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GUARDIANS OF WEALTH: CYBERSECURITY

SB Magazine — Mon, 09 Sep 2024 20:23:40 +0000

Guardians

of Wealth

CYBERSECURITY

in Banking, Finance,

and WealthManagemen

The realms of banking, finance, and wealth management are interconnected domains that play vital roles in the functioning of modern economies. Banking serves as the foundational structure for financial transactions, while finance provides the necessary tools for resource allocation and investment. Wealth management, with its emphasis on personalized financial strategies, ensures that individuals can navigate the complexities of managing their assets effectively. Together, these elements not only contribute to individual financial well-being but also enhance overall economic stability and growth, highlighting their indispensable roles in contemporary society.

When we think of heroes, our minds often go to DC Comics’ Justice League, Aquaman, or Marvel’s characters like Spiderman, The Avengers, Black Panther, or the antihero Deadpool. All come to us fully equipped in muscle-padded, tightfitting power suits with superhuman abilities. It’s common knowledge that the Godfathers of superheroes, Batman and Superman, are the benchmark for all other superheroes. They all have one thing in common. Protecting our universe and fighting evil forces.

But that’s for the comic books and blockbuster movies. What about reality? Who’s got our backs on a daily basis? Yes, we have policemen, firemen, EMTs, and doctors. But even these heroes need protection too.

Enter the superhero who is working diligently behind the scenes, undercover, and stealthily safeguarding us from (SFX: deafening screams) CYBER ATTACKS. These are the real heroes in today’s digital age.

Cybersecurity has become a critical aspect of the banking, finance, and wealth management sectors. When financial transactions and sensitive data are predominantly conducted online, the protection of financial institutions and customer data from cyber threats is paramount to maintaining trust and stability within the industry. The regulatory frameworks, technologies, and tools utilized, and the importance of human factors are crucial in ensuring a robust cybersecurity posture. By delving into these key aspects, we can gain a comprehensive understanding of the challenges and strategies involved in safeguarding wealth in the digital realm.

Cyber-attacks in the banking and finance sector have been a persistent threat, with notable incidents serving as cautionary tales for the industry. One such case is the 2016 Bangladesh Bank heist, where hackers attempted to steal nearly $1 billion from the central bank’s account at the Federal Reserve Bank of New York. The perpetrators managed to compromise Bangladesh Bank’s computer network, observe how transfers were done, and were able to gain access to the bank’s credentials for payment transfers. They used these credentials to authorize about three dozen requests to the Federal Reserve Bank of New York. These requests were made to transfer funds to accounts in the Philippines and Sri Lanka.

This incident highlighted vulnerabilities in the global financial system and underscored the importance of secure payment messaging systems. Lessons learned from this and other incidents emphasize the need for continuous monitoring, swift incident response protocols, and enhanced authentication mechanisms to prevent unauthorized access to financial systems.

Smaller companies, such as those that offer bookkeeping, payroll, and small businessaccounting, are also at risk. Sensitive financial information is increasingly targeted by cybercriminals. The accounting industry relies heavily on accurate and secure data management, making it a prime target for hackers. Accounting firms, like CFO ProSolutions in Shreveport, with their wealth of sensitive financial data, are prime targets for cyber-attacks. Phishing, ransomware, and other types of cyber threats can lead to devastating consequences. “We have managed services with an IT company. They manage everything in our network. They require that I carry cyber insurance as well. They have protocols through our e-mails set up that prevent unsafe documents from being opened. Every file is password-protected. We also have a software called Share File. I can send a link to a client to upload their information securely,” owner Missy Fussell said. CFO has had several incidences where criminals have hacked into their client’s emails, assumed their identity, and attempted to steal an identity. “We utilize the internal controls checklist used by CPA’s. We send this 11-page checklist to our clients to ensure a system of checks and balances.” Missy also strives to establish a relationship with her clients. It’s good business and it also helps recognize any red flags.

Accountants play a critical role in safeguarding sensitive financial data. By implementing robust security measures, staying current with industry best practices, and fostering a culture of cybersecurity awareness, accountants can help protect their clients’ informationand maintain trust in their services. It is crucial when creating a cybersecurity plan to implement a checklist of best practices.

