A reader asks, “What are the differences between finfluencers and financial experts? Is there any way to distinguish them? How can investors be wary of finfluencers?”
Definitions for both types are subjective, and these are mine: A finfluencer has a good understanding of the kind of content that would be lapped by consumers (viewers/readers/listeners) and produces just that.
Such content includes top 10 stocks, MFs, best demat trading accounts, best credit cards, tax saving ways, stories of compounding, etc. That is content consumers are searching for. A finfluencer does not have to try and influence. They are saying things that the audience wants to hear appealingly. So, in that sense, the name is a misnomer!
A true financial expert offers insight that most people cannot appreciate independently due to their familiarity and experience without worrying about the popularity of such insight. They produce content that is necessary regardless of whether consumers feel the same—for example, retirement planning, asset allocation, portfolio management, etc. They try to emphasize what investors need and not what they want. They will not shy away from taking unpopular stands. E.g., “Don’t buy stuff on EMI, don’t use a credit card, don’t trade, don’t buy crypto”, etc.
A person can be both an expert and an influencer.
How can investors be wary of finfluencers? I think investors should be cautious of both experts and influencers! Additional research and due diligence are essential if they receive affiliate or distribution commissions for the products and recommendations. Cui bono? Who or How does one benefit from a recommendation (in this context)?
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In personal finance, nothing beats rigorous DIY research of our requirements (yes, we need to look within) and select suitable products for these requirements. Content creators are merely sources of information in our research. Nothing more. Nothing less. Caveat qui Influere. Also see: Beware of Finance influencers! They can mess up your portfolio!
Also, see my comments in this Deccan Herald article: F.I.R.E. journey with finfluencers: Cash or burn?