Protecting Your Practice: Cybersecurity Tips for Financial Advisors
As a financial advisor, you have access to some of your client’s most sensitive personal and financial information. While this access is necessary to provide them with the best financial advice, it also comes with a great responsibility to protect their data. Cybersecurity threats are increasing every day, and the financial industry is one of the primary targets of these attacks. A cyber attack can have devastating effects, so taking cybersecurity seriously and adopting preventative measures to secure your practice is crucial.
Here are some of the top cybersecurity tips that you can follow to protect your practice from cyber threats:
Implement Strong Passwords:
Passwords are the first line of defence against external cyber threats. It is one of the most basic and effective ways to prevent unauthorized access to sensitive data. The key is to create a strong password that can be easy to remember but difficult for others to guess. For example, you can use longer character lengths or passphrases but should avoid personal information such as name, birth date, or address. It is also important to have unique passwords for all applications, as reusing them can allow cybercriminals to access multiple accounts if they crack a single password.
As a good security practice, financial advisors should implement password managers to enforce strong passwords for all employees and reduce the risk of weak passwords used at the firm. Password managers create, store, and manage passwords securely for all accounts, accessible by a single master password. Using a password manager ensures that the employee does not write down sensitive passwords on paper — one of the easiest and most common ways a cybercriminal uses to gain access.
Use Multifactor Authentication:
Multifactor Authentication (MFA) is an additional layer of security that financial advisors can implement to protect their accounts. MFA requires users to provide multiple ways to authenticate their identity. In addition to the password, MFA can require a fingerprint scan, a one-time code sent to a mobile device, or a security token. Implementing MFA can reduce the possibility of account compromise even if the cybercriminal can access the password — they will not be able to access the account without providing the second authentication factor.
Keep Software Up to Date
Keeping software up to date is essential to prevent cyber attacks. Software updates often include security patches that address vulnerabilities. Cybercriminals often target outdated software with known vulnerabilities to gain access and steal sensitive information. Therefore, keeping up with the latest security updates for the operating system, application, and anti-malware software is essential.
Encrypt Sensitive Data
Encryption protects sensitive data against unauthorized access in case the device is lost or stolen. Without the right decryption key, stolen encrypted data is rendered useless. Financial advisors should ensure that their laptops and mobile devices are encrypted, especially if they carry sensitive data outside the office.
Encrypting the data applies not only to data at rest, but also to data in transit, meaning data transmitted between two devices or networks. In these cases, the data is encrypted before it is transmitted and decrypted only by an authorized entity upon receipt.
Backup Your Data
Data backups ensure that the data can be restored to the latest state in case it is stolen or corrupted. When designing a data backup system, advisors should consider factors such as how often the data is backed up, how long you can access it, and how quickly it can be restored in case of an incident.
Data backups can be done using external hard drives, cloud storage or backup software. It’s important to ensure that the backups are stored securely and not easily accessible by unauthorized individuals. Additionally, regular backup system testing is essential to ensure it is functioning correctly and can be relied upon in the event of a data loss.
Train Your Staff
In addition to implementing security tools and policies, creating cybersecurity awareness for all employees is equally important as they are the most valuable assets for the company. For example, it only takes one employee to fall prey to a phishing scam or click on a malicious link to compromise the entire firm’s cybersecurity.
The training program should be an ongoing process and not a one-time event. Employees should be trained in identifying phishing emails, suspicious links and file downloads, social engineering techniques, and ransomware. Employees should also be trained on company policies, secure use of the tools and best practices for reporting suspected security incidents.
Educate Your Clients
Cybercrime is rapidly evolving, and your clients might not be aware of the latest threats targeted towards them. As a financial advisor, educating your clients on the importance of cybersecurity and how they can protect themselves digitally is essential.
Creating awareness for phishing emails, strong passwords, multifactor authentication, and monitoring their accounts for suspicious activities empowers them to stay vigilant and not get impacted. Educating clients also helps build trust and strengthen the relationship.
The Bottom Line
Unfortunately, cybercrime is not going anywhere, and cybersecurity is essential for any financial practice. So, maintaining a strong cybersecurity posture is essential to staying current with the latest threats and trends.
Implementing these cybersecurity tips may seem overwhelming, but you can protect your practice from cyber threats by breaking them down into smaller tasks and prioritizing them based on risk levels. Cybersecurity is an ongoing process and requires constant monitoring and improvement. By making it a part of your practice’s culture, you can build a strong cybersecurity posture and protect your practice against cyber threats.
Krati Kiyawat is a SecDevOps Engineering Manager at Purpose Advisor Solutions
