By Michael Pinsker
As cyberattacks continue to grow in sophistication and global scope, protecting clients’ sensitive financial information from hackers—while adhering to evolving financial services industry regulations—is more critical than ever. Broker/dealers and registered investment advisors (RIAs) that suffer data breaches are not only subject to regulatory fines and investigations but also to permanent damage to their reputations.
However, safeguarding information can be difficult because many wealth management practices, and many financial institutions as a whole, have multiple technology systems in place for storing and processing data. Just as it would be difficult to build a single fence to enclose livestock grazing on multiple disconnected pastures, securing data stored in disparate systems is a convoluted and risky proposition for advisors. Hackers have better chances of getting past cyber-gatekeepers when the latter have to split their monitoring efforts among separate entities.
It is far easier to protect multiple systems for processing and storing data when they are consolidated on a single platform, just as a fence can better safeguard livestock when they graze on a single, contiguous patch of grass.
This is why, in order to truly become cybersecure, advisors have to first streamline their data management by consolidating all their systems, data and documents into a unified fintech platform. Unfortunately, some firms think of cybersecurity and data management as two distinct areas requiring different technology solutions, leading them to utilize solutions from different vendors—a scenario that prevents them from streamlining and securing their practices over the long term.
Luckily for today’s wealth management firms, they have the option of implementing cloud-based digital systems that address both their cybersecurity and data-management needs. These solutions have been developed by third-party experts in securing, managing and processing data—which generally aren’t the major areas of expertise for wealth managers. By outsourcing cybersecurity and data management to a trusted partner, advisors can focus on their core competencies of wealth management, investment advice, financial planning and client service while confident in the knowledge that their clients’ sensitive information is protected and their systems remain in compliance with evolving cybersecurity regulations.
In addition, from a cost perspective, one cloud solution that handles both cybersecurity and data management is cheaper than two different applications from one or multiple vendors. But more importantly, the consolidation of data and systems also helps advisors realize cost savings and greater efficiency by significantly streamlining workflows related to data management, transaction processing, and other operations across their businesses, while remaining secure and compliant.
This type of offering also enables the vendor to seamlessly and automatically make all cybersecurity and data-management updates through a software overlay on an ongoing basis—further securing and optimizing advisory practices so they can easily adapt to new threats and regulations.
Understanding the Connection Is Key to Providing Crucial Business Intelligence
When conducting due diligence on technology providers, advisors should check if prospective solutions are designed to address cybersecurity and data management simultaneously. If a vendor has two different applications for securing and managing data, then its team clearly doesn’t understand that the best way to secure data is to streamline its management and storage. This may also indicate that the vendor’s solution wasn’t specifically built for the financial services industry.
On the other hand, a vendor whose system consolidates all data and documents into a single cloud interface in order to secure it can do far more than just safeguard data today—it can alert advisors to emerging problems that can cause trouble for their businesses tomorrow.
By integrating all data and systems into one digital platform where they can be securely accessed and aggregated on any company-approved device with multifactor authentication and other safeguards, third-party vendors can customize their solution interfaces to provide a holistic view of a firm’s entire operations on a single screen with one or two clicks. This insight is critical for instantly showing advisors where there is a slowdown in data or transaction processing, or client service, and how to go about solving such an issue now before it gets worse.
The creation of a concise, holistic view of a practice’s entire operations, which can help advisors effectively manage and grow their businesses today and in the future, is only possible if an advisor uses a cloud-technology solution that unifies cybersecurity and data management. Advisors can’t safeguard data from cybercriminals over the long term if their data and systems aren’t consolidated in one place, where they can be properly managed—but they also can’t manage their data more effectively or efficiently if the data isn’t secure.
When evaluating various technology offerings, advisors need to remember that their cybersecurity and data-management needs can’t be adequately addressed using separate applications. They are intrinsically linked components that complement each other within a unified solution.
Michael Pinsker is CEO and president of Docupace Technologies, LLC.