Why Advisors Need to Start Discussing Cybersecurity
Educating clients is among the top priorities for an advisor. This typically involves information on the products most suitable for their situation, long-term savings strategies, or how to set up a balanced household budget. Thanks to a swelling wave of online criminal activity, advisors can add one more item to their list of talking points: cybersecurity.
According to PrivacyRights.org, the last five years have seen roughly 9,000 reported breaches, which compromised more than 11 trillion records. Servers for everything from the popular online video game Fortnite to Capital One have fallen prey to hackers. The attacks have exposed a wealth of personally identifiable information, including in some cases Social Security and credit card numbers. The need for data security awareness is more important than ever. As a trusted advisor, it’s up to you be someone clients can turn to for answers.
Oversight agencies are taking the increase in data breaches very seriously, especially as it pertains to the financial industry. Advisors need to stay up to date with any new moves made by the SEC and FINRA regarding the safety of client data. For example, the SEC has made fraud prevention/cybersecurity a top exam priority and will frequently post new risk alerts related to safeguarding client records and personal information.
Transparency has long been a crucial part of the client-advisor relationship. With the constant threat of cybercrime and data leaks looming overhead, an upfront approach is now more important than ever. This is a lesson software firm Redtail Technology, which develops CRM solutions for advisors, learned the hard way. In March, Redtail discovered a glitch that dumped a file with clients’ personal information online for anyone to download. The company waited more than two months before giving notice to those whose info might have leaked. The time between discovery and disclosure was longer than regulations for all 50 states allow. The leak was caused by an internal error, and not related to an outside hacker, but Redtail’s hesitation could lead to legal issues for the company.
Obviously, advisors with clients affected by the leak were likely unable to sound any alarms until they were notified themselves. However, the Redtail incident highlights the need for advisors to develop their own set of safety protocols and internal policies regarding data protection and how to handle the fallout from a breach.
Beyond keeping your business practices regarding personal data in compliance, it’s important to make every effort to safeguard your own information. For one, taking steps to protect yourself is an exercise in common sense and a necessity. As many victims of fraud could attest to, identity and information theft can leave a huge mess to clean up and take months, if not longer, to recover from.
Another benefit of walking yourself through the protection process is the experience yourself. When talking to clients about the why and how of data protection, you’ll be able to speak from a “when the rubber hits the road” perspective. Instead of rambling through a scripted “How To Protect Your Data” spiel, you will be more relatable and credible by sharing your personal experience with the matter.
Extend an Invitation to Educate
Advisors looking for the next consumer engagement opportunity can find one in data protection awareness. As concern over cybersecurity grows, clients and prospects are becoming more receptive to learning how to protect themselves. Call your existing clients and schedule a time to sit down and determine how well they are protected, and what holes need to be filled.
The issue of safeguarding one’s data can also be a good prospecting strategy. With cybersecurity and data breaches in the news on almost a daily basis, it’s become nearly impossible to not think about. This means prospects in your drip list are more likely to open and read an email on the topic. And as a trending topic, SEO and social media campaigns have a higher potential for engagement.
Data protection might not be within the traditional wheelhouse of an advisor, but changing times demand a changing approach. As someone in the finance industry, many consumers probably already consider you a trusted source of advice and assistance. Taking the time to help people safeguard their personal information can lead to a long-term advisor-client relationship rooted in trust and credibility.