“Financial influencers see 60% decrease in brand deal rates and decline in followers due to SEBI regulations”

The latest move by SEBI to tighten regulations on financial influencers, known as finfluencers, is expected to have a significant impact on their revenue streams and overall market value. This tightening of rules prohibits finfluencers from using real-time trends and data in their content, as well as making claims about returns unless they are registered, with penalties for violations including fines or suspension of registration. These new regulations will force finfluencers to use stock prices with a three-month lag, thus preventing them from providing real-time trading recommendations disguised as educational content.

With this crackdown on finfluencers by SEBI, industry experts predict a substantial decline in brand deals, income, and followers for these influencers. Finfluencers who relied on creating sensational content based on stock market prices and trading recommendations in real-time are expected to be particularly affected. This move by SEBI essentially eliminates the type of content that drives audience engagement and consequently hampers the finfluencers’ ability to secure brand deals, thus significantly impacting their revenue streams.

According to industry experts, this crackdown has led to an estimated drop of 45-60% in overall marketing value and brand deal rates for finfluencers. There has also been a drastic decrease in the number of deals offered to finfluencers, as brands are now cautious about associating themselves with potentially risky content. Siddharth Chandrashekhar, Advocate at Bombay High Court, states that SEBI’s actions are not only justified but long overdue. The unregulated rise of finfluencers has turned investment advice into entertainment, often based on hype rather than expertise, leading to unsuspecting investors falling victim to misleading claims and schemes.

As of December 2024, India had around 232,000 finfluencers, with rates for a macro finfluencer ranging between Rs 1.5 lakh to Rs 2.5 lakh for an Instagram post or YouTube video. It is anticipated that micro and nano finfluencers will be most affected by the new regulations. Furthermore, brands are now shifting their budgets to SEBI-registered advisors or traditional financial institutions, leading to a significant decline in brand deal rates for finfluencers.

While SEBI’s regulations will undoubtedly change how financial influencers operate, there is still room for those focused on financial education, literacy, and awareness to thrive. The crackdown by SEBI aims to curb misleading advertisements and undue influence in the market, preventing the use of investor education as a front for prohibited practices. The ripple effect of such regulations is expected to be felt across other sectors like wellness, real estate, and lifestyle influencers, leading to improvements in disclosures, reduced deceptive practices, and better measurability in influencer marketing. Overall, the future of influencer marketing, especially in the financial sector, will require greater transparency and adherence to regulatory norms to ensure credibility, trust, and sustainability in the long run.