The rise of 'influencers', who offer financial advice on social media platforms, has raised concerns within the investment community due to their unchecked nature and potential risks for investors. While some influencers may provide valuable insights, others lack expertise or promote risky strategies for personal gain.
Here are some reasons why investors should be cautious with finfluencer advice:
1. Market manipulation: Many finfluencers are not approved by regulatory bodies like SEBI, and their financial advice can amount to market manipulation. This can lead to significant losses for investors, as seen in cases like Salasar Technologies.
2. Lack of qualification: Most finfluencers lack the necessary qualifications to provide sound financial advice. Their expertise often lies in content creation rather than financial planning, which can mislead inexperienced investors.
3. High-risk investments: Finfluencers may promote high-risk investment opportunities without appropriate risk disclosures. This can lead to significant financial losses for followers who may not fully understand the risks involved.
4. Scrutiny from regulators: Regulatory bodies like SEBI are starting to scrutinize the activities of finfluencers, indicating a future where more stringent regulations might be imposed. This reflects growing concern about the impact of their advice on market dynamics and individual financial security.
5. Reliability concerns: Financial advice shared by finfluencers is often geared towards generating views and likes rather than providing reliable, well-researched information. This compromises the quality and reliability of the advice provided.
In response to the concerns raised by finfluencers, SEBI has proposed guidelines to regulate their activities. These regulations aim to streamline registration procedures and enhance transparency, and accountability, ensuring that finfluencers provide accurate and dependable financial advice. Additionally, measures such as the establishment of a Performance Validation Agency (PVA) aim to verify performance claims made by market participants, promoting trust and reliability within the financial ecosystem.
Overall, investors should exercise caution when considering financial advice from finfluencers and seek guidance from qualified professionals when making investment decisions.
