April 3, 2025 | By Gemma Lowndes, Operations Director
Financial advisory firms are gold mines of sensitive client data, making them prime targets for cybercriminals. Despite this reality, many firms still make critical cybersecurity mistakes leaving them dangerously exposed. The consequences? Regulatory fines, reputational damage, operational downtime, and potentially financial ruin.
Building cyber resilience isn’t just about stopping attacks, it’s about ensuring that when attacks happen (and they will), your business recovers quickly with minimal disruption.
The biggest cybersecurity mistakes
Many firms assume they’re too small to be targeted. This dangerous misconception gets firms breached as cybercriminals often see smaller businesses as easier targets. No financial firm is off-limits, making proactive cybersecurity crucial rather than optional.
Without clear security policies, employees won’t know how to handle sensitive data, use company devices securely, or respond to incidents. Every firm should have documented policies covering password management, data handling, incident reporting, and remote work security, yet many don’t.
Cybersecurity isn’t an IT problem – it’s a company-wide responsibility. Many breaches happen through human error, like employees clicking phishing links. Regular training helps employees recognize phishing attempts, understand social engineering tactics, and adopt strong password practices. One-time training doesn’t work. Ongoing awareness does.
Outdated software is a hacker’s best friend. Cybercriminals exploit known vulnerabilities in unpatched software. Ensure all operating systems, applications, and security tools update regularly, yet many firms run months or years behind on critical patches.
The assumptions that get firms breached
Assuming cloud data (like Microsoft 365) is automatically backed up is a common, expensive mistake. Ransomware, accidental deletions, and system failures cause data loss. Regularly back up all critical data, test backups frequently, and have disaster recovery plans in place.
Many firms believe their IT provider monitors Microsoft 365 accounts for suspicious activity. If your IT provider isn’t alerting you when something unusual happens (logins from foreign countries, unusual data access patterns), they aren’t being proactive, they’re being reactive, which is too late.
Financial firms often overlook mobile device security despite employees accessing sensitive data on smartphones. Implement Mobile Device Management (MDM) solutions enforcing security policies. Many financial planning firms have self-employed advisors using personal laptops, without proper oversight, these devices become security risks.
Without incident response plans, firms panic when breaches occur. Develop step-by-step plans outlining communication protocols, incident containment procedures, and recovery and remediation steps before you need them.
Building cyber resilience
Cyber threats evolve constantly, and outdated defences won’t cut it. Regular audits help identify vulnerabilities before hackers do. If internal resources are stretched, consider hiring third-party specialists to conduct security assessments.
What happens if your systems are compromised? Strong Business Continuity and Disaster Recovery (BC/DR) plans ensure businesses continue operating despite cyber incidents. This includes having secure backups, defining clear crisis management roles, and regularly testing recovery processes.
Security awareness should be ongoing, not once-a-year training sessions. Engage employees with regular phishing simulations, interactive cybersecurity workshops, and clear reporting procedures for suspicious activity.
Your security is only as strong as the weakest link in your supply chain. Vet third-party vendors by checking security certifications (ISO 27001), reviewing incident response plans, and conducting regular security assessments.
With GDPR and other regulations in place, data protection isn’t optional—it’s mandatory. Best practices include encrypting sensitive data, enforcing strict access controls, monitoring data access logs for suspicious activity, and having clear response plans for data breaches.
The reality check
Failing to address cybersecurity risks is costly—not just financially, but in lost client trust and regulatory fines. Financial advisory firms must shift from reactive to proactive approaches by implementing cybersecurity best practices and resilience strategies.
Cyber resilience isn’t about preventing every attack—that’s impossible. It’s about ensuring that when attacks happen, your business detects, responds, and recovers quickly. By addressing these cybersecurity pitfalls and strengthening defences, you protect your firm, your clients, and your reputation.
