Advisor Group rolls out cybersecurity program for broker-dealers

Insurance, data-backup, auditing and monitoring are among the components of CyberGuard

Jul 19, 2019 @ 4:44 pm

By Ryan W. Neal

Advisor Group has a new suite of cybersecurity services and technologies to help protect the 7,000 advisers across its four firms, FSC Securities Corporation, Royal Alliance Associates, SagePoint Financial and Woodbury Financial, against digital threats.

CyberGuard includes cybersecurity insurance to cover data breach response costs, regulatory liability and business disruption. It also offer advisers discounted access to cloud-based data backup, access to security auditing and monitoring, and enhanced email and file storage.

(More: Ask these cybersecurity questions)

Ed Obuchowski, Advisor Group's chief technology officer, called the program "a strong, flexible chassis" for integrating cybersecurity applications and services into the firm's proprietary systems and easily rolling it out to advisers. The program also will provide advisers access to a team of security experts to answer questions and help optimize their defense programs.

"Moving forward, the program will grow and adapt to stay ahead of new cyber threats that are arising and evolving virtually every day," Mr. Obuchowski said in a statement.

For example, Advisor Group is planning to soon add a capability to CyberGuard that will search the dark web — encrypted websites that cannot be accessed by traditional internet browsers or search engines — for stolen adviser credentials, protect against email phishing and assess the risk of third-party vendors.

Advisor Group isn't the only large broker-dealer taking cybersecurity for its advisers seriously. Brock Jolly, a partner at Veritas Financial, said his broker-dealer, MML Investors Services (a subsidiary of Mass Mutual) offers robust protections centered around encrypted emails, secure devices and web-based applications.

"They've been pretty well at the forefront of things technology-wise for the last handful of years," Mr. Jolly said.

(More: State regulators release model cybersecurity rule)

Mr. Jolly wasn't sure if MML offers cybersecurity insurance, but he said the firm offers cloud-based backup and security monitoring. However, Mr. Jolly also admitted to having a "love-hate relationship" with the monitoring tools, especially around protecting client logins.

"When they do the job, the client isn't happy," Mr. Jolly said. "A client calls us to say they can't get into their account, but that means the technology was doing what it's supposed to do."

MML also hires security experts to do penetration testing to make sure digital systems are working, Mr. Jolly said.

MassMutual declined to comment.

A spokesperson for Lincoln Financial Group did not say what services it offers advisers, but it referred to its brand website on how it is protecting consumer data.

Cybersecurity experts said technology can only go so far in preventing a data breach.

Human error is often a cause, and advisers need training on recognizing and effectively responding to anything the technology can't stop.

Adam Cmejla, founder of Integrated Consulting & Advisory Services, shared a story on Twitter of receiving a message for an authentic, yet compromised, client email account asking for $56,000 distribution.

Mr. Cmejla said he realized it sounded odd, especially because his emails provide a disclaimer that orders will not be processed via email. He called the client, who did not even realize his email was compromised.

"We all need to continue to be diligent and on-guard when it comes to phishing attacks via email," Mr. Cmejla said. "Always double check and verify distributions in or out of a client's account via phone call."

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