New Delhi: The central government may have no plans yet to regulate financial influencers — or “finfluencers” — on social media, but several have pointed to the rise of unethical influencers who allegedly peddle inauthentic information and advice.
These finfluencers believe the government should indeed regulate this growing segment in some manner.
Finance Minister Nirmala Sitharaman had in April warned about the prevalence of unethical finfluencers, but had also said that the government was not looking to regulate them as yet. Instead, she had suggested, consumers of online content should be alert and should use their discretion when following the advice of finfluencers.
“At this stage I do not have any proposal before me for regulating them (finfluencers), but yes, a word of caution is important,” Sitharaman had said at an event in Bengaluru. “If there are three-four people giving us objective, good advice, there are seven others out of 10 who are probably driven by some other considerations.”
This comes at a time when there has been a profusion of social media influencers who claim to offer sound financial advice, and a commensurate rise in the number of people who follow this advice.
A report released Wednesday by Dentsu India, Recogn, Boomlet Group, and IIT Delhi’s Digital Behaviour Initiative — titled ‘Impact Of Influencer Marketing In India’ — found that 70 per cent of Indians surveyed believed that influencer marketing had an impact on them.
“There is a rise in finfluencers because there is no barrier to entry in this field,” Himani Chaudhary, a finfluencer with about 6.4 lakh followers on Instagram, told ThePrint. “Anyone with a camera can record and put out content.”
“Some of them have started giving trading tips and stock recommendations under the guise of guaranteed returns, without having any licence to do so,” Chaudhary added. “Only the government can help in blocking such entities and establishing eligibility criteria to become a finance educator.”
The problem is not restricted to just Instagram, said Niyati Mavinkurve, a digital content creator and co-founder of YouTube channel Let’s Make You Rich, with 1.77 lakh subscribers.
“The Securities and Exchange Board of India (SEBI) recently prosecuted some YouTube channels for pump-and-dump schemes in which the people earned crores,” Mavinkurve said. “There are many Telegram channels and groups that are used to pump-and-dump penny stocks.”
A pump-and-dump scheme is when an influencer creates a fake buzz about a particular stock by hyping it up to his/her followers, encourages them to buy the stock thus driving up its price, and then selling all of their own holdings in that stock, thereby making a huge profit. This often then leads to a crash in the price of that stock, leaving gullible investors with a worthless investment.
In March, the SEBI had cracked down on a nexus of finfluencers — involving notable names like actor Arshad Warsi and his wife Maria Goretti — for allegedly indulging in pump-and-dump schemes.
“While it is hard to exactly pinpoint the percentage of fake ‘finfluencers’ in the ecosystem, I agree that this percentage is rising rapidly,” said Shavir Bansal, also known as BeKifaayati on social media.
He further said that identifying a fake finfluencer was relatively easy, if followers were alert to some “subtle tell-tale signs in all of them”.
These signs include “promoting a penny stock, giving buy/sell recommendations without proper licensing and disclaimers, talking about ‘Get Rich Quick Schemes’, etc,” added Bansal, who has 7.73 lakh followers on Instagram and 1.18 million subscribers on YouTube.
The overall view of the finfluencers ThePrint spoke to is that there really isn’t any ready and, importantly, safe way to “get rich quick” and influencers that promise such results are most likely fake.
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‘Focus on facts’
There are ways for consumers of social media content to identify genuine finfluencers, and most involve doing a little research before taking them at their word.
Chaudhary said that a genuine finfluencer would likely have relevant educational qualifications related to commerce or finance, would have relevant work experience, and would focus content on educating consumers rather than peddling schemes.
A simple Google search reveals that Chaudhary has studied economics at Delhi University, has a post-graduate diploma in banking and finance, worked at Deloitte as a financial risk consultant, and is a research analyst certified by the National Institute of Securities Markets.
Mavinkurve, similarly, has studied commerce at Narsee Monjee College of Commerce and Economics. Bansal has earned an MBA degree from the Indian Institute of Management in Calcutta.
Of course, a dedicated fraud would fabricate even these credentials, and so it becomes important to look at additional factors before listening to financial advice.
“I strongly believe that genuine ‘finfluencers’ must fulfil two conditions,” Bansal said. “First, they must have a strong background in finance/banking or some sort of certification (Chartered Financial Analyst, Chartered Account, Company Secretary, etc). Second, they must have 100 per cent of their content in the genuine category focusing on either the factual or informational side of things, which can easily be fact-checked.”
This focus on facts rather than opinions or recommendations seems to be an important factor in judging the credibility of a finfluencer.
“When it comes to personal finance, some points are a matter of fact,” Mavinkurve said. “The fact that life insurance payments are exempt from tax won’t change regardless of my opinion on it.”
“I can, however, give my opinion on the way the tax department administers itself or some of the deductions given to business owners which may seem unfair or vulnerable to abuse,” she added.
According to Bansal, a good way to steer clear of the reputation of being fake is to choose topics carefully.
“We talk at great length about credit cards, insurance (both health and term) and banking products like loans, savings accounts, demat accounts, neo banks, BNPL (buy now, pay later), etc,” he explained.
“We steer clear of anything related to the stock market (apart from mutual funds). We don’t have both expertise and proper licensing to give our opinion about the stock market,” he added. “We also steer clear of crypto, forex and F&O (futures and options) tips.”
(While ThePrint has verified the background of the finfluencers mentioned in this report, it does not carry any liability for recommendations made by them on their respective social media platforms. Consumers must do their own due diligence.)
(Edited by Nida Fatima Siddiqui)
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