Allan Gray | How to safeguard your investments

Given the prevalence of fraud and investment scams, it may feel as though you need to build a financial fortress to protect your investments. Twanji Kalula offers some simple steps you can take to safeguard your long-term wealth throughout your investment journey.

Financial historians have traced one of the earliest recorded cases of financial fraud back to 300 B.C., when two Greek sea merchants, Hegestratos and Zenosthemis, attempted to sink their vessels in the hope of cashing in their insurance policies. Although financial systems have evolved significantly over the centuries since, fraudsters continue to target financial services providers, and investors, in the digital age.

In South Africa, financial institutions detect and prevent thousands of cases of fraud each year. However, despite these ongoing efforts, fraud attempts remain prevalent. The Association for Savings & Investment South Africa (ASISA) recorded a 26% year-on-year uptick in the number of fraud cases affecting investors in 2024 and, according to a recent report, South Africans lost in excess of R2.7bn to financial crime in 2024.

As an investor, beyond basic awareness, there are proactive steps you can take to reduce the risk of fraud and protect your investments.

Sound investment vehicles make for a safer investment journey

Astute criminals study human nature and use this knowledge to play into victims’ hopes and worries. From Ponzi schemes to cryptocurrency cons, scams remain rife as would-be investors are lured by promises of enticing returns, often for little effort. Many fraudulent schemes bank on our innate “fear of missing out” on a great investment opportunity to rush our investment decision-making.

… many criminals win their victims’ confidence by pretending to be knowledgeable financial professionals.

When it comes to investing, the adage rings true: If it sounds too good to be true, it probably is. Any investment that promises extremely high returns, particularly in the short term, should be approached with trepidation.

Always understand the underlying investment

When considering any investment, seek to understand how your capital will be used to generate returns. Investors typically earn returns by investing in an asset that either increases in value over time or generates income. Many assets do both. If an investment provider cannot explain how returns are generated, or the investment requires the investor to recruit other people to generate returns, something is amiss.

Invest with reputable financial institutions

To evaluate whether an investment is sound, confirm that the investment provider is registered and has a proven track record. In South Africa, the conduct of financial institutions is regulated by the Financial Sector Conduct Authority (FSCA). Legitimate financial institutions are issued with a financial services provider (FSP) number, which can be verified with the FSCA.

Get the right advice

Financial planning can be complex, and professional financial advice has many proven long-term benefits. With this knowledge in mind, many criminals win their victims’ confidence by pretending to be knowledgeable financial professionals.

When considering the services of a financial professional, such as an independent financial adviser, it is worth doing additional research to confirm that they are adequately qualified and in good standing with an appropriate professional body, such as the Financial Planning Institute of Southern Africa (FPI). Members of the FPI have to adhere to a strict code of ethics and meet numerous requirements to acquire and retain their professional designations.

Know who you are talking to

Another trick that scammers use to defraud investors is impersonating employees of reputable financial institutions – particularly via social media platforms. Exercise caution when someone claiming to be a representative of an established company tries to solicit new investments via social media platforms such as WhatsApp, Telegram, LinkedIn or Facebook, as they may be using a fake or compromised account to do so.

Unsolicited phone calls from what appears to be a financial institution should also be treated with care. When in doubt, hang up and contact the entity using their official, verified contact information to resolve any matter. Do not divulge ANY personal information, including one-time pins (OTPs), passwords and pins, as no financial services company will ask you for this information.

Contact us via our official channels

Allan Gray employees do not use social media or any instant messaging platform to initiate new investments, manage existing investment accounts, or engage with clients about their investments. If you would like to start a new investment or transact on an existing investment account, please do so via Allan Gray Online or by contacting our Client Service Centre.

How to protect your investments from cybercrime

As an Allan Gray client, using the Allan Gray Online portal is the most secure way to manage your investment accounts. Below are some best practices to safeguard your investments against cybercrime when managing your online investment accounts.

Prioritise password hygiene

Protect every investment account with a unique, complex password that includes alphanumerics and special characters. Never use a password for more than one online account. Try to avoid accessing your investment account on public computers and devices. Keep your contact details up to date to ensure you are notified of any activity on your account.

Be vigilant when engaging with any communication about your investments …

Multifactor authentication provides an additional layer of protection to online accounts. All Allan Gray Online accounts currently use two-factor authentication, which requires investors to enter a password and an OTP to log in. To further enhance our clients’ account security, we will be rolling out mandatory multifactor authentication in the coming months.

OTPs and passwords should never be shared. Allan Gray employees will never ask you to divulge this information.

Transact through verified channels

Fraudsters often attempt to steal investment contributions by intercepting or falsifying communication and providing incorrect bank account details to unsuspecting victims. Guard against following prompts received via email, SMS or WhatsApp, even if these appear to come from a legitimate source.

When starting a new Allan Gray investment, or making an additional contribution to an existing investment, opt for our electronic collection or debit order facilities. If you would prefer to initiate the payment on your end, use the Allan Gray banking details on your bank’s list of pre-approved beneficiaries.

Protect sensitive information

Personal details are currency for criminal syndicates. A widespread, sophisticated cybercriminal practice known as “phishing” aims to trick unwitting investors into sharing sensitive personal information by phone, email or SMS. By impersonating reputable organisations, including banks, cellular network operators, courier companies and investment managers, criminals create fake scenarios that require would-be victims to share account numbers, passwords, OTPs and other details that can be used to access and compromise investment accounts.

Be vigilant when engaging with any communication about your investments to avoid being compromised by phishing. There are two things to be especially aware of:

Urgency: Most phishing attempts try to create a sense of alarm to spur investors into taking immediate action. View any urgent request to change a password, verify details, avoid an account being suspended or prevent a fraud attempt with scepticism. Avoid opening attachments or clicking on links in emails and SMSs without verifying their authenticity, as they may be harmful.
Inaccuracy: One of the easiest ways to spot a phishing attempt is to look out for flaws in the communications you receive. When it comes to emails, always check the sender’s address to ensure it contains the correct domain name. Similarly, hover over any links to ensure you are being directed to a legitimate website. Phishing attempts are also often riddled with spelling and grammatical errors. That said, criminals are increasingly using artificial intelligence to improve the quality of their communications, so the absence of errors does not necessarily mean that an email or SMS is authentic.

Keeping your devices’ internet browsers, operating systems and antivirus software up to date offers additional protection against known phishing attacks.

If you are in any doubt about the authenticity of a communication related to your Allan Gray investment, please contact our Client Service Centre or your independent financial adviser directly before taking any action.

Remain engaged

At Allan Gray, we often speak about staying the course, which includes encouraging our clients to track their investment progress over time. Investment accounts that are not engaged with are more likely to be compromised (and this is less likely to be discovered). Review your quarterly statements, keep your information up to date and stay abreast of developments to ensure that your investments, and by extension your financial future, remain safe.