The biggest technology threat to the financial advisory industry might be underestimating the risk of a technology threat in the form of a determined hacker or illusive virus.
According to a panel of technology security experts speaking Monday in San Diego at the Insider's Forum conference, most financial advisers are oblivious to the technology threats facing their businesses.
“There are nasty, nasty things out there that can mess up your network,” said Steven Ryder, founder and president of True North Networks.
Speaking on a panel ominously titled “Machine to Man: Data Security Threats & Solutions,” Mr. Ryder said a third of all computers are regularly infected with some type of virus or malware.
“Security is not convenient,” he added. “It's not easy having multiple passwords and servers.”
In his pitch to encourage advisory firms to take technology threats more seriously and either hire a full time tech expert or at least contract with an outside firm for regular support, Mr. Ryder said he avoids the use of public wifi whenever possible.
Co-panelist Julian Makas, founding partner of ITEGRIA, also stressed the risks of using public wifi, a message he said advisers should be passing along to their clients.
“Once you're on the network everybody can see your traffic, even if it's password-protected,” he said. “Personal hot spots, however, are much safer because it's a network you can control.”
Mr. Makas said one way to help reduce the damage of a technology attack or virus is to encourage open and transparent communication with employees that doesn't include the threat of punishment for triggering a technology breach.
“Let your employees know they're not going to get in trouble if they do something that results in a computer virus, because the longer it goes the worse it will get,” he said. “By creating a more open environment, you will usually be able to cut off the damage earlier.”
He cited, as an example, the rash of false apps created during the summer Olympics that were designed to look like ways to easily follow the competitions, but we're actually ways to gain access to information on phones and computers.
“There were dozens of false and malicious apps created around the Olympics, and that just shows you that breaches are inevitable,” he said. “But just because they can get in, doesn't mean you want them there for months or years. The hacks used to be for fun and games, but now they've figured out ways to make money off it.”
Dan Skiles, president of Shareholders Services Group, who moderated the session, warned of the tenacity of would-be hackers, that will often find a way into an advisory firm's systems by posing as an existing client in email correspondence.
“Sometimes the hackers will try to keep an email conversation going for a while until they can get you to agree to some kind of wire transfer,” he said. “And sometimes the threat can start with a client,” that has been hacked.