Should you put your money in the hands of an Instagram or YouTube finfluencer?

The term “finfluencers” is currently popular among investors because these people offer advice on personal finance investments, including stock investments, over social media platforms. However, the reality is that these advisors are not officially registered or SEBI-registered advisors, which has led to various illicit practices being discovered. As a result, the Securities and Exchange Board of India (SEBI), the regulatory body, announced in December that it is planning to set up a framework to identify these financial advisers. Should you trust a social media influencer with your funds, let’s know from the industry experts.

Mr. Ayush Shukla, Creator & Founder of Finnet Media said “Money is a very important asset and hence it is important to allocate it wisely and more importantly carefully. With Instagram booming, there are a lot of people who have taken on content creation – some are just copy-pasting renowned creators without any knowledge. Its important to verify the credibility of creators, their education, background and the type of content they create. However, the last decision should be driven by personal research and you must adapt as per your own requirements since content creators drive awareness and not customized personal finance solutions. Finance is personal, so not everybody can tell you what to do and what not to do, you can reach out to and follow creators for new modes of investing but the final decision should always be personal research and guidance driven.”

Mr. Kunwar Raj, Founder, Unfinance said “The question of whether or not you should trust a finance influencer with your hard-earned money is a tricky one. On one hand, these influencers can be a great source of information and inspiration. On the other hand, well…most of us have heard stories of so many people blindly trusting a finance influencer who claimed to have a secret formula for getting rich quick? Let’s just say usually these stories do not have a pleasant ending. While there certainly are some benefits of following finance influencers, such as access to valuable financial information and inspiration, there are also risks. One of the biggest dangers is the potential for fraud and misinformation. There have been numerous examples of people losing their money after trusting someone on the internet who claimed to have the secret formula for getting rich quickly.”

“For instance, 8 personal finance influencers in the USA were charged with fraud in December after authorities said they made $100 million by promoting stocks they planned on dumping, taking advantage of their followers It’s essential to remember that just because someone has a large following on social media, it doesn’t mean they are an expert in the field of finance. Even if they have a genuine interest in the subject, they may not have the same level of knowledge, skills, or ethical standards as a licensed financial advisor. On the other hand, there are a number of trustworthy finance influencers who are providing valuable information and inspiration to help people manage their finances. They also have helped increase financial literacy and provided access to a wide range of resources that might not have been easily accessible before the advent of social media. In conclusion, it’s crucial to approach finance influencers with a healthy dose of skepticism. Always do your own research, verify the credentials of the influencer, and consult a licensed financial advisor if you have any doubts or concerns. Also, Keep in mind that you are the only one who’s responsible for your financial decision. You can also cross verify the reviews of the product from different sources and check the credibility of the influencer before following their advice. So make sure you have all the facts before investing your hard-earned money. And always be aware of the potential risk before making a decision,” said Mr. Kunwar Raj, Founder.

Ujjwal, Content Creator – Finance, CS said “Copying content is as easy as liking an instagram picture. Today anybody with a phone can become finfluencer and start talking about money. Thus, in such a situation you can protect yourself and your money by considering a few things before making a financial decision based on the advice or recommendations of an influencer: Research the influencer’s background and credentials. Do they have any qualifications or experience in the financial field? Are they professionally qualified (CA/CS/Lawyer) to talk about content they are talking about? Look at their content. Is it adding value? Are they providing valuable, informative content or are they just trying to sell you something? Consider their motives. Are they being paid or compensated in some way to promote a product or service? In 99% cases, the answer is yes. 
If so, it’s important to ask the influencer about his experience with the product or how long he has been using it. Some influencers themselves check the features of the product before telling it about them to the audience.”

“In another opinion when you come across an advice. Try to go behind the reason why such advice was given? Ultimately, it’s important to exercise caution when making financial decisions based on the advice of influencers. In my experience, 80% of finfluencer won’t tell you to invest in a stock or mutual fund. They know their responsibilities. It’s always a good idea to do your own research or consult with a licensed financial professional before making any major financial decisions,” said Ujjwal, Content Creator.

Shreyaa Kapoor, Content Creator – Finance, Ex – Bain said “The job of finfluencer is to simply tell you the various avenues available. While it is paramount that they also do they due diligence before collaborating with a brand, consumers should take it to be a directional answer rather than gospel. Doing your own due diligence around the brand and aligning it with your risk appetite and time horizon is essential. The audience should ask relevant questions and in fact if they have any issues, use influencers as a medium to reach to the brand. For Instance: I have covered multiple questions and problems the audience was facing with a brand and got it fixed within 2 days. Most influencers, try to collaborate with brands they personally use and trust considering the volatile nature of the space so their experience can prove to be helpful as if makes the audience aware of the avenues available but at the end, personal finance is so specific that no brand/ product can be one size fits all – hence DYOR should be a standard practice.”

Anushka Rathod, Digital Content Creator – Business & Finance said “Absolutely not! You should not trust every finfluencer with your money. It is your hard earned money and you need to be extremely cautious. A lot of people on the internet will give you stock tips, suggest specific policies. These things should strictly come from a SEBI registered advisor. Although, a lot of creators are genuine and do their research to give you proper information, educate you on the basics and the features of certain investments. This information iis not subjective and you can use it to start you research and make your investments according to your unique situations.”

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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