“Obviously, for Future Advisor we can leverage BlackRock’s decades of experience in risk, data security and best practices,” Lu says. “We’re also, for the most part, talking about financial institutions already subject to heavy regulation who already have robust cybersecurity practices. Our concerns is that advisors might not be keeping an eye out for this, and there’s no way of knowing how large or robust their technology providers are unless they’re doing the due diligence themselves.
BlackRock says that digital advice providers should also be diligent about data protection and cybersecurity, including controls on who can access client and account data. The firm also recommends that robo-advisors use data encryption and purchase cybersecurity insurance.