This is the No. 1 cybersecurity threat to financial advisers, experts say

Phishing, or sending emails from supposedly reputable companies in order to get individuals to reveal personal information, leads the list of scams

Jan 30, 2018 @ 1:46 pm

By Bruce Kelly

Phishing, the fraudulent practice of sending emails from supposedly reputable companies in order to get individuals to reveal personal information, is still the biggest cybersecurity threat financial advisers and their clients face in 2018, according to a panel at the Financial Services Institute annual meeting in Dallas on Tuesday.

"Let's be honest, phishing by far is the biggest threat in our adviser world," said Annie Groleau, compliance officer for cybersecurity at Securian Financial Services Inc.

Last July, the Financial Industry Regulatory Authority Inc. issued an investor warning for people looking for jobs that individuals claiming to be involved in the hiring process for legitimate organizations — including Finra — have turned to Skype and other online video call platforms as a way to phish for personal information and money.

According to Finra, scammers also may use fraudulent emails or copycat websites to get unsuspecting consumers to provide valuable personal information, and then use it to steal their money or identity.

"Phishing tends to be number one out there and I still think it's going to be number one," said David Kelley, surveillance director in the Kansas City office of Finra. "You may think that's a minor thing, but it's so easy for the bad guys to find something to initiate a phishing attack."

(More: Firms begin to heed cybersecurity, but have much to do)

Of course, broker-dealers and financial advisers face numerous other cybersecurity threats, according to the panelists.

Those include older clients turning over passwords to electronic accounts to their brokers as well as the overall cybersecurity of smaller registered investment advisers (those with $100 million or less in client assets), according to Joseph Borg, director of the Alabama Securities Commission and president of the North American Securities Administrators Association.

The states regulate small RIAs, while the Securities and Exchange Commission oversees the larger firms.

"A lot of the clients, particularly seniors, are now turning over their passwords to the rep," Mr. Borg said. "A trade gets entered or money gets moved. It looks like a customer issue."

Such actions are intended to be a service to the customer because they don't want to deal with their computer, Mr. Borg said.

"I know the states in general are looking at the issue to determine what kind of practice this is, and we are starting to see the numbers increasing," he said. "I'm starting to see some real big problems with it."

Meanwhile, state regulators also are focused on investment advisers and their overall cybersecurity, Mr. Borg said.

"We are concerned with how they interact with social media to deal with customers," he said. "The states, through the [NASAA], have issued an investment adviser cybersecurity checklist about this."

0
Comments

What do you think?

View comments

Recommended for you

Featured video

Events

Transamerica's Boan: Crafting better retirement income conversations

Retirement income is a challenge for investors. How can advisers have better conversations about retirement income? Transamerica's Joseph Boan offers insights and tips for advisers.

Latest news & opinion

HighTower on prowl for new CEO, Weissbluth to become chairman

Move is latest in Chicago-based RIA consolidator's effort to expand senior leadership team.

What's in a name? For TCA by ETrade, everything

Trust Company of America is gone, and there's big buzz over the name change. But turning the custodian into an industry powerhouse will take a lot longer — if it happens at all.

When it comes to regulating AI in financial services, murky waters are ahead

Laws are unclear on how the technology fits in with compliance.

As Ameriprise case shows, firms on hook when brokers go bad ​

The SEC will collect $4.5 million from the brokerage firm for failing to supervise brokers who were ripping off clients.

10 highest paid professions in America today

These are the top-paying jobs in the U.S., according to Glassdoor.

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