Why Should Financial Advisors Educate Clients About Cyber Security?
Today is the era of digital technology and in this era the nature of business has also changed. Whereas a few years ago all business transactions were done manually, now they are becoming digital. In this background, whether you are a common man or a businessman, everyone should know about this thing, how to stay digitally safe and prevent cybercrime.
But are financial advisors taking some responsibility in this direction? Do these people have a responsibility to educate their clients about the importance of cyber security? Let’s discuss it.
Financial institutions have implemented rigorous procedures to protect customers’ assets, but as the systems underpinning the finance sector become more complex, cybercriminals are constantly evolving their tactics.
These developments have led to an unprecedented increase in cyber threats, financial planning firms now have a responsibility to raise awareness and encourage good practice. Let’s see in details:
Customer can face loss:
Cyberattacks are constantly evolving and criminals are becoming more sophisticated in their approach, so it is more important than ever for financial advisors to stay informed about emerging threats and technologies that may compromise their clients’ financial well-being and stability.
Without reporting recent phishing scams and malware attacks, advisors are failing to meet their obligation to promote the overall well-being of clients.
In practice, customers who are not familiar with the use of technology or online services are at a disadvantage and are at increased risk of having large amounts of money withdrawn from their accounts or having their personal information compromised.
However, it is not only direct financial losses that customers may experience. There are also potential legal fees and time to recover lost funds, lost investment opportunities and the resulting financial stress that clients have to contend with.
Reputational Damage May Cause To Financial Advisors:
A lack of cyber education can have serious and far-reaching consequences for clients, but the same is also true for financial advisors.
Failure to promote safe online habits that prevent account intrusions can significantly destroy the trust on which advisor-client relationships are founded.
Clients may feel that their adviser has failed in their duty of care, leading to a loss of goodwill and trust and causing them to seek financial guidance elsewhere.
More broadly, negative perceptions about cybersecurity readiness can harm a financial advisor’s reputation. Other potential clients may view someone who has neglected his or her duty to educate in an important area of financial management, thereby limiting business growth for the company at large.
If client data or assets are compromised, financial advisors may also face regulatory penalties and investigations for failing to follow cybersecurity best practices and protocols around data security.
First, it is important to understand the symptoms of phishing attempts to avoid scams designed to steal personal information of their clients.
These usually come in the form of emails or messages impersonating banks or government agencies that convince customers to click on malicious links that grant access to their devices.
Customers should always be informed of the intentions of these schemes and advised to delete the messages immediately.
Equally, having a dedicated client portal with strong security means clients can rest assured when communicating with their financial planning firm and avoid the vulnerabilities of email interactions.
Advisors should reiterate to customers that they should avoid using public WiFi when accessing online accounts and instead use mobile data or wait for secure WiFi.
They should also recommend using secure websites, indicated by https:// and a padlock icon.
Similarly, customers should be encouraged to create complex passwords with multiple character types.
Enabling two-factor authentication adds another layer of user verification beyond just the password, while password managers can securely store multiple unique logins instead of having to write them down.
Exercising discretion when sharing documentation or information online limits the opportunities for customers to become victims of cyber crime.
Additionally, good quality downloadable antivirus software and firewalls add supplemental barriers against malware and hacking.
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Digital Risk Assessment:
Attackers are constantly inventing more ingenious scams, so maintaining an open dialogue with customers about these emerging threats is paramount to maintaining their financial health.
In addition to reactive warnings, advisors can also proactively display useful tools like virtual private networks or encrypting sensitive data.
Ultimately, for advisors to demonstrate truly holistic management of client interests, it is now necessary to take digital risks into account alongside traditional portfolio guidance.
Helping clients in establishing careful online habits not only helps preserve hard-earned savings, but it also maintains the relationship between financial advisors and their clients who place their trust and future security in the hands of advisors.
By bearing this responsibility, advisors can empower clients to protect themselves and avoid potential breaches of credibility, reputation and regulatory compliance.
That’s a brief article regarding awareness on cyber security I thought to share with you! I hope this will be valuable for you. You can reach me through the emails given below. I will love your valuable comments and feedback.
Yours
Abhijit Ranjan
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