BY ALEX PADALKA, FOR FINANCIAL ADVISOR IQ
Financial advisors should be worried about data breaches in iPhones if law enforcement gets its way, experts tell U.S. News.
The Federal Bureau of Investigation wants Apple to create a back door to access encrypted iPhones, following the December shootings in San Bernardino, Calif., the publication writes.
The biggest concern for advisors is that a back door into iPhones would create another entry point vulnerable to breaches, Shane Cummings, director of operations at advisory firmHalbert Hargrove, tells U.S. News.
“The financial and consumer industries have already seen very devastating identity theft cases,” Cummings tells the publication. “Putting a ready-made tool in the hands of hackers could make identity theft even easier.”
While the risk of being inadvertently affected by Apple’s data protection woes are real, it is unlikely that advisors themselves would ever fall into the same legal quagmire in which Apple has found itself.
A customer data request to Apple is very different than what is expected of an advisor in similar circumstances, Michael Delgass, an attorney and CEO of Sontag Advisory, tells U.S. News.
Advisors are mandated by law to share client data in law enforcement inquiries, U.S. News notes. Industry standards clearly outline the obligations RIAs have to comply with government requests and failing to do so would likely get a firm shut down, Cummings, tells the publication.
Yet some experts believe that advisors should take note of Apple’s predicament and understand the implications of even seemingly innocuous client data requests from third parties.
Brian Hamburger, an attorney and founder ofMarketCounsel, a compliance consulting firm for advisors, tells U.S. News that there are some important similarities between the iPhone case and the data requests sometimes made of advisors occasionally asked by third parties to provide information on their clients.
He argues that by asking Apple to open someone’s phone, the FBI is effectively asking the technology giant to decide “who is worthy of being protected” and who is not.
Hamburger notes that wealth advisors can sometimes be asked to furnish client information to third parties – whether it be family members, the client’s accountants, or others.
While some requests might seem innocent they can result in unforeseen trouble for the advisor, he tells U.S. News.
Advisors should always verify the legitimacy of a claim before handing over client data.