5 reasons you're not reading this cybersecurity article

Data breaches have become so common that financial advisers cannot afford to remain uninformed

Mar 8, 2019 @ 10:29 am

By Sid Yenamandra

Cybersecurity articles are notoriously unpopular with financial advisers compared with other industry news, unless it's something drastic like Voya's recent slip-up exposing advisers' Social Security numbers on its website.

When it comes to financial technology, advisers are more likely to peruse something like T3's 2019 Software Survey than they are to learn about how cybersecurity best practices can save them from costly damages tied to data breaches.

I don't think this is about boredom. Based on conversations with advisers and wealth management executives, I've come up with five reasons why you are not reading this cybersecurity article. Those reasons might surprise you, and spark positive action.

1. You trust yourself, your third-party vendors and in-house staff to be careful. Chances are you have discussed cybersecurity threats and written cybersecurity policies adhering to Securities and Exchange Commission or Financial Industry Regulatory Authority Inc. regulations. But without learning about real safeguards — like comprehensive automated tracking, logging and remediation technology — all you have is hope.

(More: Serious cybersecurity enforcement is coming in 2019, but are advisers ready?)

2. You have not suffered a data breach nor been fined over one. Why spend time and money on something that has not been a problem? That's like saying because you've never been fined by the IRS, you refuse to learn about tax obligations or because you've never suffered a major illness, you refuse to learn how to stay healthy. Learning how to prevent problems is more effective than learning how to fix problems.

3. You suffered a data breach despite taking precautions. Advisers who have been there may feel that cybersecurity does not work since data breaches are inevitable. But some breaches are much worse than others, and the worst ones are often preventable. And there is a difference between suffering one minor breach and several major breaches. It's always better to discover how to minimize threats.

4. You have errors and omissions or liability insurance. Advisers who can recoup the cost of data breaches that occur due to mistakes or malfeasance have good reason to rest easier than advisers who lack insurance. However, insurance cannot restore reputational damage stemming from a breach that influences clients, prospects and talented staff to look elsewhere. Plus, unless your policy is designed specifically for cybersecurity, you likely are not as well-covered as you think.

5. You are ignoring the issue. We all know advisers who simply do not want to think about cybersecurity. Maybe they do not consider themselves to be tech-savvy, they find the subject frightening or they hope to exit the business before they suffer a data breach. If you fall into one of these camps, you are wishing the problem away, advice you would never give a client. Instead, you would tell them to prepare for the challenge.

Learning how to protect your business requires you to explore new fields, including those that lie outside your comfort zone. Data breaches have become so common that financial advisers cannot afford to remain uninformed about them. When it comes to cybersecurity, the best place to start is by reading the news.

(More: 10 trends in cybersecurity you need to know)

Sid Yenamandra is the co-founder and CEO of Entreda, which provides comprehensive cybersecurity solutions for independent retail financial advice firms and their advisers.


What do you think?

View comments

Upcoming event

Oct 22


San Francisco Women Adviser Summit

The InvestmentNews Women Adviser Summit, a one-day workshop now held in six cities due to popular demand, is uniquely designed for the sophisticated female adviser who wants to take her personal and professional self to the next level.... Learn more

Most watched


Young advisers envision a radically different business in five years

Fintech and sustainable investing are two factors being watched closely by some of the 2019 class of InvestmentNews' 40 Under 40.


Young professionals see lots of opportunity to reinvent the advice experience

Members of the 2019 InvestmentNews class of 40 Under 40 have strategies to overcome the challenges of being young in a mature industry.

Latest news & opinion

New Jersey fiduciary rule: Pressure leads to public hearing, comment deadline extension

Industry push results in chance to air grievances on July 17 and another month to present objections.

InvestmentNews' 2019 class of 40 Under 40

Our 40 Under 40 project, now in its sixth year, highlights young talent in the financial advice industry. These individuals illustrate the tremendous potential of those coming up in the profession. These stories will surprise, entertain, educate and inspire.

Galvin to propose fiduciary rule for Massachusetts brokers

The secretary of the commonwealth is proposing a fiduciary standard in response to an SEC investment-advice rule he views as too weak.

Summer reading recommendations from financial advisers

Here are some books that will keep you informed and entertained during summer's downtime

4 strategies for Roth conversions

There's never been a better time to do a Roth conversion, and here are several ways to go about it.


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.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print