Finance influencers were quickly becoming the rising stars of influencer marketing, attracting partnerships from both traditional and new-age banking, financial services and insurance (BFSI) brands. However, the abundance of "get-rich-quick" tips, some bordering on illegality, raised concerns. In a significant move, the Securities and Exchange Board of India (SEBI) penalised and barred renowned YouTuber and options trader PR Sundar, the first such action against a finfluencer. SEBI's decision, on May 25, to ban PR Sundar from trading for a year due to an alleged violation of investment adviser's norms serves as a strict reminder of the government's scrutiny over finfluencers. This landmark decision emphasises the importance of regulatory compliance in the financial advisory space.
“It was high time. It's a step towards establishing trust and reinforcing the significance of adhering to regulations, regardless of the platform through which financial advice is shared,” said Pranjal Kamra a financial content creator for YouTube or fintuber, and founder and chief executive officer (CEO) of financial advisory firm Finology Ventures Pvt Ltd.
“SEBI registration was initially intended for companies or individuals providing financial advice in the offline world, where influencers were not prevalent. However, with the rise of financial influencers, who now play a significant role in dispensing financial advice, it is only logical that they come under the purview of the same regulatory framework,” Kamra said.
According to him, this move sends a powerful message, stressing the importance of accountability and ensuring that the same standards apply to all those offering financial guidance.
Finance Minister Nirmala Sitharaman recently addressed concerns regarding financial influencers in India and issued a warning about the dangers posed by Ponzi apps offering financial solutions. While there are no immediate plans to regulate finfluencers, Sitharaman stressed the importance of exercising caution.
She highlighted that while a minority may provide objective and reliable advice, the majority—seven out of 10—may be driven by ulterior motives.
Motives and money
Speaking of motives, while some influencers function almost like financial advisors working on a commission basis, some content creators, make money from partnerships with brands where they endorse various BFSI products including policies, stock broking apps and even market advice.
Payments for these finfluencers can range from Rs 50,000 to over Rs 5 lakh per post, with popular influencers doing a minimum of two branded posts per month.
Experts reveal that influencers with 50,000 to 60,000 followers charge around Rs 1 lakh per post, while those with half a million followers charge approximately Rs 2 lakh. Influencers crossing the one million mark can demand Rs 5 lakh or more for a single post. Rates remain consistent across platforms like Instagram and YouTube, although some influencers have their own customised pricing structures.
In a previous interview with Storyboard18, finfluencer Rachana Ranade had said she charges brands close to Rs 6 lakh for integrated videos and Rs 12 lakh for dedicated videos.
The good and the bad
However, Ayush Shukla, Founder of Finnet Media, holds a different perspective on the recent development.
“It would be unfair to generalise and label all finfluencers as bad based on the actions of one individual,” he said.
Shukla highlights the importance of considering whether the person in question had the necessary registrations to provide financial advice and accept payments.
“If such regulations were violated, it is only natural for SEBI to take action. This should create an example but not a roadblock,” he said.
The recent development might lead to a temporary slowdown in partnership deals for content creators, said one creator who preferred to remain anonymous. Many BFSI brands may choose to enter a silent period, refraining from any communication and waiting for the issue to subside.
“They will eventually return because the lure of instant reach and access provided by influencers is too compelling to ignore. Despite the initial impact, I believe that the partnership opportunities will resume as the industry recognises the value and impact that influencers bring to their marketing campaigns,” they said.