Advisers reveal cyber insecurities at FPA conference

Most don't expect they could pass a hacking-preparedness test if the SEC came knocking, or even know all the compliance factors they are responsible for, according to a new Financial Planning Association study

Sep 16, 2016 @ 10:51 am

By Liz Skinner

Most financial advisers aren't confident they are well-armed to fight off cyberthieves, or even prepared enough to meet the requirements of the regulators policing their efforts.

Less than a third of advisers “completely agree” that they are 100% prepared to deal with the risks associated with cybersecurity, according to a new study by the Financial Planning Association, which released the data Friday at its annual conference in Baltimore.

Only 18% of advisers said they are “very confident” they would pass a Securities and Exchange Commission examination of their policies and actions on this issue today, with most not even sure they know what those SEC inspectors want from them.

“Advisers are aware of the risk associated with cybersecurity threats, but they're not fully confident in their ability to handle the challenges presented or even on how their firms should navigate a path forward,” said Dan Skiles, president of Shareholders Service Group and an FPA board member.

Advisers say cybersecurity is a top priority for their firm, recognizing the pain it can cause clients if personal information is stolen and used to create fraudulent identities, the survey of 1,015 planners, mostly registered investment advisers, found.

(More: Cybersecurity still worries RIAs the most: study)

The SEC issued cybersecurity guidance in April 2015 for advisers that recommends they design a strategy that helps to prevent, detect and respond to threats from hackers. It issued a reminder in its April 2016 rule proposal on business continuity plans.

Mr. Skiles suggested advisory firms need to up their cybersecurity preparation.

Two-thirds of advisers said they spent $5,000 or less in the past year — including some that spent nothing at all — developing or implementing cybersecurity policies and action plans, according to the FPA survey that was sponsored by TD Ameritrade Institutional.

“While advisers and their firms rightly see cybersecurity as a major threat to the industry, the response efforts are equivalent to a sprinter who's just popped out of the blocks,” Mr. Skiles said. “They know what the end-game is and where they're going, but they're just getting started and may encounter a number of hurdles along the way.”

Bryan Baas, TD Ameritrade Institutional's director of risk oversight and control, said advisers should be adopting industry best practices and a detailed security plan to protect clients and their firms.

“The reality is cyberfraud is pervasive and advisers cannot eliminate the threat, but they can reduce their risk,” he said.

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

Featured video

INTV

Why broker-dealers are on a roll

Deputy editor Bob Hordt and senior columnist Bruce Kelly discuss last year's bounce-back for IBDs.

Latest news & opinion

Things are looking up: IBDs soared in 2017

With revenue up, interest rates rising and regulation easing, IBDs are soaring.

SEC advice rule may give RIAs leg up over broker-dealers

Experts say advisers will be able to point to their role as fiduciaries as a differentiator in the advice market.

Brokers accept proposed SEC rule on who can call themselves an adviser

Some say the rule will clear up investor confusion, but others say the SEC didn't go far enough.

SEC advice rule: Here's what you need to know

We sifted through the nearly 1,000-page proposal and picked out some of the most important points.

Cadaret Grant acquired by private-equity-backed Atria

75-year-old owner Arthur Grant positions the IBD for the 'next 33 years.'

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print