The job of an influencer is to influence people to do what they want them to do. Many influencers are out there today trying to convince their audience to invest in or buy things, be it consumer brands, real estate, or even risky financial products, which sometimes lead to irreparable losses.
The ban on PR Sundar, a “finfluencer” who gave financial advice to people, by the Securities and Exchange Board of India (Sebi) highlights the risks they pose, especially when people blindly heed their financial advice promising higher returns.
PR Sundar provided investment advisory services to people without a Sebi registration. The regulator banned him from dealing in securities for a year and ordered him to return his clients’ money, including the advisory fee.
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Risk Of Incorrect Advice
However, influencers are not the only risks. People also get duped by chit-funds that do not have RBI permission for financial activities. Clearly, seeking financial advice from an unregulated entity is fraught with risks.
The problem is compounded when it comes to finfluencers. They may not have the required qualification, and so the information provided to people may be incorrect. Besides, they may give biased advice for illegal financial gains from the promoters of a particular product.
For example, consider Vauld, which promised high returns on crypto investments. But ironically, the company went bankrupt, and as a consequence, many people suffered huge losses. In this case, several top influencers, such as Ankur Warikoo, Akshat Srivastav, not to mention PR Sundar, etc., had advised people to invest in the company.
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Still, some investment products may not be bad but may have certain risks. It is the financial advisor’s duty to alert people of the dangers. Sundar faced allegations of selectively sharing screenshots of his successful trades and deleting the unfavourable transactions.
What Guidelines Say
The Advertising Standards Council of India (ASCI) has laid down guidelines for influencers who can influence people’s purchasing and investing decisions. In case they are receiving any money from a brand or a product when talking about them, they are supposed to give disclaimers in the text or the video transparently that is easily noticeable.
Apply Common Sense
When one has an illness, one goes to a doctor with an MBBS degree. For specialists, people look for other degrees as well. Similarly, if one is listening to an influencer's advice, it is necessary to find out whether the person is in a position to give such advice. He should either have the necessary training or the required certification. For example, when looking for advice on financial planning, one approaches a certified financial planner or a Sebi-registered financial advisor, who can be trusted for their advice.
“Be it finfluencers or celebrities, always be cautious before making a decision. Right now, we can see a lot of celebrities promoting health-deteriorating stuff or even betting and casino apps, so the ultimate responsibility is always on viewers to do their own due diligence before making a decision,” says Anant Ladha, founder of Invest Aaj For Kal, a financial advisory firm.
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Thus, before making a decision, always do the due diligence; ultimately, it’s your hard-earned money.
