Page 24 - Investment Advisor - Jan/Feb 2021
P. 24
RIA LESSONS & LEADERS
By Jeff Berman
Top RIA Trends in 2021
Tech expert Joel Bruckenstein says advisors should ask their vendors
immediately if the hacked SolarWinds software is in their “cyber” package.
ncreased cybersecurity threats es in two Wealth Management business
stand to be the largest concern for data centers in the U.S.
IRIAs in 2021 — whether they are Breakaway RIAs may be especially
fully aware of the threat or not — while vulnerable, Bruckenstein noted. “When
consolidation and wider use of analytics, you break away,” the larger firm you left
artificial intelligence, machine learning is no longer around to be responsible
and other tech by advisors are among the for security, “so if you are not aware of
trends likely to continue into 2021 and it and you don’t ask the right questions
beyond, according to Joel Bruckenstein, and you don’t take the proper precau-
head of Technology Tools for Today (T3). tions, you’re at risk.”
“The industry is evolving, and it’s
evolving at a rather rapid pace,” he told CONSOLIDATION CONTINUES
Investment Advisor in a phone inter- Consolidation, meanwhile, has contin-
view. He pointed to the huge increase should be to deal with some of these ued through the pandemic. “You’ve seen
in advisors using video conferencing, as threats,” he said. Larger firms typical- numerous buyouts of smaller firms over
well as new account openings and client ly have somebody on staff or full-time the course of” 2020 by larger financial
onboardings being done digitally since consultants who are experts at dealing firms, according to Bruckenstein.
the start of the pandemic. with breaches. When it comes to smaller He pointed to Charles Schwab’s
“These are major advances that firms, however, “I’m not sure [they] are recently completed purchase of TD
would have happened anyway but might even fully aware of just how great the Ameritrade, as well as Goldman Sachs
have taken three years,” he said. “That’s threat is.” buying Folio Financial/FolioFN as
significant and there’s no putting the SolarWinds software, which is at examples. The list goes on and “I don’t
genie back in the bottle … These are the heart of the recent hacking opera- think we’ve seen the last of that,” he said.
structural changes in the industry that tion, is used by financial services firms, That “raises some potential concerns
are permanent. And that’s a big deal.” Bruckenstein points out. for RIAs,” he noted. Among them: “Is
“Many firms in the industry have too much power being concentrated in
THE CYBERSECURITY THREAT some sort of SolarWinds product that the hands of too few firms right now? I
Although the pandemic has ushered in either they are using directly, or that a don’t think so. But if the trend continues
much wider use of tech by RIAs as a result vendor is using as part of their ‘cyber’ as it is, there’s certainly a possibility
of the shift to remote work, COVID-19 package. Every advisory firm should be that that will happen and that it could
has also invited an influx of bad actors asking their vendors about this, but few stifle innovation.”
hacking into financial firms’ systems. if any are so far,” he stated.
The U.S. government just got hacked Meanwhile, regulators are “cracking THE VIRTUAL PARAPLANNER
by Russia. “If that was an advisory firm, down on” financial firms that aren’t “You’ve already seen some major move-
[regulators] would be fining them mil- doing enough to protect their clients’ ment on the analytics side over the last
lions of dollars,” Bruckenstein said. data, he noted, predicting this will “con- couple of years, and that’s accelerating …
The massive security breach “illus- tinue to be an area of concern and focus to put meaningful data in front of advi-
trates that the threats from bad actors for regulators over the coming year.” sors in a way that they can digest it and
are not going away and, if anything, I The Office of the Comptroller of the take action on it,” Bruckenstein said,
believe, they’re going to become even Currency recently levied a $60 million calling that a “very positive trend.”
more prevalent,” he predicted. civil money penalty against Morgan Meanwhile, we are also “starting
Unfortunately, “most advisory firms Stanley Bank, N.A., and Morgan Stanley to see the emergence of a number of
are just not as well prepared as they Private Bank, N.A., for 2016 data breach- products that really do leverage either
22 INVESTMENT ADVISOR JANUARY/FEBRUARY 2021 | ThinkAdvisor.com