10 Biggest Cyber Security Mistakes Financial Advisors and Planners Make…And How to Avoid Them 

Financial advisors and planners rely on digital tools and platforms to manage their clients’ assets, provide investment advice, and streamline their operations. While these technological advancements have undoubtedly brought convenience and efficiency to the industry, they have also opened the door to a host of cybersecurity threats and challenges.

Despite the growing awareness of these risks, financial advisors and planners continue to make significant cybersecurity mistakes that leave them and their clients vulnerable.

In this blog, we will delve into the ten most significant cybersecurity mistakes that financial advisors and planners often make. We’ll also provide practical insights and guidance on how to avoid these pitfalls and strengthen your cybersecurity defenses

1. Underestimating the threat

One of the biggest cybersecurity mistakes of firms is underestimating the threat landscape. Many business owners assume that their company is too small to be a target. But this is a dangerous misconception. 

Cybercriminals often see smaller businesses as easy targets. They believe the company lacks the resources or expertise to defend against attacks. It’s essential to understand that no financial firm is too small for cybercriminals to target. Being proactive in cybersecurity is crucial.

2. No formal security policies

Firms often operate without clear security policies and procedures. With no clear and enforceable security policies, employees may not know critical information. Such as how to handle the firms highly sensitive data. Or how to use company devices securely or respond to security incidents. 

Financial planning should establish formal security policies and procedures. As well as communicate them to all employees. These policies should cover things like:

  • Password management
  • Data handling
  • Incident reporting
  • Remote work security

3. Neglecting employee training 

When was the last time you trained your employees on cybersecurity? Firms often neglect cybersecurity training for their employees. Owners assume that they will naturally be cautious online.

But the human factor is a significant source of security vulnerabilities. Employees may inadvertently click on malicious links or download infected files. Staff cybersecurity training helps them:

  • Recognise phishing attempts
  • Understand the importance of strong passwords
  • Be aware of social engineering tactics used by cybercriminals

4. Ignoring software updates

Failing to keep software and operating systems up to date is another mistake. Cybercriminals often exploit known vulnerabilities in outdated software to gain access to systems. Financial planning firms should regularly update their software to patch known security flaws. This includes operating systems, web browsers, and antivirus programs.

5. Lacking a data backup plan

Financial planners may not have formal data backup and recovery plans. They might mistakenly assume that data loss won’t happen to them. But data loss can occur due to various reasons. This includes cyberattacks, hardware failures, or human errors.

Regularly back up your company’s critical data. If you’re using Microsoft 365 this also needs to be backed up. A common misconception is that because data is in the cloud then it’s being backed up, this is simply not the case. Test the backups to ensure they can be successfully restored in case of a data loss incident.

6. Using weak passwords

Weak passwords are a common security vulnerability. Many employees use easily guessable passwords. They also reuse the same password for several accounts. This can leave your financial firm’s highly sensitive information exposed to hackers.

Encourage the use of strong, unique passwords. Consider implementing multi-factor authentication (MFA) wherever possible. This adds an extra layer of security.

7. Ignoring mobile security

As more employees and advisors use mobile devices for work, mobile security is increasingly important. Financial firms often overlook this aspect of cybersecurity.

Put in place mobile device management (MDM) solutions. These enforce security policies on company- and employee-owned devices used for work-related activities

8. Not securing your advisors laptops

Lots of financial planning firms have self-employed advisors and a large number of these use their own laptop.

Lack of visibility of what is on these devices is a real concern, does it have security software installed? Is it up to date? Does the device have the latest security patches installed? Is anyone else using the device? Who’s accessing your firms sensitive information?

9. Presuming your IT company are monitoring your Microsoft 365 access

Lots of advisor firms use Microsoft 365 for email and data access. But, how would you know if someone is in your (or a member of your teams’) 365 account?

The answer for the vast majority of companies we speak to is either “I don’t know” or “I presume our IT company would know”.

Bottom line: If your outsourced IT company aren’t alerting and asking questions when you go abroad, it’s a clear indication they are not being proactive and keeping your data as secure as it needs to be

Without these kinds of alerts, suspicious activity can go unnoticed for days, weeks, even months.

10. No incident response plan

In the face of a cybersecurity incident, financial firms without an incident response plan may panic. They can also respond ineffectively.

Develop a comprehensive incident response plan. One that outlines the steps to take when a security incident occurs. This should include communication plans, isolation procedures, and a clear chain of command.


12-point security checklist for financial planners

To help boost your cyber security, we’ve put together an FCA-based 12-point checklist designed with financial planners in mind, that you can use to help you tick off all areas of cyber security.

Click here to download your free checklist and protect your organisation.