800-646-0700         LOG IN        CONTACT US        FREE TRIAL
Cloud Technology Blog for RIAs and Broker-Dealers

Following the WannaCry Cyber-Attack, Here’s what Breakaway Advisors Need to Know about IT & Security

5/31/17 10:41 AM / by Sam Attias


In light of the global WannaCry cyber-attack, the rising number of advisors breaking away from wirehouses need to place cybersecurity at the top of their list of priorities as they build their practices.

Approximately 65 advisory teams and individuals departed from wirehouses, established RIAs or independent broker-dealers last year, more than triple the number of breakaways in 2013, according to data from DeVoe and Company. The firm attributes this ongoing breakaway surge to the expiration of the many forgivable loans that wirehouses signed in order to retain or add advisors during the financial crisis of 2008-2009. Now that seven years has passed, and these loans are coming due, the advisors who were given these financial packages are considering their options.  

This and several other trends, including a greater emphasis on the fiduciary standard and more advanced and affordable technology, will likely give more advisors the confidence to start their own practices. Breaking away from a wirehouse to go independent requires courage and conviction—but that’s not all. Like entrepreneurs in any industry, advisors that choose to go down the road to independence must also have a strategic business plan in place which outlines the technology solution(s) for their practice. Following the WannaCry attack, this plan has to emphasize security.

Breakaway advisors need to understand the advantages and disadvantages of cloud and in-house technology systems, and how to implement and maintain them, in order to choose the IT solutions that can help them best operate their businesses and protect themselves and their clients’ information from cyber-criminals.

What capabilities should your technology systems and applications be able to support? What is required to implement, maintain and update cloud and in-house IT platforms? What should advisors look for when evaluating potential technology vendors? What is the best technology solution for ensuring that clients’ financial data remains secure against hackers? Breakaway advisors need to be familiar with the answers to these questions when they are setting up their practices.

Our white paper, “Choosing the Right Approach as a Breakaway RIA,” can serve as a guide to help breakaway advisors identify the ideal IT approach for their firms: http://info.externalit.com/breakaway-ria-whitepaper.

Since breakaway advisors don’t have access to the in-house financial and technical resources that were available at the wirehouses they left, they will likely find cloud-based IT platforms to be more efficient options for protecting their firms and clients from cyber criminals, and remaining in compliance with evolving cybersecurity regulations.

However, not all clouds accomplish the same technology and IT objectives for RIAs. We authored another white paper, “Not all Clouds are Equal: Demystifying the ‘Public vs. Private’ Debate,” to educate breakaway advisors and other wealth managers about how to identify the best type of cloud platform for their practices, and how to evaluate potential cloud service providers: http://info.externalit.com/not-all-clouds-are-equal-public-vs-private.

Breakaway advisors who place security and compliance at the core of their technology solutions and processes have the best chance of avoiding security breaches and regulatory infractions which can permanently damage their reputations. To ensure client data is always protected, and that they are always in compliance with cybersecurity regulations, breakaway RIAs and other smaller wealth management firms may find a turnkey solution from an outsourced IT service provider to be the best long-term technology option.


Topics: Cybersecurity, Cloud Computing, Software-as-a-Service, Breakaways

Sam Attias

Written by Sam Attias

Sam Attias is Managing Director of External IT. He has more than 15 years of experience in the industry including in the areas of Wealth Management, Investment Banking, Fixed Income and M&A.