Securing Your Client’s Information: Data Security Tips for Agents and Advisors

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Financial agents and advisors often request and work with important personal identifying information (PII) from their clients that must be kept secure at all times. If a client’s sensitive information is leaked, it could be catastrophic for both the client and the business. Reviewing data security and cybersecurity best practices can protect your business and your client’s data.

The need to secure client data is a priority as the number of data breaches is skyrocketing. Recent data from Risk Based Security revealed that the number of PII records exposed has increased to a staggering 36 billion in 2020; the worst year on record for data security.  Although all industries have been affected, the volume of sensitive data and information that the financial industry stores makes them a prime target for hackers and data breaches.

To ensure that financial advisors and their firms are taking cybersecurity seriously, the Securities and Exchange Commission and U.S. state securities regulators are starting to crack down on financial advisors’ cybersecurity practices. Let’s review some data security best practices for agents and advisors.

How Can Financial Agents Keep Client’s Personal Information Safe?

It’s important for financial advisors to minimize risk by evaluating how their client data is stored. They should keep tabs on the people who have access to this information and use multiple security methods, like encryption and multi-factor authentication. It’s also important for firms to periodically review their software, run updates, and patches. Additional steps for financial agents and advisors to protect personal information are:

  • Keep an Active Inventory of Data Locations. Know what data you retain and how it’s controlled, shared, and accessible.
  • Review Policies and Procedures: Defining your policies and procedures as related to regulatory rules regarding data security and retention along with informing your clients about how their data is stored, used.
  • Review your partners for data protection: Many financial advisors work with third-party companies to ensure that their customers are getting the best possible service. While this can save them a lot of time and energy, it’s important to make sure that the company isn’t misusing their customers’ personal information. Financial agents should work with companies that are transparent about the ways they use information and take extra steps to keep this information secure.
  • Regulatory Requirements: Stay up-to-date with the latest compliance requirements and rulings that may impact your business.  A compliance audit of your data security vulnerabilities can protect your business.
  • Perform Vulnerability Checks: A vulnerability assessment or vulnerability check is a holistic look at security weaknesses in an information system. It evaluates if your policies, procedures, and system is susceptible to any known vulnerabilities, assigns severity levels to those vulnerabilities so you can build a business continuity plan.

Planning for Data Security Concerns

If the unthinkable happens, financial advisors need to have a business continuity plan in place for data breaches, preventing future data security concerns, and notifying their customers. If your business employs staff, educate employees about safety protocols, regulations, and stress the importance of protecting their clients’ secure data. Regular security meetings should be part of the workplace culture. Some businesses even require their employees to use separate devices like smartphones and tablets for business use.

We take every step to ensure that our clients’ sensitive data is safely stored. Within DMI’s agent/advisor portal, we offer Secure Upload, a data solution fur current customers to securely upload and share files for operations support.  For prospective customers who want to utilize DMI’s My Back Office solution, contact your DMI Sales Representative.