Why Sharan Hegde’s financial advisory business is a test for Sebi's ad rules

Sharan Hegde's social media following acts as a funnel for his RIA business, Personal CFO. (Image: Pixabay)
Sharan Hegde's social media following acts as a funnel for his RIA business, Personal CFO. (Image: Pixabay)


  • While Sebi has clearly directed financial advisory firms and finfluencers to operate separately, well-known finfluencer Sharan Hegde's advisory business is walking a thin line around rules regulating ads by financial advisors.

Management consultant Sharan Hegde was just 25 in July 2021 when Mint first wrote about the rise of financial influencers, or ‘finfluencers’ as they've come to be known. Working with PwC in Bengaluru at the time, he had around 105,000 followers on Instagram and was already earning more from paid social media promotions on ‘financewithsharan’ than his monthly salary.

Cut to July 2024 and Hegde is among India’s most-followed financial influencers, with about six million followers across various social media channels. He now brings in around 60 crore in annual revenue, of which about 85% comes from selling courses through his ‘One Percent Club’.

Hegde has also started a registered investment advisory (RIA) business, which raises more questions than it answers.

Should social media influencers be dispensing financial advice through RIA entities of their own? And what does this mean for the Securities and Exchange Board of India's advertising code for RIAs?

Also read: To keep finfluencers at bay, public issues to make key disclosures via audio visual format starting July 1, orders Sebi

The markets' sanctity

Finfluencers have traditionally been funded by brokers and other financial services firms in return for promotions. But not all of these ‘collaborations’ were transparently disclosed to the public.

Hegde had been pulled up by the Advertising Standards Council of India (ASCI) for an Instagram post promoting Cred (Dreamplug Technologies) without adequate disclosure that it was an advertisement.

Sharan Hegde is among India’s most followed financial influencers, with about six million followers across various social media channels. (Mint)
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Sharan Hegde is among India’s most followed financial influencers, with about six million followers across various social media channels. (Mint)

Another challenge that finfluencers posed for Sebi's rules was their unregistered status. While dispensing financial advice in exchange for money is prohibited for entities not registered with Sebi, the dispensation of financial advice for free (through advertisements and social media posts) falls in a grey area.

Moreover, as the number of finfluencers dispensing unregistered financial advice kept rising, the markets regulator finally took the bull by its horns in August 2023.

Also read: Asci ticks off Axis Bank, Sharan Hegde, Octa

Sebi proposed a separation of financial influencers from the regulated financial system in a consultation paper. In October last year, Hegde received 10 crore in funding from broking platform Zerodha's co-founder Nikhil Kamath.

Hegde registered a new company with his business partner Raghav Gupta, sister Shreya Hegde and Diksha Shukla on its board of directors. This company, One Centurion Ventures Pvt. Ltd, later became the entity that acquired an RIA licence under the brand name—Personal CFO.

This is one of three brands—Finance with Sharan, One Percent Club (The 1% Club) and Personal CFO—that Hegde runs, forming a connected ecosystem.

In June this year, Sebi announced its board's decision barring regulated financial advisory firms from working with unregistered financial influencers.

One opportunity, many pitfalls

Since Hegde himself doesn’t meet the stringent requirements of becoming an RIA—you need to have at least five years of experience and a post-graduate degree in certain subjects—the licence seems to rest on the shoulders of Shukla, who previously worked as a portfolio analyst at fintech firm INDmoney.

Hegde, however, has big plans for Personal CFO and One Percent Club.

In a recent social media post, Hegde stated that he would need hundreds, if not thousands, of finance experts to meet the demand for financial advice at his firm.

“1% Club began as a finance educational platform, but today, it’s so much more. A few months back, we launched our Personal CFO (bespoke 1-1 financial services for investment planning, insurance advisory, credit card strategy, loan optimisation, etc), and all hell broke loose. With almost 60,000+ lifetime members, the demand is unlike anything I could have ever predicted. I need hundreds, if not thousands, of finance experts over the next few years to meet this demand," he posted.

