Only 2% of finfluencers are Sebi-registered in India

Social media is becoming a popular place for stock market advice, but a new report raises concerns about the reliability of these sources. According to the CFA Institute, only 2% of financial influencers, known as finfluencers, are registered with the Securities and Exchange Board of India (Sebi). This poses a risk for investors looking for trustworthy guidance. Many finfluencers make bold promises, claiming that small investments can lead to significant returns. The report found that 82% of investors influenced by social media have acted on their advice, and 72% said they made profits. However, 8% reported being misled or scammed, with the risk being higher for those over 40 years old. Finfluencers attract followers by making investing seem simple and fun. Some influencers are appreciated for breaking down complex topics or sharing personal investment stories. Yet, many investors do not verify if these influencers are registered with Sebi, which opens them up to misinformation and hidden promotions. The report also found that 33% of finfluencers offer specific stock recommendations without proper credentials. Additionally, 63% do not disclose sponsorships, leading followers to potentially act on paid promotions without knowing. Many influencers also do not clarify important investment details like fees and tax implications. In light of these findings, Sebi has started to implement stricter regulations against unregistered influencers making investment recommendations. Investors are advised to be cautious when taking financial advice from social media. It is vital to verify the registration status of influancers and check for any disclosures regarding sponsorships. Investors should approach social media content with a critical eye, relying on personal research and credible sources. Caution is advised when confronted with claims of quick and high returns, as these can often be misleading. The report suggests that Sebi should enforce stricter rules on who can give financial advice, ensuring that only qualified professionals do so. Increased transparency regarding sponsorships and better fraud detection measures are also recommended to protect investors. While finfluencers can provide valuable information, individuals must remain vigilant. Trusting unverified information can lead to financial losses, emphasizing the need for informed decision-making in investing.