Page 36 - Banking Finance September 2024

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enablers, while there is no causal study but there is a followers in millions and their financial orientation courses
strong co-relation in growth of followers of finfluencers and stock tips are subscribed by lakhs of people. This could
and increased financial market participation. Finfluencers prove to be a systemic risk, if uninitiated people without
play a key role of shaping financial attitudes, behaviours bothering about their individual risk profile start investing
and or providing wings to aspiring dreams. in investment products like stocks, F&O etc end up with
significant losses. The increase in retail participation in F&O
This presents financial market regulators with a unique despite 4 in 5 investors making losses is a testimony to this
challenge of safeguarding interest of millions of existing fact. The consultation paper was in effect tacit admittance
investors, maintaining market stability, transparency while and recognition by SEBI of the growing popularity of
ensuring the continued financial awareness and education finfluencers. Finfluencers in turn do not want to register with
for millions more prospective investors to join the the regulators and come under the ambit of regulation due
financial markets. to the burden of compliance, monitoring and supervision.

As per SEBI, "Financial influencers, commonly called Why are finfluencers growing in popularity?
'finfluencers', are persons who provide information and/ Finfluencers create their influence by expertise,
or advice on various financial topics such as investing in credibility, content novelty, content packaging, story-
securities, personal finance, banking products, insurance, telling techniques, using easy comprehensible language,
real estate investment, etc. through social/digital media examples and de-mystifying inscrutable financial concepts
platforms/channels, and have the ability to influence the and terminology. They also form a bond with their
financial decisions of their followers". Finfluencers are followers and create a forum for knowledge sharing and
present on social media platforms like YouTube, clarification thus reducing barriers of participation and
Instagram, Facebook, telegram among others where they reducing the hesitancy of consumers. All this in an
post content related to personal finance, additionally unobtrusive, non-judgemental manner without any
some of them also have financial education courses and embarrassment or associated shame due to lack of
packages that provide stock tips and more. Importantly, knowledge. Lack of formal financial training in curriculum
finfluencers command following of millions of followers, aids the consumers to subscribe to one or the other
which is in stark contrast to the significantly lower number finfluencer. Word of mouth, peer influence and example
of followers of regulated financial entities. of success further bolster the case for finfluencers.

The popularity of these finfluencers who are erstwhile A dip-stick amongst young-adults on drivers of
Management Consultants, CAs and Finance professionals, finfluencers growing popularity uncovered the following:
increased to the extent that market regulator SEBI took Source (Finfluencer's) Credibility
cognisance and came out with a consultation paper titled
Source expertise in form of academic/corporate
"Association of SEBI Registered Intermediaries/
background and success
Regulated Entities with Unregistered Entities (including
Content Simplicity and relevance
Finfluencers)" in August 2023. This consultation paper
was aimed at cutting revenue streams of finfluencers by Easy delivery and no use of jargon in explaining
preventing registered financial entities from entering into financial and investment concepts
any association with finfluencers. Short modules, storytelling narrative
Fear of missing out, peer influence amongst followers
Now why did SEBI come out with this consultation paper
Aspirations and hope amongst followers
that sought views and suggestions from all on this topic? The
Non-obtrusive way of getting knowledge
primary reason was the regulator was not comfortable with
unregistered entities or individuals promoting financial Making money work
products to general public without regulatory oversight,
monitoring and supervision. Most of these finfluencers have Buyer beware, followers suggest that self - control needs

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