Economy

Is your advisor prepared for cyber attacks? Here’s what you should know

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Vasily Pindyurin | fStop | Getty Images

Cyber criminals steal billions of dollars a year from financial firms. Financial advisors – and their clients – are at risk as attacks increase and grow more complex, according to security experts.

“Advisors have one thing the bad actors want, and that’s money,” said Brian Edelman, chief executive of FCI, a cybersecurity firm specializing in financial services. “They’re the gatekeepers to a lot of money.”

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Registered investment advisors, or RIAs, manage more than $4.7 trillion dollars in client assets — about a fourth of all assets under management, according to TD Ameritrade. By 2022, that figure could grow by $1.4 trillion, according to the firm.  

In addition to being a central repository for customer money, financial firms are attractive to scammers due to their valuable customer data, according to a White House Council of Economic Advisors report, which found that cybercrime cost the U.S. economy between $57 billion and $109 billion in 2016.

The finance sector, both public and private, suffered the largest number of security breaches relative to other industries that year, according to the White House analysis.

It could have gone a very different direction because the quality of the fake was quite, quite good.

Evelyn Zohlen

founder of Inspired Financial

Investors don’t often ask about their financial planner’s cyber protocols, said Evelyn Zohlen, a certified financial planner and founder of Inspired Financial in Huntington Beach, Calif. Yet inquiring about protective measures should be on each client checklist.

“They should care because by the time there’s been an incident and they’re asking, it’s too late,” she said.

The checklist

Almost half of companies experienced some type of financial fraud in the past two years, cybercrime being the most prevalent, according to a recent poll of 5,000 global firms by PwC. About 1 in 10 companies lost more than $50 million. Just 56% investigated the incident.

‘Eye opening’

Bill Clark | CQ-Roll Call, Inc. | Getty Images

The FPA launched a certificate program for members last month around cybersecurity. The topic is especially important given the fast pace of business being conducted by advisors, said Martin Seay, FPA president and director of Kansas State University’s personal financial planning program.

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