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No Day at the (Information Security) Breach

Written By Gary S. Williams, CFP®, CRPC®, AIF® and Nicholas Ibello, CFP®, AIF® February 5, 2019

It seems that every few months we hear about a breach in information security, from major department stores to government agencies. Many of us have been issued more than one new credit or debit card in response to these breaches to keep our stolen information from being used by someone else. There is much to worry about when it comes to keeping your important information safe. What is your financial advisor doing to keep your most sensitive information safe?

In addition to researching the background and experience of a financial advisor, equally important is making sure the proper safeguards are established to protect your privacy. Here are some considerations to be aware of when handing over your financial records and personal information to a financial advisor.

Storage and Distribution of Your Information

How does your advisor keep your personal information from being seen by someone other than you or an employee of the firm? Is the office alarmed so they will be alerted to a break in right away? Find out if the computers your advisor’s office uses are password protected and encrypted.

Sending Personal Information

Sending personal and confidential information via email without safeguards can cause the information to end up in the hands of someone besides the intended party. One easy and smart way to avoid this from happening is to send private emails using encryption technology. For example, at Williams Asset Management, if we send an email to a client that includes financial or personal information, it is encrypted when it’s sent and the client is required to provide a password in order to open the e-mail.

Monitoring and Verifying

Ask your advisor if she has a system in place to monitor whether your personal information has been stolen or misused. Find out how she would notify you and what the next step would be. They should also have procedures in place to verify that any request to move money from one place to another is being made by you and not an imposter. For example, Williams Asset Management’s broker/dealer, Commonwealth Financial Network (CFN), uses sophisticated programs to monitor sensitive client information when it’s transmitted. If a breach were to occur, CFN will determine the scope of the incident, notify the client, and stop all transactions until the breach is addressed.

Reimbursing You In Case of a Cyber Attack

You want to ask what your advisor’s policy is on being reimbursed for any assets lost due to a cyber attack. Make sure anything you may lose due to a computer breach will be replaced. Many advisors work to avoid breaches, but they also have insurance to cover clients if a breach does occur. Find out what your advisor’s policy is. As an example, CFN has a privacy liability and network risk insurance policy to cover costs associated with a breach, including reimbursing clients for losses incurred due to unauthorized transactions.

Keeping Up To Date

Ask your advisor what his or her policy is on keeping up with computer threats and keeping out hackers. If they don’t perform cyber security risk assessments or work with a firm who does it for them, they are leaving your confidential information open for thieves.

Hackers are always finding new ways to gain access to our personal information. If you look for an advisor who takes information security seriously and takes precautions such as these, your chances of becoming a victim are much smaller.