Only 6% Of Finfluencers Are Sebi-Registered, Yet 33% Offer Explicit Stock Recommendations: Report

The rapid growth of social media platforms and millions of subscribers has given rise to influencer celebrities. But the finfluencers (those who offer financial advice on social media platforms) from this segment have become a cause of concern. Especially if they are not qualified to offer advice. The recently released report titled “Clicks and Credibility 2.0: From Influence to Accountability, Disclosures, and Policy Impact” conducted by the CFA Institute and FleishmanHillard reveals that only 6 per cent of the sampled finfluencers are registered with the Securities and Exchange Board of India (Sebi) and are authorised to offer investment recommendations, yet 33 per cent offer explicit stock recommendations.

The research gathered responses from 48 active finfluencers, who operate primarily in the Indian market through a qualitative study. It collected responses from different age groups spanning 25 to 56 years. The average age is 32 years, and half of the participants were 30 or younger. The sample includes around 71 per cent of males and 29 per cent of female participants. These finfluencers are mostly based in Mumbai and Delhi NCR, and approximately 10 per cent operate from outside India.

Only 6 Per Cent Finfluencers Registered With Sebi

The report finds a stark contrast between the regulatory compliance requirement and the nature of the content that is being shown. It reveals that only 6.3 per cent of the sampled finfluencers are registered with Sebi, whereas a substantial 33 per cent offer explicit stock recommendations to their followers. This gap raises questions regarding the suitability of advice and the protection of retail investors who are resorting to social media for guidance. Further, it finds that 37.5 per cent of finfluencers do not adequately disclose conflicts of interest, such as sponsored content or affiliate marketing.

Instagram Is The Most Popular Platform

According to the report, among different social media platforms, Instagram has emerged as the most popular platform, with 100 per cent of finfluencers maintaining their presence there. The platform serves as the primary follower base for 62.5 per cent of the finfluencers. The second preferred platform by finfluencers is YouTube. These two platforms (Instagram and YouTube) come out to have over 90 per cent of the total cumulative followers.

The data shows that the most used content format is Reels, favoured by 79.1 per cent of finfluencers, which highlights their preference for short-form, high-engagement video content.

Hindi And English Are The Most Popular Medium

To reach Indian investors, language plays a significant role. The study finds that a combination of Hindi and English is the most popular medium, with around 48 per cent of creators using these languages. Considering the overall presence, Hindi emerges on top with over 81 per cent of creators using the language. This indicates Hindi has the widest reach in the Indian finfluencer ecosystem.

The report also notes that despite the professional appearance of creators, many of them operate their advisory business or offer taxation-related services in parallel, which may benefit from their online presence without clear disclosure.

Misleading Social Media Posts And Safe Harbor Protection

From a regulatory perspective, Sebi has been proactive and has introduced measures to prevent registered intermediaries from associating with unregistered finfluencers, but enforcing these measures remains a challenge. The report identifies the hurdle of ‘safe harbor’ protection that is granted to social media platforms under the IT Act 2000, which currently does not impose proactive content vetting responsibilities on the social media platforms themselves.

Finfluencer Phenomenon Is A Global Concern

The report also provides an international context, emphasising that the finfluencer phenomenon is a global concern. It shows that the Financial Conduct Authority (FCA) in the UK has cracked down on illegal finfluencers through arrests and criminal proceedings. The US employs the Anti-Touting Rule, which makes it illegal to promote a security without disclosing compensation. Australia is seeing the result of issuing specific regulations for online financial discussion, in the form of a drop in unauthorised posts. These global developments show a shift in regulatory approach from merely educating investors to holding market participants strictly accountable.

What Should Investors Do

To address the issues, the study offers recommendations for investors:

• It advises investors to verify the influencers’ credentials and their Sebi registration status before acting on their advice.

• It suggests investors look for the disclosures posted with influencers’ content to understand their intent and motivations. It recommends investors not to rely on finfluencers’ content blindly.

• Investors should be wary of creative terminology, such as ‘Sebi compliant’, which is not the same as being ‘Sebi-registered’.

• For social media platforms, the report suggests introducing verification badges for registered professionals and deploying artificial intelligence (AI) tools to identify manipulated financial content.

• It further suggests minimising monetisation of accounts that provide unregistered investment advice and limiting their amplification.

In summary, the report found that the finfluencers have the potential to democratise financial knowledge, but the digital-first ecosystem needs to establish stronger ethical foundations and shared accountability.