What security measures does your advisor have in place to protect against fraud?


October, 2014 |

“Protecting the security of your assets is of paramount concern and we’re constantly evaluating our policies and procedures to be sure yours are in safekeeping.” Jim Pratt-Heaney

Globalization has driven dramatic economic, political and technological advances. At the same time, our inter-connected world has contributed to a notable increase in the frequency and sophistication of financial fraud. Never have such threats been more significant. As the steward of your financial well-being, your advisor should be in a position to best protect your money from such risks. This requires a combination of personalized care, a strong institution in which to hold your assets and disciplined operational procedures. At Coastal Bridge Advisors, protecting the security of your assets is of paramount concern and we’re constantly evaluating our policies and procedures to be sure yours are in safekeeping.

Unfortunately, fraud committed to gain access to an investor’s assets has become more common than ever. Email in particular has been utilized by criminals looking to present themselves as clients requesting that they may receive money from “their” account. As a financial gatekeeper, the advisor must be diligent about such requests. If such advisor works for one of the larger publicly held financial companies, sometimes referred to as “wirehouses,” he or she may be handling hundreds of clients. Boutique registered investment advisors (RIAs), such as Coastal Bridge Advisors, may provide a low client-to-advisor ratio which translates into a more intimate knowledge of the client and their financial needs. Furthermore, unlike the wirehouse advisors, RIAs are required by law to act as fiduciaries. In other words, legally, the firm and its advisors must always put the interests of the client ahead of their own.

Another great benefit of the RIA is that firm’s ability to choose a custodian based on its proficiency at protecting assets. The Merriam-Webster Dictionary defines a “custodian” as “someone who keeps and protects something valuable for another person.” In the financial world, that someone is an institution that holds the securities and other assets for safekeeping. When vetting a custodian, your advisor should be in a position to choose an institution which meets some essential criteria: a well-capitalized, highly liquid bank with strong capital ratios, a member of the Securities Investor Protection Corporation (SIPC®), insured by the Federal Deposit Insurance Corporation (FDIC), and best business practices employed across the organization.

From a procedural perspective, Coastal Bridge Advisors requires that any request to transfer funds be confirmed verbally so as to diminish the threat of fraudulent emails alone. Once confirmed, a Fed Funds Wire Request form is completed and an encrypted version is uploaded and transferred to the custodian. Our custodian demands the added protection of requiring an approved Coastal Bridge Advisors signature before executing. Additionally, we provide an online customized reporting service, so at any time of the day or night, clients can see the state of their portfolio, with all holdings and transactions kept entirely transparent. This adds yet another layer of protection to their assets and keeps them safe.

Bottom line: With all the potential for wire fraud, multiple layers of protection are necessary to fully protect a client’s assets. Our best advice to clients? Make sure the advisor you’re working with knows you well, has procedures in place that provide adequate security and employs a custodian that provides ample safety.

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Jim Pratt Heaney

Chief Compliance Office and Chief Investment Officer,  (CIMA®) Jim is one of four founding partners of Coastal Bridge Advisors with over 30 years of experience in the financial services industry.  As Chief Compliance Officer, Jim oversees Coastal Bridge Advisors business operations ensuring all are compliant with SEC regulation.  As Chief Investment Officer and a Certified …

Jim Pratt-Heaney full bio >

Coastal Bridge Advisors has been named the Best Private Wealth Manager Under $5B by Private Asset Management

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