Financial advisers work with some of the most sensitive information their clients own. Personal details, financial information, investment plans, and identity documents all need to be protected.
Good data security reduces the risk of information being accessed, altered, lost, or disclosed to the wrong people. It is also an important part of meeting your responsibilities as a licensed Financial Advice Provider.
Why Data Security Matters
Clients trust you with highly sensitive information. If that information is exposed through a cyber incident or data breach, clients may face identity theft, fraud, or financial loss, while your business may face fines, disruption, increased costs, complaints, and damage to your brand and trust.
8 Areas Worth Reviewing
1. Control who can access information
Not everyone in the business needs access to every system or client record.
Review user permissions regularly and ensure staff and contractors only have access to the information they need. Update permissions when people change roles or leave the business.
Periodic reviews can help identify inactive accounts and unnecessary access.
2. Use multi-factor authentication
Multi-factor authentication (MFA) provides an additional layer of protection beyond a password. Even if a password is compromised, MFA can help prevent unauthorised access to systems and client information.
Strong password practices are also important. Avoid shared logins and consider using a password manager to store unique passwords securely.
3. Keep software up to date
Software updates often contain security fixes. Delaying updates can leave known vulnerabilities unaddressed. Having a process for applying updates helps reduce avoidable security risks.
4. Review security alerts and account activity
Unusual login activity or security alerts can be an early indication of a security issue. Reviewing alerts and account activity may highlight unauthorised access, unusual behaviour, or system issues before they have a wider impact.
Regular monitoring can help businesses respond more quickly when action is required.
5. Train staff regularly
Many security incidents begin with a phishing email, fraudulent link, or other attempt to obtain information. Regular staff training can help people recognise suspicious activity and respond appropriately.
6. Test your backup and recovery plan
Backing up data is important, but businesses should also know how quickly information can be restored if systems become unavailable.
Consider:
- How often backups are performed
- Where backups are stored
- Who is responsible for recovery
- How long restoration is expected to take
Testing recovery processes periodically can help identify issues before they are needed in a real situation.
It’s also worth having an incident response plan that outlines key responsibilities, communication requirements, and the steps needed to minimise disruption. Review the plan regularly so everyone understands their role before an incident occurs.
7. Know where your data is stored
Most advice businesses use multiple software providers and cloud-based services.
Understanding where information is stored, who can access it, and how it is protected should form part of your due diligence process when selecting and reviewing providers. If information is stored overseas, businesses should still ensure they meet their obligations under the Privacy Act.
8. Review your service providers
Most advice businesses rely on external providers, including software vendors, IT providers, contractors, and outsourced administration services.
Ask questions about how they protect information. Have they completed independent security audits, achieved recognised certifications such as ISO 27001, or undertaken security testing such as vulnerability assessments and penetration testing? Do they have cyber insurance?
Final Thoughts
Data security relies on more than technology. The systems you use, the suppliers you work with, and the way your team handles information all play a role.
Regularly reviewing these areas can help protect client information, support privacy obligations, and reduce the likelihood of security and privacy issues.