Assess current cybersecurity posture. Conduct a risk assessment, review access controls, and conduct regular updates to stay ahead of the threat.
Educate clients on the dangers of a cyber attack
Implement a strong password policy. Use multifactor authentication.
Secure networks and devices
Regularly update software and apply patches
Encrypt sensitive data
Establish a comprehensive data backup and recovery plan

The role of the cyber security hero for wealth management is even more comprehensive. We sat down with the Lyons Group at Raymond James for an in-depth discussion on how Raymond James is able to maintain “constant vigilance” where our privacy is concerned.

“We have built a massive technology infrastructure that takes an active approach in not only addressing issues but anticipating them,” said Jeff Lyons. “At our Raymond James home office in Saint Petersburg, Florida, we have a ‘war room’ that is the center of our Raymond James security. This room has many monitors and screens that watch over 200 applications and can even detect when systems slow down by even 500 milliseconds.”

Jeff went on to say that 1.5 million fraudulent and phishing emails are blocked in a single day. They can see where the threats are coming 12 SEP 2024 | SBMAG.NET $ from and where they are going in real-time. The Raymond James cyber security team has also partnered with the NSA and other government agencies to protect their clients. Jeff, a certified CFP (Certified Financial Professional – only 5% of the financial advisors in the world are CFPs), is held to an even higher standard when it comes to doing what is best for his clients. As a Wealth Management Professional, it’s his job to stay on top of technology and the security systems that Raymond James has in place.

Jonathan Terry, a Lyons group junior partner, is currently working on his CFP. He provided us with a list of key notes on the Raymond James security protocols. One that stood out was the Business Continuity Management Group (BCM). This dedicated team works closely with the Information Technology department “to employ a standardized framework for building, maintaining, and testing business continuity plans.” The BCM team will help businesses design a plan that allows that business to continue operations should something happen. This includes providing clients with prompt access to their funds and securities.

We may not understand how hackers can kidnap our emails, but it happens every day. Even our text messages are unsafe from these predators. Chelsea Grissom, Senior Registered Client Services Associate with the Lyons Group, said, “I always call a client back to get verbal confirmation of any emailed request for trades or funds transfer, including wire transfers. I will offer to send or receive documents via the ‘client vault’ instead of email. With Artificial Intelligence’s ability to mimic our voices, scams are everywhere. “I encourage our clients to have a Trusted Contact listed in the event of a suspicious phone call,” said Chelsea. This is a person she can call and ask a series of pre-arranged questions that only the client would have the answer to. This is another example of the layer upon layer of security Raymond James and other wealth management teams adhere to.

As technology continues to advance, the future of cybersecurity in banking, finance, and wealth management is marked by both challenges and opportunities. Emerging technologies such as blockchain, quantum cryptography, and biometrics are shaping the landscape of cybersecurity, offering new ways to secure financial transactions and data. However, the adoption of these advanced cybersecurity measures also presents challenges in terms of compatibility, scalability, and cost. Financial institutions must navigate these complexities while also staying ahead of evolving cyber threats such as AI-driven attacks and supply chain vulnerabilities.

The realm of cybersecurity is dynamic and ever evolving, driven by the constant interplay between threat actors and defenders. We’ve just investigated the tip of the iceberg when it comes to the various aspects shaping cybersecurity practices in the financial sector. From the importance of regulatory frameworks and technological tools to the critical role of human factors in maintaining a strong security posture, financial institutions must prioritize cybersecurity as a fundamental aspect of their operations, adapt to changing threats, and collaborate with industry partners to enhance the resilience of the financial ecosystem.

The people in the cybersecurity world put on their capes every day. They are vigilant, innovative, and dedicated guardians of wealth.

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UNDERSTANDING THE BASICS OF INVESTING

SB Magazine — Fri, 10 Nov 2023 18:15:35 +0000

Investing is a common way for people to build wealth. But it can take many forms and involve different levels of risk. What makes sense will differ from person to person.

Why? Because everyone’s financial circumstances are different. What may be good advice for a 23-year-old just leaving college and entering the workforce may not be the best course of action for a 57-year-old looking to preserve or even catch up in retirement savings.

Some investors may be able to afford a little risk in their investment portfolio … others may want to avoid risk at all costs. In addition, some folks may be able to manage their own budget and planning, but others may need a financial professional to sort out their situation.

