SEBI Chief Warns of Finfluencer Risk

Tuhin Kanta Pandey, Chairman of SEBI, addressed the critical challenges within India's investment advisory ecosystem at the ARIA Aspire 2026 conference on March 16, 2026. He emphasized that while India has achieved significant financial inclusion, the focus must now shift to financial empowerment through reliable advice.

Pandey expressed concern that the number of registered investment advisors has been declining since 2021. With approximately 1,000 registered advisors currently, he cautioned that an expanding investor base necessitates more regulated professionals. He warned that a shortfall could lead to the proliferation of 'finfluencers' who often present opinions as expertise.

Highlighting a significant trend, Pandey stated that nearly 62% of prospective investors are influenced by finfluencers, whose advice can distort investor behavior. He also noted that many investors still prefer free recommendations, indicating a cultural evolution is needed. AI's role in financial advice presents both opportunities for efficiency and challenges regarding human judgment and trust.

SEBI is actively working to simplify compliance for advisors while strengthening investor protection. Recent measures include relaxed registration requirements and increased operational flexibility, such as sharing performance data. The upcoming operationalization of PaRRVA is expected to enhance performance data verification.

Looking forward, SEBI is establishing a working group to review mutual fund distributor regulations and examining potential overlaps with investment advisors. A common advertisement code for intermediaries and the development of the "SEBI SETU" digital platform for regulatory guidance are also underway. A standardized penalty framework is being developed to promote transparency and compliance.