Why Phishing Scams Are Increasingly Targeting Financial Advisors

Advanced Phishing Methods

Some cybercriminals have developed more sophisticated techniques to steal valuable data. There are keystroke viruses that can infect a computer and record everything you type, including login credentials for online banking and other financial websites.

Once a machine is infected, it can send this sensitive information to a cybercriminal who will then be able to use these credentials to access online accounts. You can avoid being affected by one of these viruses by being wary of the links and attached files you receive via email. Make sure the devices you use to manage clients’ accounts have antivirus software.

Cybercriminals can also impersonate a client by hacking their email address or stealing their phone. They might claim that they need access to their funds right away because of an emergency. This type of scam can be difficult to recognize since the message will come from a trusted source and might look legitimate.

The best way to protect yourself from these scams is to establish best practices for certain actions such as releasing funds and meeting face-to-face with a client before performing these actions. Always verify written requests for distributions by calling the client. You should also communicate with clients regularly via phone calls and establish ID verification questions in advance; confirm the client’s identity at the beginning of the call using the established ID verifications.

Your Role as a Financial Advisor

You need to be aware of the most common phishing tactics and other ill-intentioned techniques used by cybercriminals. Provide training to every firm employee to ensure everyone who has access to sensitive information is aware of these techniques. An employee accidentally opening a malicious file can infect an entire network. Also, encourage employees to take their time conducting thorough and careful email reviews to prevent inadvertent, careless mistakes that can easily be avoided.

You should also look into creating an educational program to help your clients recognize these scams. Your clients might not be aware of how complex these hazardous attempts are, how prevalent they are becoming, or how to identify an investment scam. Use your humanity and the personal relationships you have cultivated to your advantage; communicate this as an added value to your clients.

Lastly, you should develop procedures that you can follow to verify a client’s identity before performing actions like withdrawing funds for a client. Communicating via regular phone calls and face-to-face meetings instead of entirely relying on emails will help you build stronger relationships with clients and make it difficult for cybercriminals to successfully impersonate them.

Andrea McGrew is chief compliance/chief legal officer at USA Financial, a comprehensive financial services institution, focused on providing advisors with the tools required to make solid recommendations and to empower clients to make educated and informed financial decisions. For more information, go to www.usafinancial.com.