How to protect yourself from financial influencers?

Dhirendra Kumar, CEO of Value Research, has been part of All India Radio's renowned finance program 'Market Mantra' for two decades. The weekly show offers valuable insights and advice on personal finance, business news, and economic trends. In a recent episode, a listener posed the following question:

On YouTube, numerous financial influencers have emerged who offer money-related advice, provide training, and market courses. How can we shield ourselves from such individuals, and what guidelines should we follow?

While this question was addressed over the airwaves, we crafted a response for our online readers:

There are currently no formal constraints in place for these 'financial influencers'. SEBI, tha markets regulator, is actively engaged in efforts to regulate such influencers, aiming to hold them accountable for the promises and guidance they offer.

That said, the Advertising Standards Council of India (ASCI) has recently directed finfluencers to register with SEBI and display the registration number in their adverts on social media platforms. Further, they should also disclose their certifications, if any. All of this is applicable for finfluencers working in the BFSI (banking, financial services and insurance) sector.

While the ASCI ruling is just a few days old and may take some more time for implementation, the most effective strategy, for now, is to shield oneself from these financial influencers by ignoring them and disregarding their advice.

Financial advice is not entertainment
It is essential to differentiate financial advice from entertainment. On platforms like YouTube, while watching videos, viewers often receive recommendations. These influencers present information in an engaging manner, sharing insights about market performance and proposing that trading specific stocks can lead to substantial wealth.

The primary rule is clear: if something appears too good to be true, it probably isn't true.

In cases where these influencers guarantee overnight riches and offer assistance in attaining such goals, it is imperative to critically analyse the situation and question why they are not focused on achieving those riches themselves.

Our take
When assessing advice, it's important to consider the individual's background and experience. This step holds significance because many view the stock market as a realm of easy success, assuming that hidden 'tricks' held by others are the key to triumph.

Stock investment is far from a mere trick; it demands diligent earnings, savings, and consistent cautious investments.

Suggested read: Making finfluencing easier

This article was originally published on August 16, 2023.