ybersecurity has become a topic of almost daily news. And it’s usually in the news for a bad reason: Big banks reporting clients’ data stolen or major retailers announcing online security breaches.
JPMorgan Chase (NYSE:JPM), the largest U.S. bank, was hacked in 2014; cybercriminals stole customer names, addresses and emails. Nearly 56 million customer credit card numbers were compromised because of malware found on Home Depot ‘s (NYSE:HD) cash register system. Hackers stole names, Social Security numbers and other sensitive data of employees and current and former customers of Anthem (NYSE:ANTM), the second-largest U.S. health insurer. Other names in data-security news have been Target (NYSE:TGT), Staples (NASDAQ:SPLS), UPS (NYSE:UPS), eBay (NASDAQ:EBAY), Neiman Marcus, AOL (NYSE:AOL), Adobe (NASDAQ:ADBE), and the list goes on.
This trend only makes it scarier for investors to do transactions online or to trust institutions with their money and personal information.
In response, financial advisors and the financial industry in general are pouring dollars into protecting their systems and their clients’ data. Encrypted servers, firewalls, password protection, two-step verification and routine tests are just a few of the measures that they take.
One of the biggest dangers is one of the biggest trends: moving data into the cloud.
“A lot of things are cloud-based today. It sounds great and it’s efficient, but at the end of the day, you’re relying on someone else’s security measures to protect your clients’ data,” said Ed Gjertsen II, president of the Financial Planning Association and vice president at Mack Investment Securities, a financial planning and asset management firm in Northfield, Ill.
Because of the sensitivity of the client data that resides in the cloud, Gjertsen always asks for the cybersecurity policy of any third-party vendor, cloud-based client management system or account management system provider. That way, “we know what happens and how it’s protected. You’re only as good as your latest and greatest technology and the people who work for you.”
In addition, regulatory bodies such as the Financial Industry Regulatory Authority, or FINRA, and the Securities and Exchange Commission have set up specific screening programs to recognize and prevent cybersecurity threats.
Protecting The Whole
FINRA reviews company policy regarding what happens in case of a hack, such as the business continuity plans that a firm has in case of a cyberattack. FINRA also provides training programs, offers insurance coverage, and shares and assesses information about threats and their impact. The goal: to protect investors, financial advisors and the financial system as a whole from harm.
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