Many investing options.

Complicating the situation is the variety of investment opportunities available. Most people participate in the market through retirement plans provided by their employer, which typically offer the chance to direct funds into stock and bond investments. Beyond that, the advent of online brokerages and electronic trading has opened the door for many people to construct their own investment portfolios ranging from individual stocks and bonds to commodities and real estate.

And there are additional opportunities with private equity funds and online funding ventures like Kickstarter.

In addition, investment vehicles have become varied as well. There is a wide spectrum of ETFs and mutual funds available beyond the world of stocks and bonds. And more and more exotic mechanisms, like digital currency and derivative investments, are entering the market.

The investment world is broad and varied. But through it all, are some basic principles and stock market basics all investors should understand and keep in mind.

Basics of investing

Risk: All investments have risk. How much risk typically depends on the type of investment. Understanding the risks involved, both in investing and in specific investments, is essential before committing any money.

For example, bank certificates of deposit (CDs) and U.S. Treasury bonds are generally considered lower risk than stocks or shares in a venture fund. But CDs and bonds typically command lower rates of return, because they are less risky. The general rule is the higher the risk, the higher the potential rate of return. But rates of return outside of CDs and Treasury bonds — and particularly for investments tied to markets — are not guaranteed.

Nor is there such a thing as a safe investment. History is replete with examples of investments people thought were “safe” going down in value.

So why invest at all? Because it’s a way that has proven, over time, to build wealth. It’s also a way to counter inflation, which is the loss of value in savings because of general increases in prices and costs.

So, a good step for any investor, is to understand how much risk they are willing to accept.

Additionally, all investors should recognize that their risk profile may change over time and so they may want to periodically reevaluate their position.

Diversification: Here’s a common bit of advice: “Don’t put all your eggs in one basket.” The same advice applies to investment portfolios. If all your investments are in the same type of asset class, say stocks, and that investment area suffers a setback, a market correction for example, then your portfolio will suffer likewise. If your investments are spread out over different investment categories, say a mix of stocks, bonds, and mutual funds, then the damage from a particular downturn will be limited.

For that reason, many investors divide their holdings among different types of investments. And some carry the strategy further, divvying up stock holdings between large companies and small companies, for example. Others still look to vehicles like insurance and annuities to vary their investment mix even more.

Asset allocation: How does one diversify? Typically, the choices you make will depend on your age and risk tolerance. Generally, when you’re older, you want to have less risk in your investments, since you will have less time to make up for a loss. As a result, older investors tend to want a greater proportion of bond holdings in their portfolio than younger investors, because bonds are considered less risky than stocks for the most part. On the other hand, younger investors may be willing to accept more portfolio risk in exchange for the possibility of higher returns, since they have a longer investment horizon to make up possible losses.

Dollar-Cost Averaging: Buying stocks and other investments at regular intervals in fixed dollar amounts is a strategy followed by many investors. This system reduces the average purchase price of the stocks in a portfolio, regardless of which direction the market is moving. That’s because as the prices of securities being purchased rise, fewer units are bought, and vice versa.

The practice of dollar-cost averaging doesn’t eliminate risk. But, by lowering the average purchase price, it does help prevent investors from overbuying shares in the face of a market retreat. However, it also means gains are limited in the face of a market spike.

“When stocks go down, people often get fearful and sell,” said the Financial Industry Regulatory Authority in a discussion of the practice. “Then, when the market goes back up, they might miss out on potential gains. On the flip side, when the stock market goes up, investors might be tempted to rush in. But they could end up buying just as stocks are about to drop. Dollar-cost averaging can help take the emotion out of investing. It compels you to continue investing the same (or roughly the same) amount regardless of the market’s fluctuations, potentially helping you avoid the temptation to time the market.”

Steady investment strategy

Some investors, especially those willing to commit time to market study and research, may elect to move into more complex and sophisticated strategies and systems. Indeed, there are people who decide to become professional investors.

Most people, however, have careers and make a living in other ways, and use investment to build wealth and prepare for retirement. And so, they regularly put their earnings in a well-diversified portfolio and reinvest any gains along the way.

