There are finfluencers (financial influencers) who influence people on social media platforms about which mutual fund to invest in, which stocks to buy, which IPO to buy, what’s the market trend etc. Finfluencers generating content on financial topics, are rapidly rising in popularity on social media. Many finfluencers earn a lot, even lakhs, by making videos on initial public offers and posting them on social media platforms. Most important fact is they are totally nobody. There is no reason to listen to them. They are just social media personality that give quotes, life lessons and business advice which they take from Google and based on which they give business advice. In short, they deceive their followers.
A finfluencer usually promotes a broking firm by adding a link to open an account. They get a commission for each account opened using that link; some even get a share of the firm’s earnings from these accounts.
In June 2024, the Securities and Exchange Board of India (Sebi) has taken a bold step by banning regulated entities from getting associated with unregistered finfluencers. This crackdown targets anyone who provides financial advice or makes claims about securities without Sebi’s registration. Earlier, Sebi had noted concerns about finfluencers promoting some of the IPOs falsely instead of objectively informing the investors of its merits and risks. People invest their hard-earned money into various financial products with having actual information.
SEBI’S new regulations create a distinct separation between qualified financial advisors and unregulated online influencers. Regulated entities such as brokers, mutual fund houses, research analysts and financial advisors are now strictly prohibited association with unregistered finfluencers. This ban includes partnerships for marketing purposes, sharing client information, or receiving financial benefits from their activities. Sebi is also establishing a secure payment system for registered investment advisors (IAs) and research analysts (RAs) to collect fees from their clients. This ensures that investor payments are directed only to authorised professionals, making it easier for investors to distinguish between registered IAs/RAs and unregistered finfluencers.
Younger people are increasingly turning to content on platforms such as TikTok as they are more aware of their personal finances, with #fintok currently at 927.8 million views. The influencers often share their personal financial journeys, offer financial literacy education, and promote various financial products and services. They may collaborate with financial institutions, promote budgeting apps, or review investment options. Like other influencers, they can monetize their influence through sponsored content, affiliate marketing, and other means.
There is high appeal in financial information that comes in bitesize, light-hearted formats and Gen Z and millennials are turning to finfluencers to improve their financial education and boost financial literacy levels.
Sebi’s move addresses the troubling alliance between market intermediaries and shady influencers. ‘Finfluencers’ have been linked to discount brokers, driving up trading activity and often misleading investors with false profit claims on platforms like YouTube and Telegram.
Finfluencers have played an impactful role in spreading financial awareness and motivating investors to actively participate in the finance market. However, their activities remain unregulated, posing risks to investors. Some famous finfluencers are Shaunak Udupa who enjoys 150k subscribers, Rachana Ranade with 4 million subscribers, Anushka Rathod enjoys 17.3k subscribers, Sharan Hegde 1.1.k subscribers.
Recently, the Securities and Exchange Board of India (SEBI) has taken a stern stance against a social media influencer, Mohammad Nasiruddin Ansari, widely known as ‘Baap of Chart.’ Recently, SEBI imposed a ban on Ansari from the securities market, accompanied by a substantial fine of Rs 17.2 crore. Ansari is the sole proprietor of the firm Baap of Chart (BoC). He promoted himself as a stock market expert on various social media platforms and invited investors/ clients to enrol for various “educational courses” offered by him. According to SEBI’s order, Ansari marketed his stock recommendations as educational training, but he was trying to sell them. Ansari is a self-proclaimed investment expert who used to provide stock recommendations under the moniker ‘Baap of Chart’ through platforms like X, Telegram, and YouTube. However, his actions did not go unnoticed by SEBI. Along with his associate Rahul Rao Padamati and their company Golden Syndicate Ventures, Ansari has been barred by SEBI until further notice.
Market regulator Securities and Exchange Board of India has issued a draft circular in which it has asked companies that are coming out with a public issue to include audiovisual (AV) presentation of disclosures made in their offer documents for interested investors. In the draft circular dated March 19, the regulator said that the IPO’s AV presentation should start with a disclaimer that investors must not rely on any other content, such as those made by finfluencers, and that the lead managers of the issue be responsible for the content and information made available on the AV. Sebi said: investors are advised not to rely on any other document, content or information provided on the offer on the internet/online websites/social media platforms/micro-blogging platforms and by the finfluencers since the same is not approved/commissioned/paid by the company or its promoters/directors/KMP (key managerial personnel) in any manner.
By this move, SEBI wants to eliminate unregistered finfluencers providing illegal investment advice through social media channels. Restrictions have been imposed on intermediaries, such as brokers and mutual funds, from engaging unregistered finfluencers for product promotion. The rise of finfluencers signals that people have money to invest.
