Financial influencers to see drop in brand deals and value as SEBI curbs use of live stock prices

Uncertainty looms over financial influencers as SEBI strikes again.

Regulatory clouds are looming over financial influencers, or finfluencers, once again as the Securities and Exchange Board of India (SEBI) on January 29 clarified that people who educate others on the stock market must use stock prices with a three-month lag.

Now that the capital markets regulator has said that creators will have to use stock prices with a three-month lag, those types of content creators will lose their relevance, said Sakchi Jain, chartered accountant (CA) and financial educator.

"Brand deals will be affected because they (creators) wouldn't be able to directly promote a mutual fund or a particular stock. So, the affiliate income as well as the promotional income would come down for them," Jain said.

She noted that there are influencers who earn when people use their referred links for investments. Out of the total investments made through their link, the financial influencer earns around two to five percent.

SEBI has prohibited two activities which include giving investment advice (directly or indirectly) without being registered/permitted by the market regulator to do so, and making claims of returns or performance (expressly or impliedly) without being permitted by SEBI to do so.

Brand impact

"Influencers who promoted specific brokers or investment platforms will now focus on more general awareness rather than product endorsement," Jain added.

Many follow finfluencers for daily market updates. When these influencers won’t be creating content on it, then the engagement will go down. “People might not be interested in following them as much as they did earlier, and brands will notice that; hence, brand deals may go down as well,” said Monica Malik, who runs an Instagram channel called Pretty Much Finance.

Sumon K Chakrabarti, CEO & Co-founder, Buffalo Soldiers, an advertising agency, concurred, saying that restriction (of not being allowed to use live market prices) may pose challenges for influencers in creating relevant content, potentially leading to a drop in engagement. Followers who rely on real-time updates for trading decisions might feel disconnected from the content of such influencers, he said.

Outdated prices will negatively impact brand associations as marketers use influencers to attract active traders, said Chandan Sharma, General Manager-Digital Media, Adani Group, who tracks influencer marketing.

Chakrabarti also noted that brand deals have got disrupted and the number of deals has come down for financial influencers due to SEBI's enhanced oversight as brands are adopting a more cautious approach while engaging with financial influencers.

"Before the regulations were enforced, financial influencers who provided live market updates, stock tips, and trading advice were able to command premium rates, often upwards of Rs 1-3 lakh per post, due to the high demand for real-time market insights. However, SEBI's clampdown on financial influencers has led to a reduction of 40-60 percent in brand deal rates. Brands are now more focused on long-term financial products and educational content, preferring to work with influencers who can provide value through consistent, risk-averse advice on mutual funds, SIPs, or retirement planning," he added.

Finfluencers with specialised knowledge in areas like cryptocurrency, trading, or high-level financial planning are likely to charge premium rates ranging between Rs 3 lakh and Rs 12 lakh, Chakrabarti said.

"The rates of finfluencers also vary based on the platform where they publish content. For example, a macro finfluencer might charge Rs 1.5 lakh for an Instagram post, Rs 2.5 lakh for a YouTube video, and Rs 1 lakh for a Twitter post, all depending on their presence and engagement on the said platform."

However, micro-finfluencer to mid-tier finfluencers' business model has collapsed due to the regulations so both creators and brands have to revisit this space, said Sharma. Brands are also re-evaluating their communication strategies to comply with the SEBI guidelines and compliance, he added.

According to Qoruz data, there are 232,000 finance influencers as of December 2024. Only five to 10 percent create stock-market-related content, noted Aditya Gurwara, Co-Founder & Head of Brand Alliances at Qoruz. "It means just 11,000 to 23,000 influencers are discussing stocks, and many of them have already adapted to SEBI’s previous regulations."

Strategy shift

The restriction on financial influencers from using live stock-market prices will impact how creators engage with their audiences, said Krishna Desai, Chief Product Officer, Animeta, a creator tech company.

"For creators previously focused solely on trading content, adaptation is key. They now need to pivot towards in-depth market analysis, discussing company portfolio trends and long-term investment strategies rather than offering instant buy/sell tips. This shift ensures compliance while allowing them to provide meaningful financial insights to their audiences," he added.

Desai noted that with the evolving guidelines, many creators have successfully pivoted to focus on smart financial planning, thrift strategies, and money-saving advice beyond the stock market. This shift has also expanded opportunities to collaborate with brands across new categories.

"For instance, earlier in 2024, finance creators like Time Billionaire (Mohd. Abu, Sakchi Jain, Divyanshu Jain) shared tips on saving grocery expenses through Amazon Fresh’s monthly sales. More recently, CA Shreya Jaiswal highlighted Tanishq’s gold exchange program, helping consumers enhance the value of their gold while exploring the latest festive collection," he said.

Many financial influencers have started offering courses on topics such as how to start investing in mutual funds, how to value a mutual fund or stock, and various how-to series related to mutual funds and stocks for a subscription fee, which represents one viable monetisation model, said Anand K Rathi, Co-Founder of MIRA Money.

Another way they can generate revenue is by partnering with asset management companies (AMCs) to create financial education sessions. These collaborations can lead to valuable learning opportunities for their audience while also enhancing the influencers' monetisation efforts, he added.

But the transition is a little difficult, said Malik.

"It is like a beauty influencer trying to pivot to a travelling beat. The audience will take some time to adapt. Currently, influencers creating content around stock market updates have an audience that wants to see them for daily updates. The audience who are following them are mostly traders or those who are active in the stock market. So transition will be difficult and the (brand deal) rate might drop. But it also depends on the creator how well they transition," she added.

For those relying on financial influencers, Malik said that SEBI's clarification is a positive step, as it will protect individuals from relying on unregistered influencers for stock advice and potentially losing money based on such recommendations.

"This development will help protect young, inexperienced investors from financial losses. Given the recent F&O crisis in India, where many GenZ traders have lost money, such a move was long overdue," Chakrabarti said.

Raghav Gupta, Co-founder, 1% Club, said that companies like theirs often find themselves at a disadvantage when others exploit loopholes. "This step levels the playing field and ensures that responsible content creators thrive. It will also encourage more fact-based, long-term financial education rather than short-term speculation," he said. The company is co-founded by popular finfluencer Sharan Hegde.

SEBI on Wednesday issued a circular clarifying provisions related to regulated entities and persons engaged in prohibited activities. While SEBI had restricted the association of registered and unregistered entities through a circular issued on October 22, 2024, the latest circular will put an end to the lucrative and questionable business such associations have spawned, which is illegal advisories masquerading as stock market education.