A February 2020 article on cybercrime found that, “Global businesses and their customers lose more than $500 billion annually to cybercrime.” 1 The article continued, “Breaches are occurring at a higher rate – five billion records compromised in 2018 and 4.1 billion records in just the first six months of 2019.” 2

Your clients are more aware of these types of risks than ever. With well-publicized online breaches at companies like Target, Facebook and even credit-rating giant Equifax, many who may have already been wary of placing their trust in technology-driven products and services are more concerned than ever. Add to this the fact that the current pandemic has made businesses and individuals everywhere — many working with sensitive data from remote locations — even more dependent on the internet for information and transactions of all types. This shift in work environments has made it easier for unscrupulous actors to take advantage of cyber vulnerabilities.

Five Pillars of Cybersecurity

Because your financial advisory business is built on a foundation of earning and keeping the trust of your clients and other stakeholders, fewer elements of your operation are more vital than building and maintaining reliable systems and responses for protecting against, detecting and mitigating cybersecurity threats to your firm’s and your clients’ valuable data. Regulatory entities like the SEC and FINRA have taken note, enforcing rules designed to punish RIAs with lax cybersecurity practices in place. But the issue goes beyond compliance: your viability as a firm rest on keeping your clients and key trading partners assured of your commitment to protecting the vital data with which you are entrusted.

This is not a new topic but it is ongoing. A 2018 article notes five “pillars” of cybersecurity for SEC-compliant RIA firms: 3

  1. Identify: Understand what a financial advisor needs to track/monitor/mitigate.
  2. Protect: Develop appropriate safeguards for advisor data.
  3. Detect: Implement activities to identify an actual breach.
  4. Respond: Develop responses to cybersecurity events.
  5. Recover: Implement ongoing operations to get better and reduce the impact of a successful breach.

Resources for Cybersecurity Awareness

Developing a system and procedures to implement measures that support these prime goals requires careful planning, documentation, periodic auditing and updates, systematic oversight and ongoing training. Remember, your system is only as good as your understanding of it and the persons to whom you entrust its operation. Even if you opt not to outsource your cybersecurity program and compliance procedures, you can gain most of the knowledge and understanding you will need through readily available resources such as:

  • National Institute of Standards and Technology (Dept. of Commerce, nist.gov)
  • National Cybersecurity Alliance (staysafeonline.org)
  • Schwab Cybersecurity Resource Center (advisorservices.schwab.com)

By educating your team members and clients about the most common threats and vulnerabilities, and by implementing well-constructed, consistently applied cybersecurity measures, this encourages greater client confidence and a more secure future for your practice.

At Wealth Advisor Alliance, we have built our reputation on giving ambitious, visionary RIAs the tools, support, and confidence they need to pursue what we call Independence with Options. To find out more about how we can help you build the firm you have always imagined, please contact us.

We help advisors establish and grow successful wealth management practices. To learn more about how we can help you amplify your life’s work, contact us at team@waalliance.com. You can follow us on Twitter@theWAAlliance and on LinkedIn.

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1 FinTechFutures.com, “Cybercrime in Financial Services: Work Together to Win the War,” February 4, 2020, https://www.fintechfutures.com/2020/02/cybercrime-in-financial-services-work-together-to-win-the-war/

2 Ibid.

3 Patrick Cleary, “Building the Five Pillars of SEC Cybersecurity Requirements…” Kitces.com, November 14, 2018, https://www.kitces.com/blog/sec-cybersecurity-requirements-for-registered-investment-advisors-rias/


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