Fidelity Institutional Adds Cybersecurity Solution for Wealth Managers

Fidelity Institutional announced this week that it is giving advisors access to a new third-party cybersecurity solution provided by Armorblox, a software-as-a-service cybersecurity company, to better protect them and their end clients’ business email from fraudulent activity.

Fidelity noted that business email compromise and email account compromise was the top cybercrime reported to the Federal Bureau of Investigation last year in terms of financial loss of some $2.1 billion, according to the 2020 FBI Internet Crime Report.

Armorblox’s technology analyzes client emails and identifies problematic risk behavior. The company uses advanced algorithms, such as natural language understanding, machine learning and other artificial intelligence techniques, to analyze thousands of data points and help prevent sophisticated email threats. 

With this solution offered by Fidelity, Armorblox can alert advisors of fraudulent emails, helping to protect them and their end clients from future risk. 

“A robust cybersecurity program is critical not only to advisors’ business operations, but also to maintaining the trust they have worked so hard to build with their clients,” Scott Slater, vice president of practice management and consulting at Fidelity Institutional, said in a statement. 

“Access to this cybersecurity offering allows us to provide even greater value for our advisor clients, while allowing them to provide peace of mind for their end clients.” 

Addressing the Threat

Fidelity said that in a study it conducted in July 2020, 67% of advisors reported that the pandemic had prompted their firms to revisit and update their cybersecurity protocols regarding using technology virtually. Forty percent said compliance, risk monitoring and cybersecurity technology platforms had become more valuable during the crisis. 

Investors have also weighed in. Fidelity’s 2021 Investor Insights Study, conducted in the spring among 1,974 investors, and including 773 millionaires, showed that 58% of advised investors said they would switch financial advisors if there was any report of cybercrime or security breaches into customer accounts at their advisory firm.

Fidelity noted that advisor outsourcing has also increased over the past three years. A quarter of the 451 advisors it surveyed in April said they outsource IT, tech, platform development or cybersecurity entirely to third-party firms. 

Forty-six percent of respondents said their primary reason for outsourcing IT, tech, platform development or cybersecurity was lack of internal expertise in this area. Thirty-seven percent said their main reason was a desire for optimized overall firm efficiency or productivity, 33% cited better cost effectiveness and 32% said doing so reduced risk to their firm.

Sixty-nine percent of advisors who outsourced IT, tech, platform development or cybersecurity did so successfully, reporting that it saved their firm time, helped optimize efficiency and resulted in excellent service quality. 

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