financial literacy, Nagtegaal says savings levels remain low, relatively few people actively plan for retirement and many households lack emergency savings.
These factors, she argues, create a perfect storm: high financial pressure, limited access to professional advice and increasing reliance on unregulated alternatives like AI.
“The challenge is that AI tools are not financial advisors,” says Nagtegaal. “They are not regulated, do not have a fiduciary duty and cannot fully understand an individual’s financial situation, risk tolerance or long-term goals. While these tools can provide general information, they cannot replace the judgment required for decisions around debt, investments, tax or retirement planning.”
She warns that widespread reliance on inaccurate or generic financial guidance could lead to poor financial outcomes.
Nagtegaal adds that while over-reliance on AI presents risks in many industries, the financial services space is uniquely vulnerable.
“Financial decisions often have long-term implications that can affect someone’s financial security for years or even decades, as well as that of their family. Decisions around retirement, debt, investments, insurance or estate planning require an understanding of an individual’s complete financial picture, including their goals, obligations, risk appetite and personal circumstances.
“Unlike a regulated financial advisor, AI has no fiduciary responsibility, cannot be held accountable for its recommendations and cannot determine whether advice is appropriate for a particular individual. It generates responses based on patterns in data rather than professional judgment or regulatory obligations.”
Although there is limited South African data on the use of AI for financial advice, Nagtegaal says broader AI adoption suggests more consumers are likely to use these tools as they become more familiar with them.
Andile Jonas, head of marketing at Momentum Savings, says AI can gather information but should not be treated as a substitute for financial advice.
“They are not called large language models for nothing – they gather streams of words they think may answer a question you pose. Unfortunately, some people are starting to use them as a shortcut for financial advice,” he says.
Jonas says he supports the efficiency AI can offer but is concerned that it cannot account for people’s individual circumstances.
“Each of us is unique and has unique needs,” he says. “What if my circumstances change overnight? Will I be protected against the unexpected? How well does it know the market and what is available and suitable for me?”
Nagtegaal adds that AI is likely to become a starting point for learning about financial concepts and comparing options, but she expects qualified financial advisors to remain important for interpreting information and providing tailored advice.
She says the financial services industry could use AI alongside human advisors to improve access to financial advice while maintaining professional oversight and accountability.
Johan Steyn, founder of AIforBusiness.net, says while AI tools can offer basic pointers on finance, health or legal questions, it is better to trust an experienced expert.
“These tools are built to sound confident even when they are wrong. They carry no accountability and they do not know your circumstances the way a good advisor does. They also often miss the South African context entirely – our tax rules, the two-pot retirement system, FSCA-regulated products or the specifics of your own financial life. Use AI to understand the basics and to ask sharper questions – but when the decision is significant or irreversible, put your trust in a human who has the experience, the judgment and the accountability to stand behind the answer.”
