If you open Twitter, Facebook, LinkedIn or YouTube, you are likely to find an influencer telling you where to invest, where not to and what to and what not to do with your money. In recent years, a new breed of influencers have emerged on social media platforms, attracting a growing number of followers seeking financial advice and knowledge and are referred to as ‘fininfluencers’ or financial influencers. These individuals have attracted significant attention due to their perceived expertise in finance and ability to connect with audiences.
These are individuals who have established a strong presence on social media platforms mainly focusing on finance-related topics. They may or may not have a background in finance, economics or investing, but they leverage their knowledge and experience to provide valuable insights, tips, and guidance to their followers. Fininfluencers use a variety of formats, including videos, podcasts, blogs, and social media posts, to disseminate financial information in an engaging and easily digestible manner.
People are increasingly turning to financiers for financial advice. A key characteristic of financiers is that they make complex financial concepts accessible and relevant. They use their platforms to break down complex ideas into easily understandable terms, cater to the needs of a wide audience, and that’s where they impact their audience.
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Fininfluencers bridge the gap between traditional financial education and the obscurity surrounding those topics by breaking down complex concepts and providing easy to understand and apply education in everyday life. His practical approach to finance helps demystify the subject, helping his followers make informed and smarter financial decisions.
According to experts, while fininfluencers are playing a vital role in making finance-related topics easy and understandable, they also enable their audience to make informed decisions most of the time. “Finance can seem a bit intimidating, sometimes people get lost in the jargon. Short-form content like reels or shorts deliver information in chunks by including real-life examples and a relatable approach. Fininfluencers help viewers understand and apply financial principles more effectively.” Share Partho Dasgupta is the former CEO of BARC India and currently the Managing Partner of Thoth Advisors.
While there is no doubt that there are increasing cases of fininfluencers at risk of being converted or advocating the wrong cause, fininfluencer’s entire social media game is based on trust and authenticity. Many of them build trust by openly sharing personal stories, including their successes and failures. This transparency creates a sense of belonging and credibility, leading followers to perceive financiers as reliable sources of financial information. The personal touch and willingness to be vulnerable boosts the trust factor, which is important when seeking financial guidance.
SEBI Guidelines and Pushback:
As the popularity of financiers continues to grow, regulatory bodies like SEBI have started taking note of their activities. SEBI is actively working on developing guidelines to regulate financiers and ensure investor protection. The major concerns that have prompted regulatory scrutiny have focused primarily on preventing misinformation and unverified advice from being disseminated. However, while there are many real influencers on social media, the platform is also plagued by many alleged financiers.
Dasgupta said, “With many financial influencers offering advice, there is a risk of making baseless claims, which may mislead investors. SEBI should address this problem by setting up guidelines that require financiers to certify their claims and disclose any conflict of interest they may have.”
Another area of concern is the potential for conflict of interest arising from partnerships between financiers and service providers for financial products or promotional activities. While such collaborations can bring transparency and valuable insights to onlookers, clear guidelines are needed to prevent potential conflicts of interest and protect the interests of investors.
SEBI is particularly focused on investment recommendations provided by financiers. The proposed guidelines aim to ensure that investment advice is supported by appropriate qualifications and expertise. In addition, it is necessary to adequately inform the audience about the risks associated with investing, ensuring that followers are well informed before making any financial decisions based on the financier’s recommendations.
The emergence of financiers has revolutionized the way people consume financial information and seek advice. His accessible and relatable approach has democratized finance, empowering individuals to take control of their financial well-being. However, regulatory bodies like SEBI recognize the need for clear guidelines to maintain transparency, credibility and investor protection in this emerging scenario. Striking the right balance between the benefits of fininfluencers and the need for regulation will be key to harnessing the potential of fininfluencers to promote financial literacy as well as ensure the integrity of the information they provide.