Cybersecurity Tips for Retiremement Plan Custodians & Advisors

January 24, 2020

One of the most important aspects of overseeing retirement accounts is to ensure that all funds and private information are protected. Your clients work hard for their money, and they put a lot of care and preparation into planning their retirement. They should feel confident that their custodians or financial advisors take cybersecurity seriously and are doing everything in their power to keep their funds safe.

Unfortunately, the elderly population (and their retirement funds) is often a common target for theft or other risks and liabilities. Criminals will try to scam individuals directly or get ahold of their account information in order to drain their funds. Financial advisors cannot control who is targeted, but they can help their clients stay protected.

Here are six basic cybersecurity tips to help clients protect their retirement funds.

1. Do not discuss account information via email.

Although it may be simpler and quicker at times, it is never a good idea to discuss account details through email. Emails are vulnerable to hacking and information could easily be stolen. Instead, discuss all account information and instructions over the phone or in person.

2. Require verbal confirmation when possible.

Requiring verbal confirmation for transfer of funds adds an extra layer of protection. This is commonly the practice for third-party transfers, but should be considered for internal transfers as well, or transfers over a certain monetary limit. Verbal confirmation allows the custodian or financial advisor to ensure that it truly is the client requesting the transfer.

3. Train representatives on common issues.

A great way to protect a client’s account is to train the representatives handling the cases. They should be trained on common issues experienced, how to identify red flags, and how to scrutinize every detail of an account.

4. Involve other personnel.

Representatives should also be trained on the proper chain of command and how to involve other personnel in the communication and transactions involved in managing an account. Checks and balances happen naturally when several people have a hand in managing a client’s account. A supervisor can see and correct something that a supervisee might miss. This also ensures that employees are held accountable for their actions.

5. Record and/or document any client contact.

Documenting all client contact will help to protect both the client and the custodian or advisor. That way, there is a record of all communication that can be referenced if any detail is brought into question. This would also allow for a smooth transition if the client’s representative could not continue with their case for any reason.

6. Discuss common threats with clients.

Possibly the best cybersecurity tip to help clients protect their funds is to actively discuss threats with them. Make sure they are aware of common threats to and vulnerabilities of their funds. Help them identify when something seems suspicious, and encourage them to discuss all opportunities with you before handling their funds. If they trust that you have their best interest in mind, they will trust your advice as well. For some cybersecurity resources to go over with your clients, check out our Check Before You Invest checklist and list of investment questions.

Cybersecurity threats are a serious issue for both the client and the firm involved. It is important to be aware of threats and to proactively work against them. If you see a threat or vulnerability going undetected, speak to a supervisor immediately and help to resolve the issue.

Leave a Comment