Like compliance, cybersecurity is not a topic that advisors relish discussing, but “it’s a necessary evil,” says Joel Bruckenstein, head of Technology Tools for Today, or T3.
Why? Because “cybersecurity is the single greatest threat to your business,” Bruckenstein told advisors during the TD Ameritrade National LINC conference on Feb. 9. “Best-case scenario, if you have a serious incident, you’re looking at six figures; worst-case scenario you’re looking at the health of your business and you’ll probably be out of business.”
In late January, TD Ameritrade Institutional integrated its Veo One platform for advisors with cleverDome, which is billed as a B corporation co-op that offers community-based solutions to protect confidential client information.
TD Ameritrade “has taken it [cybersecurity] to the next level because they got involved with cleverDome, which I think has the ability to change the industry,” Bruckenstein told ThinkAdvisor in an interview.
TD Ameritrade joined the cleverDome co-op in October 2018, after conducting due diligence on cleverDome’s technology in 2017.
Other co-op members include Redtail, Orion and Riskalyze, which share data through the cleverDome network.
Just as advisors fail to understand the changing “velocity of technology,” cybersecurity — both threats and the solutions — are also changing rapidly, Bruckenstein said. “Most people think of [cybersecurity] as part of their regulatory responsibilities, and they’ll go to whomever their regulatory consultant or attorney is and say, ‘What should I be doing?’ They give them a list of stuff to do, and they think they’re done. And they’re not.”
Cybersecurity is “a subject that intimidates advisors a little bit; technology intimidates them; [cyber] is exponentially more complicated for them to understand,” Bruckenstein said. “I think that’s why I’m so passionate about cleverDome, because advisors will never figure this out on their own. You need a reliable third-party source that can provide them with more than the bare minimum.”
A recent T3 survey of more than 5,500 advisors on their use of a third-party provider for cloud hosting or cybersecurity found that only 5.68% use one.
Bruckenstein opines that “a lot of advisors don’t understand that they need” a third-party provider. “You have a lot of the hybrid reps who say, ‘OK, my broker-dealer has come in and done a security audit’; fine, that means that they’ve passed the minimal amount that FINRA requires. It doesn’t mean that they’re doing all the best practices that they should be doing.”
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