With cybercrime increasing at a high rate in recent years, advisors can’t afford to overlook its impact on themselves and their clients. Cybercrime has increased by over 600% since the start of the COVID-19 pandemic and is expected to nearly double over the next three years, according to data cited in a white paper created by cyber security company Digital Privacy & Protection. We’ll discuss what advisors need to know to help their clients and the next steps they should take to safeguard client information and assets.
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Financial Advisors Shouldn’t Overlook Potential Cyber Security Issues
Financial advisors handle reams of confidential information for their clients, including portfolio holdings, estate-planning documents, retirement plans, tax records and beneficiary details.
And clients rightly believe that once they send over their confidential information, advisors are safeguarding it to the best of their ability.
The reality is, however, at some point, anyone can be a victim of a cyberattack. So instead of sitting on their thumbs, advisors need to be proactive in enhancing online security for their clients.
“The worst possible point at which to begin helping clients with cyber risk management is after they have been hacked,” the Digital Privacy & Protection white paper says. “Depending on what has been stolen, repairing the damage could involve hundreds of hours of unpaid work by the wealth manager involving the (Federal Trade Commission), law enforcement and passport agencies, credit card companies, vendors, and credit bureaus.”
What Advisors Can Offer
Some clients are not tech-savvy, and they will need extra help upgrading their security. The good news is that some advisor firms already use outside resources to help reinforce online security for their clients. According to Digital Privacy & Protection, advisor firms can partner with vendors to help clients with:
Advisors Can Help Limit the Information They Receive From Clients
Sometimes, clients may send information unrelated to an advisor’s responsibility. For example, some advisors don’t work in depth with clients on tax returns. Other advisors may not work closely with healthcare information.
Advisors need to make sure to let their clients know that only specific confidential information related to their job description is needed. That can help reduce risk with online security.
Advisors’ Duty to Clients
While advisors need to make sure their security is solid, they also need to inform their clients of the proper steps to avoid a cyberattack of their own. According to Digital Privacy & Protection, the following four strategies are good first steps for clients to take:
Make Sure Antivirus Software Is Updated
Antivirus software is a must for all users who have a desktop, laptop or mobile device. And making sure the software is up to date is critical in order to dodge any cyberattacks. The best way clients can ensure their antivirus software is running smoothly is to verify that it has automated check-ups and that regular antivirus scans are occurring.
Install a Virtual Private Network (VPN)
A VPN helps protect your internet connection, data and privacy online. For example, a VPN can help hide your location, as well as your IP address, so that you are not being followed in any manner.
You can also go anywhere where there’s internet access with a VPN, so if your client needs to make a confidential transaction, a VPN will help safeguard their information.
Use a Password Manager
A password manager is an application that helps generate and store multiple passwords for users in one safe location. This app is also encrypted so that hackers can’t see it. Inside the app, all passwords generated are locked and fall under a master password. When a user logs in using the master password, he will be able to see the sub passwords for use for his online accounts.
Clients managing their accounts in one safe location that is highly protected will help prevent cyberattacks.
Get a Private Email
A private email address offers the ability to use a private server that has better security in terms of authentication than the typical email domains many people use. With a private email address, only you as an advisor and your client can access the messages.
Cyberattacks can happen to anyone. And advisors are vulnerable as they handle not only their clients’ information but their own as well. In order to avoid those attacks, advisors need to be proactive in implementing security measures.
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