Investors aged 26 to 30 consider the number of followers as a key parameter for trust.
However, more than half of investors, who deemed an influencer's registration status as extremely important, were unaware of their actual registration status.
Only two per cent of financial influencers, commonly known as finfluencers, are registered with the Securities and Exchange Board of India (Sebi), but a staggering 33 per cent provide explicit stock recommendations, according to a study by the global not-for-profit organisation CFA Institute.
The study raises concerns over the growing impact of finfluencers on investment decisions.
Highlighting a lack of regulation and accountability, the study notes that 63 per cent of finfluencers fail to adequately disclose sponsorships or financial affiliations, raising serious questions about conflicts of interest and the potential for investors to be misled.
"Investors must remain vigilant, seek investment guidance from Sebi-registered advisors, and evaluate the credentials of the influencers they follow," said Arati Porwal, Country Head of CFA Institute - India.
The report underlines the need for stronger certification standards, increased transparency on social media platforms, and addressing regulatory gaps.
According to the study, eight per cent of investors reported that they were duped by finfluencers' advice, with those over 40 years being more vulnerable.
Investors aged 26 to 30 consider the number of followers as a key parameter for trust.
However, more than half of investors, who deemed an influencer's registration status as extremely important, were unaware of their actual registration status, it said.
Misusing Their Reach
- 33% Finfluencers provide explicit stock recommendations despite low Sebi registration
- 8% Investors report being duped by finfluencer advice, older investors more vulnerable
- 50%+ Investors who consider registration important, unaware of the influencers actual reg status
- 26-30 Age group considers number of followers a key parameter for trust
Source: CFA Institute
Feature Presentation: Ashish Narsale/Rediff.com
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