Protecting Client Wealth Against Cyber Threats

As a wealth management advisor, you’re tasked with managing and growing client assets, and along with that comes the responsibility of cybersecurity. Understanding how to protect client wealth and their families from digital dangers is paramount in today’s financial advisory role. 

When it comes to the online security of your client’s assets, you’re the first line of defense against the increasingly sophisticated world of cyber threats, and with the SEC’s new regulations, wealth managers will be held in higher accountability when cyber breaches strike.

Here’s how you can strengthen your defenses and become a trusted advisor in cybersecurity.

Understanding Who The Bad Guys Are And What They’re After

The first step in defense is understanding the offense. Typically, cybercriminals fall under one of two categories – they are either nation-state-backed criminal enterprises residing in countries like Russia, Iran, North Korea, and China, or they are small “cyber gangs” many of which reside in the United States. 

The cyber theft industry is a $54 billion dollar business. Cyber threats can range from identity theft and phishing scams to complex ransomware attacks targeting individuals’ financial assets. Cybercriminals are known to go after bank accounts, custodial and brokerage accounts, tax returns and government benefits, health insurance, credit, and even accounts such as Venmo or Paypal. As a financial advisor, your role extends beyond investment strategies to include advising clients on how to secure their digital wealth across all these platforms. 

The 6 Most Common Ways People Are Breached

Another crucial part of cybersecurity is understanding how cybercriminals go after what they want. Here are the 6 most common avenues used by cybercriminals to execute their breaches:

1. Similar or short passwords across different accounts: 1 million passwords a week are compromised 
2. Devices that use default privacy and security settings: many devices automatically record passwords that are input, easily giving access to all passwords once the system is hacked
3. Smart home technology: typically, once one smart-home device is breached, all others connected to it can be compromised
4. Malicious software: this is software that is developed with the sole purpose of disrupting and gaining unauthorized access to computer systems
5. Public WiFi without a VPN: when connected to a public WiFi network, other users on the same network can easily monitor your online activities
6. Charging stations and rental cars: public charging stations can easily pull information out or push malware into devices 

Implementing a Cybersecurity Framework

1. Encourage Working On A VPN: Whether it be for your firm or your clients, working on a VPN is a great way to ensure you’re operating securely. 
2. Educate Your Clients: Knowledge is power. Conduct regular sessions with your clients to educate them about the types of cyber threats and the importance of cybersecurity measures.
3. Advocate for Strong Digital Hygiene: Encourage the use of complex passwords, the activation of two-factor authentication, and the importance of regular software updates. Consider providing clients with resources or referrals to trusted cybersecurity tools like password management tools. 
4. Personalized Security Strategies: Tailor cybersecurity advice based on your client’s specific needs, financial situation, and digital presence. What works for one client might not be suitable for another.
5. Ensure Secure Communication: Use encrypted communication channels when sharing sensitive financial information. Make sure your clients know how to verify that communications coming from you are secure and legitimate.

Partnering with Cybersecurity Experts

While financial advisors are experts in wealth management, partnering with cybersecurity professionals can provide an added layer of security. Introducing security solutions or partnerships, like Digital Privacy and Protection, could offer your clients top-notch protection for their digital assets. These partnerships not only enhance your service offering but also position you as a holistic advisor who cares about every aspect of your client’s wealth.

Building a Culture of Cyber Vigilance

Encourage your clients to adopt a proactive stance towards cybersecurity. Regularly review their digital security measures, update their estate plans to include digital assets, and keep abreast of the latest in cyber threat intelligence. Your guidance can make a significant difference in their overall security posture.

Learning More About Digital Security

The digital age brings with it new challenges, but also new opportunities to excel in the ever-changing wealth management industry. By incorporating cybersecurity into your advisory services, you’re not just managing wealth; you’re protecting futures.

For an in-depth exploration of how you can enhance your cybersecurity efforts and better serve your clients, watch our latest webinar, “The SEC is About to Rock Your World on Cybersecurity.” This session is designed to provide you with the knowledge, strategies, and resources to safeguard your clients’ digital and financial legacies.