Over 27% finfluencers not making complete disclosures of sponsored content: CFA Institute
A fifth of such content put out by the finfluencers is around individual stock recommendations, the findings said
Finfluencers, over 27% of them, haven't been making complete disclosures about the sponsored content they put out on their platforms, according to findings published by the CFA Institute.
The institute discovered that over a quarter of finfluencers' content related to breaking down complex financial concepts could be sponsored.
A fifth of such content is around individual stock recommendations, the findings said.
Lack of sufficient disclosures can hinder consumers' ability to evaluate the objectivity of the information and investors may not realise that these finfluencers are being paid to promote financial products, said Rhodri Preece, senior head of research, CFA Institute.
Preece added that some finfluencers may be unaware that their activities are regulated and need appropriate disclosures. "We urge regulators to consider a universal definition of an investment recommendation, and firms and social media platforms should work with finfluencers to ensure compliance with applicable policies."
The content on TikTok, YouTube and Instagram were analysed in key markets such as the United States, United Kingdom, France, Germany, and The Netherlands for the report.
Back in August 2023, the Securities and Exchange Board of India (SEBI) released a consultation paper on the association of SEBI-registered intermediaries and regulated entries with unregistered entities including influencers.
The regulator body urged all registered financial entities to cut ties with registered financial influencers and investment advisors (IAs).
In light of these updates, ASCI in its new guidelines said finfluencers operating within the BFSI realm, can now offer investment-related advice only after being registered with the Securities and Exchange Board of India (SEBI).
