Both President Barack and Republicans promised to deliver cybersecurity legislation on Tuesday, but it remains unclear what those proposals will look like and how they will benefit advisors and financial services firms.
In his State of the Union speech on Tuesday, President Obama spoke about his initiatives to combat cyberattacks, noting that “If we don’t act, we’ll leave our nation and our economy vulnerable. If we do, we can continue to protect the technologies that have unleashed untold opportunities for people around the globe.”
The administration has laid out a plan that includes broad measures to better share information between the government and the private sector and raise penalties for cyber crime.
At least a couple of advisors were skeptical of any future legislation’s adherence to privacy, but most felt it was a step in the right direction. “It’s probably inevitable that we get some sort of uniform control over the interne; the more fragmented our systems are the more vulnerable we are,” says Paul C. Spitzer of California-based Advanced Practice Advisors.
Yet the thought of “I’m from the government and I’m here to help” is a terrifying concept, Spitzer says, adding that he hopes there’s a technology solution out there that could protect from a “Big Brother” scenario. “Nobody wants someone else to determine what information we get access to,” he says.
John Maffei of MFM Financial Services also endorsed creating a more robust cybersecurity policy. "If guidelines were set that permitted firms to notify authorities when strange money transactions were taking place or ownership of financial assets were changing, I think it may help avoid a terrorist act from erupting within the financial system," he said.
Cybersecurity is also one of the few issues with which Republicans seemed to agree. Senator Joni Ernst said in the Republican’s official response to the State of the Union, “We'll advance solutions to prevent the kind of cyberattacks we've seen recently.”
John Reed Stark, a managing director at Stroz Friedberg and former chief of the SEC's Office of Internet Enforcement, said Wednesday that creating liability protections and simplifying information sharing were a good thing for the financial services industry. “From my perspective, the President was offering bi-partisan solutions that would only help financial institutions and other companies manage the emerging threats of data breaches.”
The Securities Industry and Financial Markets Association also commended the importance the President placed on cybersecurity. “The time is right for Congress to pass cybersecurity legislation that strengthens our nation’s cyber defenses by codifying liability protections that promote enhanced information sharing between the industry and government while balancing the need for important privacy protections for individuals.”
But Stark points out that President Obama’s proposal to wrap his arms around the “dizzying mishmash” of current statutes, rules and regulations is a challenge. It’s a very delicate balance to craft legislation that will both protect privacy and civil liberties, while also ensuring that law enforcement has the tools to do its job, he added.
"It's no coincidence that the President spoke about security and privacy together. 2015 is definitely the year that consumer security and privacy collide. Financial advisors must understand the relationship between the two, that one can't survive without the other, and that a failure of one exposes the other,” says Neal O'Farrell, the founder of cybersecurity firm Privide.