If data protection, document storage, and cybersecurity are not already high on your priority list, it’s time to add it to your 2023 New Year’s Resolutions list.
Not only has the SEC labeled cybersecurity as one of their top priorities for review, proposing a new cybersecurity rule to help protection clients, but not beefing up your in-house data security and processes could cost you big. The average cost of a data breach in the financial industry is $6 million, according to an IBM Security report.
And that doesn’t include the cost of the permanent damage to your reputation. Your relationship with clients is built on trust. Lose that and you likely lose them and any prospective clients who may feel their sensitive information isn’t safe with you.
But data protection extends beyond security against data breaches. Your firm must also guard against inaccurate data that can wreak havoc on your integrated systems just with a simple old or wrong upload.
Forget that gym membership. Here are four data management, document storage, and cybersecurity best practices to help you and your firm flex those data protection and compliance muscles in the coming new year:
Four Best Practices for Data Protection and Compliance in 2023
Data can be dizzying. And advisors and advisory firms handle mounds of it every day — from client sensitive personal information to trade orders to internal reports and analysis. Figuring out the best way to manage and protect it can be overwhelming. It’s no wonder that 94% of advisory firms are facing challenges around effective data use.
At Skience, we are data wranglers and dominators, so we’ve identified the top four best practices for data protection and compliance to help you not only get a handle but to get ahead and get compliant.
- Audit Your Integrations and Third-Party Vendors
Start by identifying everyone who has access to your data. And that includes everyone outside of your firm like your integration partners and third-party vendors. Ask these questions:
- How many data sources do we have?
- What tech partners do we have?
- Where is our data coming from?
- Where is our data going?
- How does the data flow from one system to another?
- Identify a Secure Document Sharing Solution
Sending and sharing documents along with client communication is key. The days of sending attachments or simple links to a Box.com or even OneDrive file are over. But advisors don’t have time to chase down the right document directory or link every time you save something. When tasks become time-intensive and incredibly manual, well-meaning processes break down and no one follows the same rules across the firm.
Instead, having a secure document sharing solution that allows you to organize and secure your files by creating custom permissions and time windows helps ensure that private information stays private and compliant. Such solutions can also automate the upload process, to take away the responsibility and burden from your team to remember how and where files need to be saved.
- Create a Single Source of Truth
Along with having one place to store all documents, having one system as your single source of truth (SST) can facilitate more accurate and secure data.
Your CRM is often your best choice for your SST, which is created through integrations and data consolidation. In the end, instead of having to log into and access several different technologies, a SST allows your entire team to have one place to go to where they know all of the data is accurate.
Having just one login instead of many also makes everything more secure. Not only are most people not good about following password best practices — password management company LastPass reports that 59% of people use the same password everywhere — but sometimes passwords get hacked thanks to phishing emails or security breaches that happen even to tech partners focused on password protection like LastPass.
- Review Your Cybersecurity Program
Your data compliance program must already follow several SEC regulations, but the SEC also announced new proposed cybersecurity rules in February 2022. To stay ahead of the changing regulations, you will need to review your existing cybersecurity program to identify any and all vulnerabilities and also ensure that you are compliant with the proposed rules, which include requiring firms to:
- Conduct cybersecurity risk assessments, document those assessments, and develop and implement policies and procedures that are designed to address any risks that were identified
- Report cybersecurity incidents to the SEC within 48 hours of identifying them
- Publicly disclose cybersecurity risks and any incidents that occurred in the last two fiscal years
- Implement new recordkeeping requirements to allow for more cybersecurity-related information
A well-trained staff is not just a big part of the proposed new rules. It is also a big part of keeping your entire data management and document storage process compliant.
All other measures can be rendered useless if you don’t properly train your staff both during onboarding and on at least an annual basis, as regulations and trends change a lot. Phishing emails can get anyone. Keep everyone sharp and also identify folks who may need retraining with regular testing.
How Skience Can Help
Protecting your data is essential to your advisory business, so be sure to choose tech partners who value your data as much as you do. Skience offers a full slate of solutions to keep your data not only secure and compliant but also accurate, easily accessible, and dynamically capable of providing a 360-degree view of accounts and insights into your business. Schedule a demo with us today!