RIAs are increasingly aware that electronic communication with clients, custodians and vendors needs to be locked down. Whether they are taking the right steps to encrypt data is another story.

Advisors and their clients communicate electronically in at least one of the following ways: through e-mail, portals or, increasingly, via text. After considering the options for securing these communications, advisors may be surprised to learn what actually offers the most protection.


Texting appeals to many for convenient and instant communication, but texts between RIAs and clients have many cybersecurity downsides. Texts are difficult to monitor, and though they can be encrypted, it’s challenging. Any files shared and uploaded in texts are unsecure and may be vulnerable.

Advisors who thrive on texting, then, should consider doing it through a platform such as Skype’s that offers more secure communications (as long as both parties use its service). But the current lack of security options is just one of a host of reasons RIAs should forgo texting with clients altogether.

One of the biggest reasons is the Securities and Exchange Commission’s Office of Compliance Inspections and Examinations (OCIE), which focuses on communications, including texts. If an advisor is going to respond to inbound texts, all sides of those exchanges must be encrypted and archived and should have data loss prevention enforcement applied. An encrypted texting service may be able to handle this, but the archiving costs can be expensive.

Client Portals

It is quite common for RIAs to use secure portals for sharing personal information that can be used to identify clients and other sensitive data. Client portals have been in existence for a while, and many offer good encryption methodologies while the information is both at rest and in transit.

Portals rely on one of two kinds of security: authentication and obscurity (when secrecy is built into the design). Think of it as the difference between being given a link and logging on to a website. Authentication uses encryption keys, or passwords, which are given to clients for their documents only, and it offers more protection and is preferred over obscurity, which relies on complicated URLs that can be hacked more easily.

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