What if you had to take an exam to continue doing your daily job?
This is what financial advisors are facing now that the government is cracking down on cyber security. Jane Jarcho, the head of the Securities and Exchange Commission’s examinations program for advisors, stated that a new exam may be coming for investment advisory firms.
The SEC would ask questions pertaining to cyber security and how much advisors know about policies pertaining to identity theft, IT training and cyber attack management. The goal is to make sure that investors are implementing government rules and regulations when conducting business.
Jarcho is also asking advisors to report material attacks. However, all else attacks do not need to be reported to avoid flooding the agency with updates.
Giving Clients a Fair Shake
There is always a large amount of concern on the side of the investor, primarily from government agencies interested in sustaining fairness. Why? Because it’s too easy for financial advisors to stretch the truth with the amount of knowledge they have (and the lack of knowledge their clients have).
Testing is another level of security that the government is providing to the investor. Financial advisors who are more in-the-know on regulations may be less inclined to bend the rules – or make mistakes that breach government laws.
Yes, this is another hurdle that advisors will need to overcome in order to do business. However, there are several benefits for those who take the exam. Not only will advisors have the opportunity to gain additional education on critical regulations, but they’ll be in a better position to do business with clients – wouldn’t you like to be a go-to source of knowledge when clients have questions?
Those who are still striving for an exemption from the exam will need to keep dreaming. Recently, Jarcho announced that all advisory businesses will have to undergo testing, regardless of size. If you’re an advisor at a relatively small firm, you’ll still need to take the exam.
Jarcho also stated that there will be a telephone interview with the SEC involved with the examination process. Advisors might be thinking back to high school days of test taking, but there’s a certain amount of respect to be had for the process. Customers and advisors are being given a level playing field, which is ideally best for business.
