SEBI released decisions made in its board meeting on June 27th 2024, which will significantly impact the income of finfluencers.
The circular says: 1.1 The persons regulated by the Board and the agents of such persons shall not have any association, like, any transaction involving money or money’s worth, referral of a client, interaction of information technology systems or
any other association of similar nature or character, directly or indirectly, with any other person who, directly or indirectly, provides advice or recommendation or makes any implicit or explicit claim of return or performance, in respect of or related to security or securities unless permitted by the Board to provide such advice/ recommendation/claim.
We have highlighted the words in bold to signify the definition of a finfluencer. Is freefincal a finfluencer according to this definition? Yes, because we review mutual funds and provide recommendations on them. We have a list of handpicked mutual funds (Plumbline). However, we do not associate with any market players and, therefore, are unaffected by these rules.
How will this rule affect finfluencer income? A SEBI-regulated entity will hire a social media management firm whenever it wants to push a new product or service. This firm will then research suitable finfluencers to contact to promote the product or service. We receive 3-5 such emails weekly and say “no, thank you” to each. This can be a simple promotion or via an affiliate link (common from brokers). The most popular example of this is the “mutual funds sahi hai” campaign on Twitter.
The amount demanded by the finfluencer to create articles, videos, shorts, social media posts, email newsletters, etc., depends on the volume of their following and is negotiable with the marketing firm. It can be a huge amount (several Lakhs a year) for popular influencers. This type of association is no longer possible and will result in lower finfluencer income.
If the regulations are implemented as is, then all ongoing agreements and payments must also end.
The circular also goes on to say:
“1.2 However, the above restriction shall not apply to persons regulated by the
Board or their agents for their association –
1.2.1 with persons who are exclusively engaged in investor education and do
not, directly or indirectly, provide advice/ recommendation/ claim of return
or performance.
1.2.2 through specified digital platform, which has a mechanism in place to take
preventive as well as curative action, to the satisfaction of the Board, to
ensure that such a platform is not used by any person for providing advice
/ recommendation /claim of return or performance, unless permitted by
the Board to provide such advice/ recommendation/claim.”
This means the SEBI-regulated entity can engage a firm/influencer involved only in investor education and bring “awareness” about their products via interviews with the regulated entity (fund managers, brokers, advisors), etc.
So if finfluencer wants to continue earning money from SEBI-regulated entities, they must stop “directly or indirectly, provide advice/ recommendation/ claim of return or performance” at least from the date of implementation of these rules (which is unclear from the circular).
They are unlikely to do this as it will significantly reduce traction to their channels, profiles or websites.
Will this curb mis-selling? Hopefully, yes, to some extent. SEBI-regulated entities can still promote their products by paying news media houses. Finfluencers can now “promote” insurance products, bank products, or any product not regulated by SEBI. Then there is honest mis-selling many influencers misguide their followers because they are misguided themselves. Nothing can be done about this.
Do share this article with your friends using the buttons below.
🔥Enjoy massive discounts on our courses, robo-advisory tool and exclusive investor circle! 🔥& join our community of 5000+ users!
Use our Robo-advisory Tool for a start-to-finish financial plan! ⇐ More than 1,000 investors and advisors use this!
New Tool! => Track your mutual funds and stock investments with this Google Sheet!
We also publish monthly equity mutual funds, debt and hybrid mutual funds, index funds and ETF screeners and momentum, low-volatility stock screeners.
Podcast: Let’s Get RICH With PATTU! Every single Indian CAN grow their wealth!
You can watch podcast episodes on the OfSpin Media Friends YouTube Channel.
🔥Now Watch Let’s Get Rich With Pattu தமிழில் (in Tamil)! 🔥
- Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
- Have a question? Subscribe to our newsletter using the form below.
- Hit ‘reply’ to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.
Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!
About The Author
Dr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter(X), Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.
Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! ⇐ More than 3,000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter the market condition is!! Watch the first lecture for free! One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course! Increase your income by getting people to pay for your skills! ⇐ More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!
Our new book for kids: “Chinchu Gets a Superpower!” is now available!
Most investor problems can be traced to a lack of informed decision-making. We made bad decisions and money mistakes when we started earning and spent years undoing these mistakes. Why should our children go through the same pain? What is this book about? As parents, what would it be if we had to groom one ability in our children that is key not only to money management and investing but to any aspect of life? My answer: Sound Decision Making. So, in this book, we meet Chinchu, who is about to turn 10. What he wants for his birthday and how his parents plan for it, as well as teaching him several key ideas of decision-making and money management, is the narrative. What readers say!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. – Arun.
Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook is for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Do you want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or get the Tactical Buy/Sell timing tool!
We publish monthly mutual fund screeners and momentum, low-volatility stock screeners.
About freefincal & its content policy. Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified with credible and knowledgeable sources before publication. Freefincal does not publish paid articles, promotions, PR, satire or opinions without data. All opinions will be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
Our publications
You Can Be Rich Too with Goal-Based Investing
Published by CNBC TV18, this book is meant to help you ask the right questions and seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want
This book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.
Your Ultimate Guide to Travel
This is an in-depth dive into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, and how travelling slowly is better financially and psychologically, with links to the web pages and hand-holding at every step. Get the pdf for Rs 300 (instant download)
