SEBI’s New Guidelines Popping ‘Finfluencer’ Bubble Or Shielding Investors From Dark?

Aimed to boost the consumer confidence, the SEBI guidelines cater to those who are skeptical in believing the credibility of these ‘experts’.

New Delhi: In a bid to make online finance more fluid, the Security and Exchanges Board Of India (SEBI) has curtailed the ‘Finfluencers’. Under the latest SEBI guidelines, all Finfluencers, or social media ‘experts’ who provides financial advices to their followers, will have to express their interest in the scheme which they recommend, as well as clearly state any conflicts of interest that may arise. They will also need to be registered with the financial body and comply with certain ethical guidelines.

The move comes at a time when majority of the people are turning to social media to seek financial advice and guidance. Aimed to boost the consumer confidence, the SEBI guidelines cater to those who are skeptical in believing the credibility of these ‘experts’. This is a significant development for the financial industry as customers can finally be more optimistic that the information they are receiving is coming from a credible and trustworthy source.

Speaking to India.com, Ujjwal D Gadhvi, Finance Content creator, said “Becoming an influencer has never been simpler than it has been since 2020. The barriers to entry into social media have reduced over the years, and more and more meople have been making it big across platforms.”

Gadhvi added that there are several authentic creators who are creating good content and spreading awareness.

“However, on the flip side, there is too much information available out there, which is confusing and/or misleading people,” he said.

When it came to managing personal finances, not so long ago, people used to rely on experts with some professional qualification for genuine advice. These experts may included CAs, bankers, or those with a promising work experience.

Social media however has changed the game, and Finfluencers have been at the forefront since 2021. More so, viewers have already started exercising caution while consuming content of emerging creators.

As per Gadhvi, the following needs to be verified about content creators:

• Their educational qualification
• Their past work experience
• Their subject matter expertise
• Whether creators share legit sources of information which they use to make Content

Jay Desai, Finance Content Creator, Chartered Accountant, CMA, CIA, told India.com that he believes SEBI’s move to set up guidelines for financial influencers is a positive step towards promoting transparency, accountability, and ethical practices in the industry.

“At a time when the financial advisory industry is rapidly evolving, with the advent of new technologies and social media platforms, it is important for financial influencers to be held to the highest standards of professionalism and integrity. By setting up guidelines, the government is signaling its commitment to ensuring that the industry operates in a fair and transparent manner, and that investors are not misled by false or incomplete information,” said Desai.

He observed that the guidelines by the market regulator are also likely to help distinguish between genuine financial influencers and those who are simply seeking to profit from the industry without providing any real value to investors. This, he said, will help promote healthy competition in the industry and ensure that investors are able to make informed decisions based on accurate and reliable information.

“Overall, I believe that the guidelines for financial influencers are a positive development for the industry, and I look forward to seeing how they will be implemented in practice. As a financial influencer myself, I am committed to adhering to the highest standards of professionalism and ethics, and I believe that the guidelines will help to reinforce these values across the industry,” Desai added.

Chandralekha, CMA, CIA, Finance Content Creator, is of the opinion that the content by finfluencers these days can be categorized into three buckets — Knowledge, Opinion and Advice. She elaborates it saying:

Knowledge – Content talking about new policies, new investment schemes, interest rates, decoding clauses in Insurance, saving money hacks, educating people to manage personal finances etc. come under this category.

Opinion – Content showing personal experiences, analyzing the existing opportunities, comparing multiple investment options, talking about a knowledge piece with added opinion falls into this bucket.

Advice – Content providing stock tips to people, promoting specific products, get rich quick schemes, trading calls, etc. belongs to this category.

As per Chandralekha, the content in the third bucket – Advice – poses the “greatest threat to the public and the government.”

Why? She said that due to recent instances of pump and dump frauds, Ponzi schemes, and MLM schemes customers have been defrauded of thousands of dollars.

“Although I believe this should be controlled, the government must acknowledge the different categories and complexities in the market for the better good of everybody.

If we look at the other side of the coin, many people have begun investing in government programmes and mutual funds—or at the very least, they have given it some thought—after consuming reliable Personal Finance information,” she added.

Chandralekha also said that it’s important to note that Finance Minister Nirmala Sitharaman not only pointed out the bad aspects of the situation but also believed that some of them were offering guidance that was grounded in objectivity.

“The new restrictions, if any, would thus have the least impact on me as a personal finance content creator, but I will continue to strive to balance my content between knowledge and opinion while providing proper disclaimers,” she said.

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