The internet and the increasing digitalisation of our world has opened up so many benefits and opportunities, it has also opened the door on cybercrime. Yep, even the coolest stuff has its downsides!
Cybersecurity threats have become increasingly sophisticated thanks to online tools and AI; what did we just say about cool stuff having downsides? Cybercriminals tend to target sensitive financial data making financial firms prime targets. To stay ahead of these threats, financial advisors must upskill and understand the digital threats they’re facing.
The importance of cybersecurity for financial advisors
Cybersecurity… IT guys are responsible for that, right? Nope! All employees who handle sensitive data within a financial firm should have a good grasp on what cybersecurity is and their role in ensuring important information stays safe. You don’t need to be able to install a firewall, but you should be cybersecurity aware so you can:
Protect client information
Clients entrust advisors with sensitive data, including social security numbers, bank account details, and investment information. A breach can lead to identity theft, financial loss, and a tarnished reputation.
Comply with regulations
Financial advisors must adhere to various regulations like the General Data Protection Regulation (GDPR), Financial Conduct Authority (FCA) and the Financial Industry Regulatory Authority (FINRA) guidelines. Non-compliance due to poor cybersecurity practices can result in hefty fines plus legal repercussions – not good!
Maintain trust
Trust is the cornerstone of the advisor-client relationship, after all, they’re handling over some of their most sensitive data to you. Demonstrating that you’re up to scratch with cybersecurity measures reassures clients that their information is safe, encouraging loyalty and a long-term partnership.
Steps to upskill financial advisors in cybersecurity
Education and training
Cybersecurity measures are important, but they’re only as good as the people using them. That’s why giving your team the tools and knowledge they need is so important. The first step in upskilling financial advisors is to provide them with education and training on cybersecurity basics. This includes understanding common threats, recognising phishing attempts, and knowing how to respond to potential breaches. Unfortunately, cybersecurity training is not a one hit wonder (we wish!) so financial advisors should take part in regular training sessions, webinars, and workshops that will keep them clued up on the latest threats and best practices.
Certification programmes
Getting certified can give financial advisors some well-earned street cred in cybersecurity, which can really put clients at ease. Programmes like Certified Information Systems Security Professional (CISSP) or Certified Information Security Manager (CISM) are well known and cover a wide range of cybersecurity topics. These certifications show a real commitment to cybersecurity and arm advisors with the skills they need to keep data safe and sound.
Implementing multi-factor authentication (MFA)
This one’s a no-brainer but often skipped – multi-factor authentication (MFA). MFA adds an extra layer of security by requiring multiple forms of verification before granting access to sensitive info. Financial advisors should make sure that both they and their clients use MFA for all accounts. It makes it a lot tougher for cybercriminals to break in.
Adopting secure communication channels
We get it, pinging a quick WhatsApp message is super handy, but it’s important to use secure communication channels to protect client info. Advisors should switch to encrypted email services, secure file transfer protocols, and encrypted messaging apps. Don’t forget to regularly update and patch these tools either, this will make sure that you are protected as much as possible.
Data encryption
Encrypting data both at rest and in transit is a must and should be part of the routine. Financial advisors should use encryption methods to protect client info stored on their devices and sent across networks. Encryption ensures that even if data gets intercepted, it stays unreadable to unauthorised eyes.
Regular security audits and assessments
Doing regular security audits and assessments helps spot vulnerabilities and areas that need a little TLC. Financial advisors should work with cybersecurity professionals to perform these audits, ensuring that their systems and practices comply with the latest security standards. This isn’t really a DIY job as you may not know what you should be looking for, that’s why we always recommend having a chat with professionals.
Developing an incident response plan
An incident response plan lays out the steps to take if there’s a cybersecurity breach. Financial advisors should have a solid plan that includes identifying the breach, containing the threat, eradicating the cause, and getting systems back on track. Regularly testing this plan through simulations ensures advisors are ready to tackle real-world incidents. Think of it like testing your office fire alarm, just with less noise and standing outside in the drizzle!
Staying informed about cyber threats
Cybersecurity is always changing, with new threats popping up all the time. Financial advisors can and should try to stay in the loop by subscribing to cybersecurity newsletters, following industry blogs, and joining professional forums.
Client education
Advisors should also help their clients get up to speed on cybersecurity best practices. This includes tips on creating strong passwords, recognising phishing attempts, and protecting their personal info. Giving clients this knowledge ensures that everyone is on the same page and can present a united front.
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