RIA Risk Reduction

A family office is a private wealth management advisory firm that serves high net worth individuals and families. There are single family offices and multi-family offices and they are entrusted with the preservation of wealth after what is sometimes termed a “life altering” acquisition event for families both new and old (so-called “nouveau riche” and “old money”). But who do these family offices entrust with their day-to-day operations and strategic guidance with managing the complexities of financial markets, investments, liquid and illiquid assets? RIAs (Registered Investment Advisors). There are hundreds of RIAs operating on behalf of trillions of dollars of private wealth. Now the question that presents itself in my mind is, who do these RIAs entrust with the technical operations and cybersecurity of their clients? MSPs (Managed Service Providers). 

The problem with this chain of trust, in my view, is that MSPs are not always aware or capable of building and maintaining a world-class cybersecurity posture to reduce or otherwise eliminate various exposures to attack and business disruption. What is the point of estate planning if some miscreant teenager is able to siphon off millions of dollars (sometimes within a matter of minutes) with a well-crafted social engineering attack against the RIA or one of the family members?

As custodians and stewards of family offices, RIA firms can fall victim to cybersecurity threats that jeopardize client trust and broach regulatory compliance. Engaging a fractional Chief Information Security Officer (CISO) or virtual CISO (vCISO) offers significant benefits for RIAs, especially when the alternative is relying solely on an MSP that lacks the specialized expertise necessary to safeguard sensitive data and highly-coveted financial assets.

A fractional CISO brings a wealth of experience and tailored security strategies that an MSP typically does not provide. They understand the unique regulatory landscape of the financial sector and can help RIAs navigate compliance with regulations such as FINRA and SEC guidelines in the US and equivalent regulatory entities internationally. This ensures that firms not only protect their infrastructure but also meet industry standards, reducing the risk of costly fines and avoiding reputational damage. Even though the cost of printer ink is approaching that of Egyptian saffron these days, one should not ask the person who changes the printer ink cartridges with managing the identity protection and monitoring services needed for robust and resilient digital wallets.

Moreover, a fractional CISO can conduct thorough risk assessments and vulnerability audits, identifying potential weaknesses that a general MSP might overlook. By developing a robust cybersecurity framework tailored to the specific needs of the RIA, vCISOs empower firms to adopt proactive measures rather than muddle along with mere reactive responses. 

Additionally, a fractional CISO can foster a culture of security awareness within the organization, providing training and resources that enhance employee vigilance against phishing and other cyber threats. This holistic approach significantly mitigates the risk of breaches and data leakage, which can lead to significant financial loss and client attrition.

Ultimately, the expertise of a fractional CISO enhances an RIA’s security posture, providing peace of mind that their infrastructure is not only protected but also aligned with best practices and regulatory requirements. In an era where cybersecurity is paramount, investing in a fractional CISO is a strategic move that can safeguard an RIA's future. The Security Agency works with RIAs in what we call “Governance as a Service” in order to validate that an MSP has enabled the best features of their email service provider, introduced enterprise-grade encryption and authorization tools and provisioned threat detection solutions for the myriad mobile devices that are being relied upon daily by the RIA and their family office clients. Book a free consultation with us to learn more about RIA risk reduction.