How Finfluencers Can Jeopardise Investors’ Money And Their Alternatives To Sound Financial Advice

Financial influencers, also known as finfluencers, use social media platforms to offer financial advice and tips to their followers. They specialise in areas of personal finance, such as investing, budgeting, saving, and wealth-building strategies. They create engaging content on platforms, such as Instagram, YouTube, TikTok, and Twitter, among others, offering informational videos, tutorials, motivational posts, and market analysis.  

Pranjal Kamra, founder of Finology Ventures and a Securities and Exchange Board of India-registered investment advisor (Sebi-RIA) told the gathering on the second day of Outlook Money’s 40After40 Retirement Expo that investors, especially those investing for retirement or otherwise, should keep away from any social media apps, such as YouTube, Instagram etc and avoid following influencers.  

He added that influencers are now promoting lottery and betting apps and a lot of mis-selling is happening because of them. “Follow influencers for entertainment, not education,” Kamra told the gathering. Incidentally, many finfluencers also promote trendy or sponsored investment avenues that only benefit them financially. 

What Do Finfluencers Do? 

Some finfluencers also provide in-depth advice on debt management, income increase, and financial goals. They simplify complex financial concepts, making them accessible to a wider audience. Some finfluencers also monetise their platforms through paid courses, affiliate marketing partnerships, or sponsorships with financial products.  

However, followers should be cautious, as not all finfluencers are licensed professionals, and financial advice should be tailored to individual circumstances. 

Why Should You Not Take Advice From Finfluencers? 

Gaurav Goel, an entrepreneur and a Sebi-RIA explains key reasons why one should not take financial advice from social media, and how financial literacy and market knowledge can help. 

Goel revealed that social media platforms often feature influencers offering unsolicited investment advice, which is otherwise authorised only under stringent Sebi regulations. Many financial influencers, however, ignore this rule, offering advice regardless of certification or mandate. This puts investors at risk, as they can be easily swayed by unverified and speculative advice, leading to significant financial losses. Therefore, it’s crucial to be cautious when following such influencers. 

Key Things To Be Aware Of 

Here are some key things investors should be aware of. 

Seek Experts: As an investor, you should exercise caution when following financial advice, particularly from social media celebrities. Many new investors, lacking expertise, frequently succumb to the advice of financial influencers, which can result in considerable losses. While regulators have tightened their attitude toward these influencers, the impact on their actions has been modest. 

Financial Literacy:  To secure your hard-earned money, Goel advises you must grasp the basics of investing and be able to discern between genuine guidance and deceptive ones.  

Sebi-Registered Consultants: One of the most dependable methods to ensure that you are getting trustworthy advice is to seek out only Sebi-RIAs for your financial advice. The Sebi website has a comprehensive list of such consultants. 
 

It is advisable to avoid taking suggestions from financial influencers, friends, or family members. Unauthorised stock suggestions are frequently speculative and hazardous.  
 

Think Long-Term: Think long-term and be consistent rather than follow the trend.  

Avoid influencers or those who advocate for immediate, short-term profits. Focus on developing a consistent investing strategy with the assistance of knowledgeable specialists, and avoid being misled by trends or unsubstantiated information. Maintain discipline and constantly prioritise your financial security.  

 
“Influencers who predict market movements without proper knowledge or qualifications can mislead inexperienced investors. To protect your financial future, seek advice from Sebi-RIAs or certified professionals. Avoid relying on unregulated influencers or unsolicited tips from online sources. A disciplined, well-informed approach to investing is crucial for building long-term wealth,” Goel adds.