Last week, the Securities and Exchange Board of India (SEBI) barred regulated entities from associating with ‘unregistered finfluencers’ to ensure greater accountability and transparency. This is said to result in significant changes to the marketing strategies, requiring strategic marketing and ad spending, with brands being extra cautious.
But how does this impact the finfluencers community at large?
In conversation with Storyboard18, one of the most followed finfluencers and Co-Founder of the Nikhil Kamath-backed finance community 1% Club, Sharan Hegde, shares that the new SEBI guidelines are definitely a big change for finfluencers. However, there’s a bit of confusion because SEBI hasn’t distinguished the types of finfluencers.
That being said, he believes there’s a clear path forward for influencers in the country, now and the focus will shift to becoming ethical and knowledgeable influencers who adhere to SEBI’s regulations while educating the public about investing.
“It’s an opportune moment for more influencers to join this movement and contribute to financial education across the country,” he says.
He also notes that if one’s only source of income is through paid promotions, SEBI could introduce stricter regulations, which might prevent companies involved in finance from advertising through influencers.
“My recommendation is to obtain the necessary licenses and create a legitimate company. Get the SEBI license if you want a sustainable career in this industry. This way, you won’t have to worry as much about your monetisation opportunities,” he remarks.
With over 3 million followers on social media, Hegde also leads 1% Club (also led by Raghav Guptas), a finance community with over 50,000 members with just one collective aim: to achieve financial independence.
Edited excerpts:
How are SEBI guidelines set to impact the finfluencers community?
The new SEBI guidelines are definitely a big change for financial influencers or finfluencers. There’s a bit of confusion because SEBI hasn’t distinguished between the different types of finfluencers. We have three main types:
1. Those who focus on financial education, like personal finance and general money management.
2. Stock market influencers.
3. Trading influencers.
It’s the stock market and trading influencers who are going to feel the pinch. They usually earn affiliate income from brokerage platforms. If you check out some YouTube channels, you’ll often see links to brokerage/ opening DEMAT accounts in the video descriptions. These links aren’t just there for a generic mention —they’re making money from them through affiliate commissions.
Many influencers have been making significant passive income this way, but that’s going to stop with these new SEBI rules.
Interestingly, even before SEBI’s paper came out, some brokerages had already started pulling the plug on these affiliate deals. For instance, some brokerages have stopped giving affiliate income for new DEMAT accounts opened through influencers, and they might still be reviewing older accounts.
So, while those who are just educating about personal finance might not be hit hard, the stock market and trading influencers will have to rethink their revenue strategies due to these SEBI guidelines.
I believe that now that the guidelines are finalised, there’s a clear path forward for influencers in the country. The focus now shifts to becoming ethical and knowledgeable influencers who adhere to SEBI’s regulations while educating the public about investing. It’s an opportune moment for more influencers to join this movement and contribute to financial education across the country.
How would it impact the overall business and paid partnerships for finfluencers?
While regulatory challenges are a reality in the FinTech space, they also present opportunities for influencers to adapt.
My recommendation is to obtain the necessary licenses and create a legitimate company. Get the SEBI license if you want a sustainable career in this industry. This way, you won’t have to worry as much about your monetisation opportunities. If your only source of income is through companies paying you for promotions, SEBI could introduce stricter regulations, which might prevent companies involved in finance from advertising through influencers.
Currently, SEBI’s regulations only prevent promoting SEBI-regulated products. This means that promoting activities like buying mutual funds or stocks will be restricted. However, if you’re promoting utility apps, such as those that help budget finances, open bank accounts, or optimise other financial tasks, these generally fall under the jurisdiction of RBI or IRDAI and are usually not affected by SEBI’s regulations.
How big is the pool of finfluencers in the country?
When it comes to finfluencers in India, you’ve got around 200 to 300 content creators with upwards and around of 10,000 followers. But if we’re talking about serious financial influencers— serious meaning those with, say, 200,000 to 300,000 followers—there are probably about 30 to 40 in that category.
Do you think such norms should be extended to other categories as well (other than BFSI), especially to health and beauty influencers?
I’m not entirely sure about the extent of mis-selling in those areas. Perhaps if there is, yes, it might be worth considering. Lately, influencers like FoodPharmer have been raising a lot of awareness about these issues. I believe there should definitely be stricter guidelines from FSSAI regarding what products are allowed into our food chain, let alone influencers promoting them.
Do you agree that in the race for likes and shares, influencers today are compromising authenticity?
I think so, yes. The algorithms are constantly changing, and you can’t really blame them since influencers have to adapt to stay visible. It’s a tough balance because if they don’t adjust to what the algorithm favors, they risk losing relevance. So, sometimes it’s a thin line between staying relevant and being authentic. When you meet an influencer in real life, you will see that they’re very different from what they are on social media. What they are required on social media will be a little different version of themselves to be relevant.
Also, it’s not just important; it’s fundamental for influencers to understand the depth and seriousness of promoting any claims, products or services
How have you or 1% Club taken an active approach towards curbing misinformation?
We at the 1% club ensure that whatever we put out is of the highest standards and we have a very rigorous vetting process to sector everything is up to the mark and not basic information. So, we talk to a lot of experts, to a lot of people who are actually doing this for a living in terms of investing and financial planning, hence we have a lot of content that we put out on social media. So, we are constantly upgrading our knowledge and hiring the right people in industry, training them and creating a lot of education products for the people.