Thanks to the internet, the financial industry is in a weird place regarding security of information.
There are clients who fear the dissemination of their personal financial information because they know they are going to be targeted by Russian hackers. They demand hard copies of every transaction, even when they are difficult and costly to provide.
At the exact same time, there are investors who are demanding advisors provide all kinds of information on their websites, including the opportunity to perform all possible financial transactions electronically. They even want to be able to access all of their financial information from all of their accounts in one place.
When the largest business and governments in the world cannot keep their information safe from hackers, how is your firm supposed to protect its clients from the possibility of having their financial information spread far and wide, while also satisfying their desire for more information online?
The answer may be “hard copy everything”. In recent focus groups I conducted with Millennials and Gen Xers, a vast majority of them wanted hard copies of all of their statements, which flies in the face of Baby Boomer investors who are moving away from hard copy.
To date, there is no 100 percent effective response to the issue of online security, but providers and advisors must be prepared to answer that question anyway. Your answer will go a long way toward alleviating some of the fears that exist within your most skittish clients.
And there are a great many skittish clients. According to Spectrem’s quarterly wealth segmentation series study Using Social Media and Mobile Technology in Financial Decisions, 66 percent of Millionaires with a net worth between $1 million and $5 million worry about the security of their financial information. More than 50 percent worry that all of their financial information and financial history could be destroyed by a computer hack.
However, investors also want more information available to them online. They want retirement and planning tools, budgeting tools, and they want to be able to access all of their financial information from all of their accounts in one place, preferably on the website of their primary advisor.
Imagine that one place getting hacked. That’s all of your client’s account information in the hands of unauthorized users.
So investors want all of their information available online, and worry that their information is not going to be secure because it is online. How do you satisfy both of those requests?
You could go old school and advise your clients to keep hard copies of everything. But, according to the Spectrem study, only 59 percent of Millionaires do that now. That means there are more than 40 percent of investors who are confident in the safety of online banking and financial transactions, and it is difficult to convince investors to go back to the old ways when they are comfortable in the world of computers.
So what do you do?
You tell your clients exactly what is going on in your technology department, in detail. The value of your in-house security team cannot be overestimated. It also cannot be over-promoted. Let your clients know what you do to protect their information.
Be innovative. This is one area where you definitely want to be cutting-edge, where you can differentiate yourself from other firms, and there are no federal guidelines or legislation against protecting information to comply with.
Of course, just like the government or your favorite retailer, you cannot promise to keep client information from being hacked. But you can promise to provide the utmost protection available to your firm.
And, if the investor wants it, you can promise to keep your in-house printer loaded with ink and paper for hard copies of everything as well.