Your Family Office Data Probably Isn’t Secure

As family offices increasingly rely on software to manage financial data, just how secure are these solutions?

Cybersecurity is a major concern for family offices, consistently raised in thought leadership pieces, global family office reports and discussion panels at conferences. A commonly quoted statistic is from last year’s Deloitte report stating 43% of family offices experienced a cybersecurity breach in the past 12  - 24 months.

Having a plan to counter deliberate cybersecurity attacks is essential, but family offices also need to consider their data privacy when using the variety of cloud-based software solutions available.

This reliance on technology is unavoidable: as portfolios become more diverse and lean towards alternative investments, they require technology solutions to be managed efficiently. Powerful wealth management platforms that aggregate data from banks and other asset managers are now standard, but something family offices should pay closer attention to is exactly how these institutions manage their data.

Third-party risk

Many of the family office software platforms available don’t actually interact directly with custodians, but use third-party intermediaries to connect and collect the financial data. There are risks to this structure, not just the fact that these intermediaries are themselves at risk to cyber attacks, but that they can retain financial data for their own use.

While one might assume data privacy is a given, just recently a well-known third-party intermediary paid $58M to settle a lawsuit based on them abusing their access to customer transaction histories.

The human element

Direct feeds between a wealth management platform and each custodian are a means to avoid this risk, but even then there is still the potential for sensitive information to be accessed by employees.

The human risk element shouldn’t be overlooked, for both software platforms and third-party intermediaries. Unless financial data is encrypted at all times, there is the possibility that not only high-level but junior employees could have access to this data.

Industry reports reflect that over 80% of data breaches are due to human error, but perhaps even worse is the thought of a disgruntled employee having access to your sensitive family office information.

Secure Means Without Exception

Secure data privacy involves the highest level of encryption protocols for data, at rest and in-transit. This means that nobody but the end client, not any third-party intermediate or even the software provider themself, has visibility on any of your financial information.

This is akin to the end-to-end encryption in use by secure instant messaging platforms like WhatsApp. It’s something a fully secure wealth management platform such as Masttro has built into the platform to ensure the end client owns their data at all times, without exception - not even employees have access.

When managing wealth data, privacy should be something that is inherent to the structure of a software solution. Other standard features should include multi-factor authentication for login, private cloud architecture and private server instance, with no data stored on devices at any time.

Own your data

At Masttro, these are all features built into the platform, where military-grade encryption protocols and Swiss-based architecture contribute to industry leading standards and a 100% record on data privacy - with zero data breaches ever occurring.

Data security should ideally never be a reactive problem, and family offices can take a proactive approach by informing themselves on exactly what features their existing or potential software solution provides to manage their data privacy.

Ask the question about third-party data feeds, what encryption protocols are in place, and whether this applies at all times. After all, it’s your data, and only you should have access to it.