A 2021 report by Edelman Trust Barometer found that the financial services sector, which includes financial advisors, is the least trusted industry…in the world! This lack of trust within the financial services industry can greatly impact your book of business, making it harder to gain and retain clients. However, not all hope is lost, there are many ways you can regain and build back your client’s trust with data security.
Why Consumers Lost Trust in Financial Advisors
First, let’s explore why consumers lost trust with the financial services industry in the first place. After countless security incidents with large names in the financial industry, think the Wells Fargo and Equifax incidents, many consumers have lost trust in the financial industry altogether, including financial advisors. If these large name companies are not putting consumers best interests and the security of their data first then how can these same consumers trust independent financial advisors will place higher importance on consumer trust and data security?
A quick recap on the Wells Fargo and Equifax security incidents. From 2009 to 2016, there were 3.5 million unauthorized accounts opened on behalf of Well Fargo clients. This is because there was high pressure on Wells Fargo employees to open real accounts and get real clients to take out loans, make deposits, transactions, etc. However, Wells Fargo employees opened fake accounts to keep up with the high demands of their job. This incident impacted consumers not being able to trust the company they were working with to do business honestly and have their best interest in mind.
Now the Equifax incident is a different story. In September 2017, Equifax was victim to a large data breach that exposed 147 million of their customer’s personal information. Such as names, home addresses, phone numbers, dates of birth, social security numbers, and driver’s license numbers. Along with that, over 209,000 credit card numbers were exposed as well. Resulting in a loss of consumer trust regarding the security and protection of their sensitive data.
The previous two incidents are just two examples of large names in the financial industry that massively impacted consumers’ trust within the financial services industry. Not to mention, the countless other headlines of company after company becoming victim of a data breach where consumers personal data is once again exposed.
The Importance of Data Security
Because of the sensitive data clients share with financial advisors, along with their money, it’s imperative that consumers trust you to keep their money and data safe. Below are a few reasons why data security is important and serves as a way you can position yourself as a more trusted financial advisor than your competition.
Build consumer and client trust – Simply put, data security builds consumer and client trust. Your client’s need to know their data is safe with you. Knowing it is safe, they don’t have to worry if their social security number is on the dark web, or if someone gained access to their bank account information. By knowing this, your clients trust you are putting their best interest first. From there, your relationship with your clients continues to grow and flourish. They will leave good reviews of your financial firm on business directories, refer you to friends and family, essentially be an advocate for your business.
Increase loyalty – When Equifax had their massive data breach, many of those 147 million consumers that had their personal information exposed were upset, to say the least, with Equifax and wanted to take their business elsewhere. Unfortunately for consumers, Equifax is one of the three largest consumer credit reporting companies and taking their business elsewhere was not as convenient as it would be for someone to switch financial advisors after their data was leaked. Rather than experiencing consumers switching advisors because of a security incident, financial advisors could protect their client’s data from the start, so they never have to switch advisors due to a security mishap. Retaining your clients makes it easier to sell more to them and receive better referrals, rather than having to constantly start from scratch finding new clients to replace the ones that you lost, thus propelling your business forward.
Attract more clients – Those client’s that are worried about their information staying safe from data breaches will seek out a financial advisor that uses advanced technology to protect their data. And those financial advisors that don’t do so will see more and more clients running to their competitors that do, as cybersecurity concerns continue growing day after day. Not to mention, you can attract more clients by advertising that you are a trusted advisor and backing up those advertisements with proof of how you ensure their data is safe.
Better than the competition – Similar to the above, you can position yourself as a more trusted financial advisor than your competition because of the technology and other precautions you use when it comes to data security. This can easily be done with a partner like AdvisorGuardian that takes care of your cybersecurity concerns for you. Such as monitoring your entire network for threats 24/7, utilizing endpoint threat protection and response, mobile device management, and a ton more to keep your clients’ data safe.
Compliance regulations – Financial advisors have strict compliance regulations from the SEC and FINRA they must follow in regards to data security. By not doing so, you can be fined, your reputation becomes damaged, and even worse your ability to do business could be taken away. The compliance regulations surrounding data security that you must follow as a financial advisor include the proper handling, storing, sharing, and receiving of sensitive data.
What You Can Do Next?
As mentioned earlier, not all hope is lost when it comes to regaining and retaining client trust with financial advisors. With AdvisorGuardian you can get advanced technology protection that ensures your client data is safe from the hands of cyber criminals. When your current and future clients know their data is protected, you are able to focus on growing your business and not on becoming a cybersecurity expert overnight.