The Investment Industry Association of Canada (IIAC) is planning to provide small Canadian brokerage firms with free access to real-time information on cyber attacks as a way of increasing industry preparedness.
In his latest letter to the industry, IIAC president and CEO, Ian Russell, indicates that the trade group will provide the industry’s small firms (those with less than $1 billion in assets) with a free subscription to the cyber security platform known as FS-IASC (the Financial Services Information Sharing and Analysis Center). The non-profit organization provides U.S. firms with real-time information on cyber attacks, institutional responses to those attacks, and access to analysts to help firms manage their controls and deal with possible breaches of their IT systems.
Russell’s letter recounts the themes of the U.S. Securities Industry and Financial Markets Association’s (SIFMA) recent conference on the retail investment business; including the latest in cyber security.
“A quickly emerging threat to the wealth management business is the risk of cyber attack on individual firm infrastructure,” the letter notes. “The frequency and seriousness of cyber attack has increased dramatically in recent years, prompting a priority effort by SIFMA.”
Russell warns that “Client funds, confidential client information and access to trading algorithms are vulnerable to computer hacking.”
He reports that SIFMA has adopted a four-point approach to the issue, which includes: increasing awareness among firms of the seriousness of real-time cyber threats and its global dimension; enhancing information sharing among firms about real-time threats and remedial actions; developing best practices for risk controls; and, introducing protocols and practices for alerting the industry and recovering from a hacking attack.
“SIFMA encourages member firms to consider the cyber threat a systems risk control problem, not an IT issue,” he notes; adding that these controls should cover access to confidential client information and proprietary trading systems, and should also include adequate third-party testing, and the adoption of business continuity plans to deal with security breaches.
One of the things the U.S. trade group is doing for its smaller firms is providing free access to the FS-IASC cyber security platform, and the IIAC says that it intends to provide a similar deal to its small firms.
In addition to the cyber security issue, the letter also examines the U.S. industry’s response to various business trends, including the impact of demographic change, growing client demand for advisor access through channels such as social media and email, and heightened regulatory demands. “Despite the smaller scale of the retail business in Canada, and greater concentration in the industry, Canadian firms confront similar demographic and technology trends, and face the same business opportunities and challenges,” he notes.
Russell reports that the general view at the conference was that the industry will have to leverage its investments in both professionalism and technology over the next few years in order to feed growth. “Technology and advisory practices now offer the opportunity to deepen and strengthen further existing client relationships through real-time contact with the advisor, broaden relationships with other baby boomers and connect with the next generation of investors,” he notes.
Capitalizing on these opportunities will require the industry to: better utilize existing technology, including mobile apps and social media; coaching advisors to improve productivity through identifying competitive advantages, building scale and designing marketing plans; using sophisticated planning tools and techniques to help identify clients’ financial and life objectives, and to map their progress toward those goals; and, providing online advice as a complement to conventional advisory services.
“The industry is well positioned to exploit these improvements to the advisory business and deliver cost-effective and high quality professional advice to existing and new clientele,” he concludes.