From influencer to educator

As long as they were doling out crash courses on make-up or tutorials on how-to-rustle-up-a-15-course-meal-in-under-15-minutes, the going was good for the 70-million-odd social media influencers in the country. But when they start weighing in on matters that require serious knowledge and expertise, it becomes necessary for the 800 million internet users who go by “social media advice” to know that these influencers they follow are not necessarily experts and more often than not they are just amplifying a brand’s message in return for something — either in cash or in kind.

Unofficial data puts the earnings of finfluencers — the portmanteau for financial sector and influencers — at anything between 50,000 and 5 lakh for every sponsored post, depending on factors like follower count, engagement and quality of content. Usually, those with a following of over 1 million earn `3-5 lakh per post. As per the Advertising Standards Council of India, one out of four finfluencer content pieces violated its code in FY23. Some months ago the council mandated that finfluencers prominently display their SEBI registration number alongside their names and qualifications.

In recent months, market regulator SEBI (Securities Exchange Board of India) has also tightened the noose around such influencers to protect investors from misleading practices. The SEBI guidelines require that financial entities not associate with unregistered influencers. Under the proposed rules, financial influencers need to obtain a registration number from SEBI and adhere to specific guidelines when creating content.

So how will these regulations affect the business of finfluencing? For one, these advisors will have to drop the hat of the “influencer” and become the “educator”.

Tough times ahead

Thanks to the guidelines, a finfluencer will have to modify content so as to make it less promotional and more educational. Stock trading or recommendations around specific investment amounts will require careful consideration before being packaged into an influencer’s content. Ramya Ramachandran, founder & CEO of influencer content company Whoppl notes, “Content about financial planning, new investment areas, apps, and trading platforms still falls under the category of informative content. On the other hand, advising people on how much money to invest or promising high returns within a short time frame, especially in cryptocurrency, is highly risky and should be avoided unless you have the necessary qualifications and authority. These types of schemes are speculative, and success is contingent on market conditions, making them inappropriate to share without proper expertise.”

According to SEBI data, there are over 1,300 registered investment advisors who are catering to an audience of over 80 million. Finfluencers will now need to be transparent and refrain from making false or misleading claims. “Compliance with new regulation will need more time and resources. Commissions will be history, and influencers can expect greater scrutiny from SEBI,” explains Sudish Balan, co-founder and chief creative officer, Tonic Worldwide.

Experts note while these guidelines can potentially stifle creativity, they are necessary to ensure accountability. “The financial influencer ecosystem recognises the importance of simplifying financial language but it will take some time for influencers to understand how to effectively navigate the SEBI guidelines,” says Manan Kapur, senior partner at YAAP, a digital content and marketing company. Kapur is confident that once finfluencers find their footing, quality and authenticity will be quick to follow.

If finfluencers are required to ensure their content is non-promotional, will brands need to re-think their influencer collaborations?

Gaurav Arora, co-founder of social media and digital marketing agency Social Panga, points out that forward-thinking brands are already focussed more on long-term brand benefits than seeking immediate returns. “I have doubts about the practicality of regulating influencer content down to the finest detail. What can be implemented are prominent advisory warnings. The question really is about how many consumers actually pay attention to the warnings,” he says, noting that there will inevitably be gaps in the system and brands will try to take advantage of them.