Experts say that social media financial advice requires a cautious approach. While it is necessary to seek financial advice, it should be professional.
Who gives the best financial advice?
In an environment where getting information through social media has become the norm, many people are turning to social media to get financial information. Accordingly, personal finance-related social media channels have also increased. Many people on social media, including YouTube and Instagram, are providing stock market analysis and investment advice. Many of them are influential people with millions of subscribers.
Professional nature
However, one should be cautious when receiving financial advice through social media. While investors are welcome to receive financial advice, it is necessary that this advice be professional in nature.
Generally, in the financial world, it is emphasized that personal advice, references from relatives or friends should not be considered as advice. Advice given by social media influencers should also be considered in this way.
To provide proper financial advice, a sector-specific educational qualification and permission from the Securities and Exchange Board of India (SEBI) are required. On the other hand, those who provide stock advice on social media channels may not be properly qualified and trained.
It is important to remember that the advice they provide is based on personal experience and not on solid financial foundations. Furthermore, they may have their own investments in the financial instruments they recommend. This is a paradox.
People who are active on social media can often engage in emotional commentary and persuasion to attract investors. Once-in-a-lifetime investment opportunities can make you act based on the fear of missing out. Investment decisions should not be made in an emotional state. Similarly, the words they use during a stock market rise or fall may be designed to trigger emotional thinking.
Risk aspects
The opinions expressed by social media financial advisors can make you adopt a different approach. When it comes to investing, following others can often be a mistake. You should act based on research based on financial goals.
In addition, additional caution is required as they can be emotionally attractive. Above all, it should be noted that social media financial advisors are not under anyone’s supervision. Remember
Professional financial advisors are registered with SEBI. SEBI’s regulations regulate them. However, since there is no regulation for social media financial advisors, there is a high risk of fraud and scams.
You should also be aware of the risk aspects of investments. Therefore, you should first look at the financial qualifications and training of the financial advisors.
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