Cybersecurity Built for
Financial Advisors

Regulation S-P (Privacy of Consumer Financial Information)

Requires RIAs and broker-dealers to adopt written policies and procedures for safeguarding customer records and information. The 2024 amendments add mandatory incident response programs and require notifying affected individuals within 30 days of a breach.

Regulation S-ID (Identity Theft Red Flags)

Requires firms that offer or maintain covered accounts to implement identity theft prevention programs that detect, prevent, and mitigate identity theft.

Rule 206(4)-7 (Compliance Programs)

Requires RIAs to adopt and implement written compliance policies and procedures, review them annually, and designate a Chief Compliance Officer.

Rule 204-2 (Books & Records)

Requires RIAs to maintain specified records including electronic communications, trade records, and client data in formats that ensure completeness and accessibility.

Attackers impersonate advisors, custodians, or clients via spoofed email to redirect wire transfers, steal credentials, or exfiltrate client data. The FBI reports BEC caused $2.9 billion in losses in 2023 alone.

Stolen or phished advisor credentials provide direct access to custodian platforms — enabling unauthorized account views, trade submissions, or money movements.

Ransomware encrypts client files, CRM data, financial plans, and email archives — halting operations and potentially exposing NPI. Advisory firms are increasingly targeted due to high willingness to pay.

Attackers or malicious insiders exfiltrate Social Security numbers, account numbers, financial plans, and tax documents — triggering breach notification obligations under Reg S-P.

Advisors using unapproved tools — generative AI chatbots, personal cloud storage, consumer file sharing — create data leakage outside your compliance perimeter.

Third-party vendors (CRM, financial planning software, e-signature, marketing tools) with access to client data can be compromised — extending the attack surface beyond your firm.

SEC OCIE Cybersecurity Examination

SEC Office of Compliance Inspections and Examinations

• Governance: Is there a designated cybersecurity leader? Written WISP? Board/senior management oversight?
• Access controls: MFA coverage, least-privilege, admin account hardening, offboarding procedures.
• Data protection: Encryption, DLP, backup & recovery, data classification.
• Vendor management: Inventory, risk assessments, contractual security requirements, ongoing monitoring.
• Incident response: Written plan, roles defined, tested via tabletop exercises, 30-day notification capability.
• Training: Continuous security awareness, phishing simulations, role-specific training for advisors.

FINRA Cybersecurity Examination

FINRA Office of Compliance Inspections

• Cybersecurity governance and risk assessment tailored to the firm's business model.
• Network and endpoint security: firewalls, EDR, patch management, vulnerability scanning.
• Phishing and social engineering controls, testing, and employee training.
• Business continuity planning: BCP documentation, testing, and communication procedures.
• Customer account protection: unauthorized access prevention, wire transfer controls.
• Regulatory filing and recordkeeping compliance.

Custodian Technology Review

Schwab, Fidelity, Pershing, or other custodian

• MFA enforcement on all advisor connections to custodian platforms.
• Endpoint security: EDR, encryption, patching on devices accessing custodian systems.
• Secure data handling: how client NPI is stored, transmitted, and disposed of.
• Access management: who has credentials, how are they shared, separation of duties.
• Incident response: notification procedures if advisor-side compromise affects custodian data.

What SEC cybersecurity rules apply to my financial advisory firm?

The primary rules are Regulation S-P (customer data safeguarding and breach notification), Regulation S-ID (identity theft prevention), Rule 206(4)-7 (compliance programs), and Rule 204-2 (books and records). The 2024 amendments to Reg S-P add mandatory incident response programs and a 30-day breach notification requirement, with compliance deadlines in 2025-2026 depending on firm size.

How is cybersecurity for financial advisors different from general business cybersecurity?

Financial advisors face unique risks: custodian credential theft, BEC targeting wire transfers, regulatory obligations under SEC and FINRA, books-and-records retention requirements, and the fiduciary duty to protect client NPI. Generic cybersecurity solutions miss these requirements. Advisor-specific programs include custodian integration security, compliant archiving, and audit-ready documentation.

What happens if we fail an SEC cybersecurity examination?

Deficiency findings can result in a requirement to remediate within a specified timeframe, enhanced monitoring, or referral for enforcement action. Serious or repeated deficiencies can lead to fines, censure, or suspension. The reputational damage from a public enforcement action can be even more costly than the penalties themselves.

Do you offer cybersecurity programs for both small and mid-size advisory firms?

Yes. Our SMB program (5-25 employees) provides a complete cybersecurity foundation — WISP, MFA, EDR, monitoring, backups, training, and incident response — at a fixed per-user cost. Our mid-market program (25-100+) adds vCISO services, SOC 2 readiness, advanced threat hunting, multi-office security, vendor risk management, and tabletop exercises.

How do you secure connections to custodian platforms like Schwab and Fidelity?

We enforce MFA on all custodian-facing sessions, implement conditional access rules (device compliance + location), disable legacy authentication protocols, enable session logging for auditability, and harden the endpoints that connect to custodian platforms with EDR, encryption, and application whitelisting.