Cybersecurity: Help Your Clients Understand How You’re Protecting Their Data – Episode 40
Cybersecurity is a key concern for advisors today—and with good reason, given that it seems there’s a new corporate data breach just about every month.
But while data security may be a big issue for you, you might not realize how important it also is to your high-net-worth clients—or what they want to see from you in this crucial area of their financial lives.
With that in mind, CEG Insights surveyed more than 1,300 investors—84% of whom have a net worth exceeding $1 million.
KEY TAKEAWAYS
- You’re very likely to lose your HNW clients if you’re hacked by cyber criminals.
- Proactively educate clients about your firm’s cybersecurity efforts.
- Use real-world examples to highlight how you’re protecting clients.
FACE THE FACTS
Here are some sobering facts about cybersecurity and your clients:
- 71% of investors consider cybersecurity to be very important.
- 33% of HNW clients say they’re somewhat likely or very likely to move their assets from your firm if you’re hacked.
- 55% of HNW Millennials—the largest group of wealthy investors today—say they would likely move their assets if their advisor’s systems were breached by cyber criminals.
The message is clear: Your clients are highly sensitive to cyber attacks. That means you have a lot to lose if you’re hacked.
To feel protected, clients want to see that you’re adopting the following security measures:
- Real-time fraud detection and alerts (39.6% of clients desire this service)
- Regular security audits and vulnerability assessments (36%)
- Enhanced two-factor authentication for account access (32.9%)
- Improved encryption of sensitive data (23.4%)
INSIGHTS INTO ACTION
Some action steps to consider as you move forward:
- Proactively educate your clients on your cybersecurity efforts and initiatives. We found that fewer than 50% of clients think their advisors are regularly updating them on cybersecurity. Let clients know what you and your firm are doing in this area of importance. You could make it part of your quarterly or annual review process—a quick review of the systems that are in place to safeguard their data. Or you could conduct workshops on cybersecurity with a security professional to offer tips and advice.
- Use real-world scenarios. There are so many examples out there of firms that didn’t have the right systems in place and got hacked as a result. Use those real-world examples to highlight what you’re doing differently and how you’re set up to avoid such scenarios.
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