Of course, the level of investment and financial goals can differ from individual to individual. Many people opt to consult a financial professional to set an investment plan. But for most people, regular and steady investing can help them win the race.

Provided by Brian B Addy a financial representative with Magnolia Wealth Strategies courtesy of Massachusetts Mutual Life Insurance Company (MassMutual).

2023 Massachusetts Mutual Life Insurance Company, Springfield, MA 01111-0001 MM202601-303986

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MONEY MATTERS

SB Magazine — Wed, 13 Sep 2023 17:49:23 +0000

When facing a serious medical or legal issue, who do you look to for guidance? You wouldn’t just walk into the first doctor’s office or attorney’s office and hire just anyone. You would do your due diligence to make sure you are choosing to work with someone you can trust. You would look for a highly credentialed professional with a lot of experience. The same approach applies when you are looking for a financial advisor.

Choosing a professional financial advisor doesn’t have to be daunting. I recommend starting with a few simple questions: First, is this person a qualified financial planner?

A best practice when choosing a financial advisor is to find one with several years of experience and at least holds the Certified Financial Planner (CFP) designation.

Another important question you might consider: does he or she have a genuine interest in customizing an investment strategy built for your specific needs, or is there more energy being put into selling you a product that favors the interest of a company with which they or their firm is associated?

In the end, experience, advanced credentials, and education can make a meaningful difference in your investment outcomes and, ultimately, how satisfied you will be in the long run with your chosen financial advisor.

Managing personal finances can be not only reassuring but exciting when you work with a qualified financial planner. It’s not just about numbers, but about dreams, goals, and security. Many individuals feel overwhelmed when trying to save, invest, or even understand the complexities of the financial world. That’s why an adept financial advisor can be invaluable by delving into not just account balances, but understanding your life’s trajectory, your aspirations, and the unique situations you might face. A hallmark of a competent advisor is the ability to foster trust and genuine relationships, ensuring that your financial strategies align with your life’s blueprint.

Fostering such a relationship is not always straightforward. When embarking on the search for an advisor, consider the following:

Define Your Needs: Are you looking for retirement planning, investment strategies, tax advice, debt management, budgeting insights, or guidance on estate planning? Pinpointing your requirements will guide your choice of expert.
Seek Referrals: Begin with your circle. Family and close friends can provide candid reviews and recommendations based on their experiences.
Check Credentials & Experience: While they don’t guarantee expertise, credentials and experience can set the groundwork for your search. They can help you distinguish knowledgeable advisors from the novice.
Find an Advisor You Trust: Such professionals commit to placing your needs above theirs. They prioritize clients’ interests, even if it means reduced compensation for them.
Ask questions: When interviewing potential advisors, remember they’ll work for you, and you should feel comfortable asking questions. Some questions to consider are:

What are your credentials?
Are you a fiduciary?
How do you get paid – commissions, flat fees, or both?
How will you manage my assets?
What proactive steps should I take for my financial future?

Choosing a financial advisor is akin to selecting a co-pilot for your financial voyage. To navigate the constantly evolving terrain of your life—be it personal milestones like marriage and childbirth, career advancements, or unpredictable events—an advisor should not just bring expertise but also empathy. This partnership thrives on regular communication, periodic reviews, and realigning strategies in response to life’s vicissitudes.

In summary, just as one exercises diligence in choosing a doctor or lawyer, the same prudence is essential when selecting a financial advisor. In addition to getting curious about credentials, education, and experience, it’s the relationship’s integrity, regular communication, and the advisor’s genuine commitment to your best interests that will ensure you achieve your financial objectives and dreams.

Denis Poljak is a Managing Director and a Wealth Manager with the Poljak Group Wealth Management at Steward Partners in Shreveport, Louisiana. The information contained in this article is not a solicitation to purchase or sell investments. Any information presented is general in nature and not intended to provide individually tailored investment advice. The strategies and/or investments referenced may not be suitable for all investors as the appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives. Investing involves risks and there is always the potential of losing money when you invest. The views expressed herein are those of the author and may not necessarily reflect the views of Steward Partners or its affiliates. Information contained herein has been obtained from sources considered to be reliable, but we do not guarantee their accuracy or completeness. Steward Partners Investment Solutions, LLC member SIPC

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