Also read: Sebi's dilemma: There exists a fine line between finfluencing and free speech

This post, especially about requiring finance experts, was for insurance advisors rather than RIAs, Hegde later clarified to Mint, when a reporter met him at his office on 8 July.

However, other issues surround Personal CFO.

“The name of the entity holding the RIA license does not seem to be provided on the website “thepersonalcfo.in". Neither are the details of the complaints provided nor the compulsory Investor Charter displayed. Also, it is not clear how the hashtag #financewithsharan, or you yourself (Hegde) are connected with the entity," noted Harsh Roongta, a personal finance coach and Sebi-registered investment advisor.

“Unless you yourself are a post-graduate and have passed XA and XB and have at least two years requisite experience, you cannot be a ‘Person Associated with Investment Advise’ for this entity," he added.

Hegde rejected the notion that these details were required to be displayed on the website by Sebi but added that he would display the RIA entity name on the website.

As for his own qualifications, he said no such requirements were needed to be met for someone to sit on the board of directors of an RIA entity.

However, Suresh Sadagopan, an RIA and principal officer at Ladder7 Wealth Planners, described Sebi's advertising code as a minefield for finfluencers.

“The RIA advertising code can be a minefield for finfluencers. It’s because many of them talk freely about investments and suggest/ promote products. But if they are coming under the RIA code, then they have to be very careful about the content of their videos as anything that they’re saying could be construed as investment advice which can influence investment decisions and hence needs prior approval," explained Sadagopan.

No pain, no gain

Hegde’s social media post highlights a central contradiction in his ecosystem of financial services.

His appeal among customers is driven by his personal following (although he is not registered with Sebi). Yet, he is promoting the newly registered RIA at the back-end.

Most of the promotion is implicit rather than explicit. Out of Hegde’s six million followers on various social media platforms, about 63,000 are paying members and around 150 are RIA clients, bringing in 75 crore in total assets under advice (AuA).

Essentially, Hegde's social media following acts as a funnel for his RIA business, Personal CFO. Arguably, every post that he puts out from his personal social media handles must also comply with the Sebi advertising code that requires RIAs to take approval from the Sebi appointed authority for vetting their ads.

That is where the crux of the confusion lies. “What is uncertain is whether the videos they make on social media can be categorized as advertisements as it’s not on one advice, just like any comments made on a TV show is not treated as (financial) advice," explained Sadagopan.

And Hegde, too, doesn’t agree with this indirect linkage.

Also read: Why are Sebi-registered investment advisors better than finfluencers?

Recently, a post put out by him to hire people for his organisation (including the RIA business) failed to highlight the RIA registration number and other mandatory details required by the Sebi code.

In his conversation with Mint, Hegde maintained that the post in question was merely a hiring post and not an advertisement.

However, this may not be the view that BSE Administration and Supervision Ltd (BASL), the regulator appointed by Sebi to vet ads by RIAs, takes.

“BASL approval for advertising is mandatory for RIAs. The pattern actually flows to all investment related ads. What I see is cutting corners that would misdirect investors. It contravenes both the letter and the spirit of the law on investment advisory as well as advertising, in my opinion," said Naveen Fernandes, Public Interest Director at BASL.

The final word?

Whether or not this particular post was an advertisement and hence a potential violation of Sebi’s code, Hegde’s business model raises several critical questions for the markets regulator.

Can a finfluencer—without strictly complying with Sebi's advertising code for social media posts—act as a ‘lead generator’ for an (RIA) app that delivers financial advice?

Sebi's board decision, announced in June 2024, affirmed the main thesis of its 2023 consultation paper—that proposed cutting off regulated firms from unregistered influencers.

But in Hegde’s case, the entities are joined at the hip by a common influencer and owner. It may need drastic surgery to continue to function.

Also read: Mint Explainer: Impact of Sebi steps on single stock derivatives, delisting

And Hegde would have to make a choice: does he want to be an educator, an influencer, or an RIA?

For Sebi, the choice is even more pivotal. Will it enforce the advertising code strictly or allow the distinction between RIAs and finfluencers to blur. Only time will tell.

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