News: SEBI has directed Mumbai-based financial influencer Avadhut Sathe and his Avadhut Sathe Trading Academy to cease offering investment advice or research services, as they are not properly registered.
About Finfluencers
- A finfluencer is a social media influencer who shares advice or information on financial topics such as saving, investing, budgeting, cryptocurrency, and wealth-building.
- They typically create short, engaging videos that simplify complex financial topics, but the content may lack depth or accuracy.
- Financial guidance provided by them may be influenced by sponsorships or paid promotions, which can bias their advice.
- Prominence: They have become increasingly prominent on social media platforms in recent years.
- The global influencer market grew from $1.7 billion in 2016 to $21.1 billion in 2023, showing rapid expansion.
- Young people are particularly influenced by finfluencers, with 25% of 18–24-year-olds using social media for financial guidance.
- Approximately 20% of young adults in this age group make investment decisions based on social media recommendations.
- Risk associated with Finfluencers:
- Many finfluencers lack formal financial qualifications and are not regulated to provide financial advice.
- They may promote complex or risky financial products they do not fully understand.
- Their income often depends on sponsored posts, referral fees, or paid promotions, which may not always be disclosed.
- Misleading financial promotions can lead to significant financial losses and may even constitute criminal offenses.
- Regulation of Finfluencers in India:
- SEBI is the primary regulator responsible for overseeing financial markets, intermediaries, and anyone providing investment advice including finfluencers.
- Under recent amendments (2024), SEBI has explicitly brought unregistered finfluencers under regulatory scrutiny to prevent misleading advice and protect investors.
- Only SEBI-registered individuals (RIAs, research analysts, investment advisers) can give financial recommendations or claim returns.
- SEBI-regulated entities (mutual funds, brokers, advisors) cannot associate with unregistered finfluencers.
