“Personalization Push Heightens Need for Advisers to Vet Cybersecurity”
by Alex Ortolani
As the retirement industry moves toward more personalization for participants to plan and save, the chance for bad actors to gain access to their information also increases.
FCI is seeing an alarming number of fraudsters acting like participants to get distributions from retirement plans, particularly defined benefit plans, which may be less frequently monitored than defined contribution plans.
Cybersecurity Expert Brian Edelman cautioned “the more nonpublic information that participants share [with recordkeepers or financial advisors], the more susceptible the participants are to hackers using that information. If hackers can use the information to trick the plan administrator into making a distribution of plan assets, then they are drawing from a very large pool.”
Advisors must be vetting retirement plan recordkeepers and third-party administrators to ensure that they are using best cybersecurity practices. Brian recommended asking for evidence of a risk assessment and observing the presence of cybersecurity controls such as multi-factor authentication and email encryption to prevent unauthorized system access.
When asked for a recommendation that providers, advisors, and plan sponsors could immediately implement to increase security, Brian advised the separation of information-based email communications from email communications used to facilitate cash distributions. And, ultimately, adoption by the entire industry of more centralized systems with embedded safety precautions instead of emails to better ensure protection of plan participants.
Read the full PLANADVISER article: https://www.planadviser.com/personalization-push-heightens-need-advisers-vet-cybersecurity/
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