As a massive following on digital platforms turned into social currency, influencers who gave fashion tips and makeup tutorials started monetising their online fame. But while paying viral sensations for promoting cosmetics or clothes was harmless marketing, things took a serious turn when influencers started recommending stocks for their own vested interests. Although SEBI is cracking down on unregistered financial advisors using online reach to manipulate stock prices, these finfluencers have already found a way to escape scrutiny.
According to a Moneycontrol report financial influencers are now securing analyst licenses on rent, after their applications for registration were rejected for different reasons. The fee they pay for this is 20 per cent of whatever they earn by providing stock tips to young investors.
Credibility reduced to a document?
Finfluencers are finding regulations for research analyst licenses too restrictive and credibility is also an issue while securing registration.
In order to qualify as investment advisors, people need to have post-graduate degrees and a five-year experience in the market.
Analysts with licences are hired by the company behind an influencer, and the advise is given under their name.
Norms too much for seasoned traders
Several finfluencers find that the strict regulations set for RA registration are too restrictive for hardcore traders and many of them have broken at least one rule.
Apart from finfluencers, trader-trainers which provide tips via workshops, and are registered as training companies, also need to get analyst licenses to give advise now.
