Can You Protect Clients' Identity?

It is difficult to go through a day without hearing cybersecurity stories or, worse yet, another data breach news flash. While it certainly feels like technology security issues are suddenly a serious challenge, we've been tackling them since the 1980s – especially in financial services. No sooner did the first byte of data hit a hard drive than did these issues surface for the institutions we work with to serve our clients.

The massive shift to portability with technology has dramatically complicated security concerns during the past five years. Unlike previous business technology trends, this wave has been a convergence of consumer and business technology by way of smart phones and tablets – and the vast expansion of accessibility to high speed connectivity that goes along with it. The good news: this has made the economy a place where businesses of all sizes can compete on a nearly even playing field. The bad news: data is everywhere, all the time, and the rules of business have been challenged in staying current.

What does that mean for the financial professional? It means the security challenges that were thought to be the headaches of chief information officers of the largest enterprises are now on the plate of every business with one or more team members. There is also no way to avoid the fact that dealing with security issues means having to deal with the jargon and technical concepts that go along with it – not easy for fast moving business focused on client service and relationships.

That sounds overwhelming. So where can one start to mitigate this risk? Being in a relationship business means dealing with identity. That is both a practical place to begin, and the partners and providers around you have resources to help your business implement security around identity.

Identity can be defined in several ways, so let's explore one element of it – your client's identity. That starts when you meet a prospective client and assess if your business can meet their needs. If they engage with your firm, you will be capturing:

• Legal identification, such as drivers license and a social security number
• Legal signatures for agreements between you and the client, and subsequently on paperwork for managing insurance and investment accounts
• More sophisticated documents related to estate planning and other activities

Let's consider five key steps you can take to better secure the process of managing a client's identity through these phases.

1) The Process for Knowing Your Customer

Know your customer (KYC) procedures are by no means new. However, they can be messy and it can present issues from a compliance perspective.

Use the most effective tool paired with a solid process for KYC when you engage a new client – your customer relationship management (CRM) tool.

Be certain to document everything from the fundamentals of name, address, date of birth and tax id - to review schedules, investment policy statements, advisory agreements and more.

Documenting your CRM properly provides all of the building blocks you need for insuring you always know the accurate details of your client’s identity.

2)  The Digital Signature 


It may be surprising to know digital signatures were being discussed in the 1990s. However, they've started to shift into mainstream use in recent years. The key with digital signatures is not just security and compliance with standards like ESIGN - but the ability to also confirm accurate and authentic signatures.

Getting the digital signature right is a key ingredient to authentic identity protection for your clients while also creating efficiency in managing paperwork. 


3)  Digital Forms and Processing 


Paperwork is an easy area to tighten up how you handle client data and goes hand in hand with digital signatures. By leveraging a fillable forms solution, this allows you to control client data and ultimately client identity. This should be approached in three ways:

• Always use the right forms, which can be done using providers such as Laser App.
• Always use the correct data with no typos, which is done most effectively when integrating form filling with your CRM solution.
• Capture your clients’ digital signatures, allowing you to productively leverage digital processing but still include identity management.

4) Use Your Providers

The service providers who help you manage your clients’ financial lives – from custodians and broker-dealers to other third party resources – all have enhanced their policies and procedures for handling client security. Discuss with them how you can either tap into security protocols they offer, or how you can align your internal procedures with them to achieve an upgrade to your process.

5) Double Check and Confirm, Always

When in doubt, double check. Like anything else, if it doesn't "smell right" – it perhaps is not right. When dealing with withdrawals and check requests, transfers and other service tasks that impact a client's accounts, take the extra few minutes for confirmations.

Ideally these would be voice call confirmations with no action until live confirmation is made. Often, your providers are taking these steps on their own, independently of your efforts.

Email, voice mail and text messaging are convenient, but live voice confirmation matters when it is dealing with client funds.

About the Author   

Blane Warrene is a national expert who speaks, writes and advises on modern technology. His career has included 20 years in and around technology for organizations spanning from financial services to non-profits. After serving in progressive executive roles he co-founded a social media-monitoring platform in 2009, Arkovi, which he raised capital for, grew and ultimately sold to RegEd in 2012. 

He is a sought after speaker, most recently speaking at the national conferences for Morningstar, United Planners and TD Ameriatrade. Blane advises organizations on the modern digital business model and how to navigate this new intersection of compliance, marketing and technology. 

Blane writes for and can be found commenting in many publications, including Financial Planning, Investment News and The Wall Street Journal. He also hosts a regular podcast, The Digital Well, which can be found at his website, blanewarrene.com.

Though a lifelong Ohioan, Blane and his family reside in the Research Triangle in North Carolina. Blane serves as a board member on the Dennison Railroad Depot Museum, an Ohio national historic landmark.

Download this eBook to learn about the benefits of e-signatures for financial advisors.