The Impact of Cybersecurity on Compliance in 2025: Why RIAs Need to Act Now

Cybercrime is estimated to cost the global economy $10.5 trillion in 2025, an increase of $7 trillion over the last decade! To put this into perspective, if this were measured as an economy, it would be the third largest in the world behind the US and China. As the financial services sector continues to be the main target for cybercriminals, it is important for RIAs to be proactive about combating an increase in criminal activity in 2025. 

With the heightened convergence of cybersecurity and compliance, staying ahead in cybersecurity is no longer optional for compliance professionals; it’s a necessity for regulatory and business success in 2025.

Cybersecurity challenges facing RIAs in 2025

RIAs are now facing an ever-increasing cost of compliance due to evolving cyber threats, enhanced regulatory expectations, and growing concerns for data privacy. Consequently, many are now looking to third parties to assist in fulfilling their regulatory obligations.

Evolving cyber threats

In a recent IBM report, the average cost of a data breach in the financial sector in 2021 was estimated at $5.72 million. Smaller RIA firms are particularly vulnerable due to ever-growing competition in the industry and the limited resources available to tackle cybersecurity challenges. 

The increase in cybersecurity incidents has been fuelled by factors such as:

• Technological advances increasing remote working
• Reliance on third-party technologies, such as trading platforms
• Prompt and highly efficient monetization of stolen data
• Ever-changing criminal tactics and strategies

Each successful attack leaves RIAs exposed to both financial and reputational damage with an array of costs, including:-

• Lost revenue
• Ransom payments
• Regulatory fines
• Damage to equipment
• Business interruption
• Cybersecurity cover

In the modern era, there is also an ever-growing risk of litigation, which adds an additional layer of cost and can distract from growing the everyday business.

Key cybersecurity compliance strategies for RIAs

As a forward-thinking RIA, you must create robust cybersecurity compliance strategies. These are not one-off projects; they require continuous updating and are crucial for building solid foundations, allowing you to expand your strategy and internal framework. 

While you need to fulfil your immediate regulatory responsibilities, taking a more forward-looking approach makes sense from a business and compliance perspective. There are numerous areas to consider, such as:-

Continuous monitoring of cyber threats and vulnerabilities

In the modern era, there is a greater emphasis on real-time tracking of potential threats that could compromise not only your business and client data but also the integrity of wider markets. It is essential to regularly assess your cybersecurity policies and framework to identify potential vulnerabilities and take action to address them.

Employee training

As corporate cybersecurity services improve, criminals are taking a more innovative approach, attempting to gain access through employees. This is why continuous employee training will be a critical element of any cybersecurity policy.

Utilizing advanced technologies

We know as well as anyone in the industry that finding the right technologies to enhance the security of your firm is daunting, and often, not fruitful for smaller RIAs. In your search for the right technology, we recommend looking into RIA Compliance Technology. Their stack of compliance technology solutions are designed to fit your needs, and meet cybersecurity standards for firms of all sizes. 

AI and machine learning have recently been the catalysts for many cyberattacks, but they are also valuable foils for cybersecurity defenses. In a fast-moving market, having a proactive relationship with your cybersecurity partner is vital to protect your business from new and existing threats.

Is complacency the main danger to cybersecurity compliance?

In 2022, the World Economic Forum released its annual Global Risks Report, which cast a very interesting light on potential complacency in business. While (we assume) rates will have improved since the report was released, at the time, 95% of all cybersecurity issues could be traced back to human error. So, the value of continuous employee training may be much greater than you assumed!

It’s important to take a broad view of your cybersecurity policies, strategies, and internal framework. Focusing more on one area may be detrimental to others, as these are all crucial pieces of a much larger jigsaw. 

Regulatory expectations

Operation resilience

SEC 2025 Examination Priorities identified cybersecurity as a main topic to discuss, with conversations surrounding:

• Policies and procedures
• Governance practices
• Data loss prevention
• Access controls
• Account management
• Response to cyber-related incidents
• Third-party risks

Drilling further, they will be enhanced by regulatory focus on:

• Automated investment tools
• Artificial intelligence
• Trading algorithms
• Trading platforms

To avoid considerable regulatory fines, there are also best practices to consider concerning cybersecurity:

• Conduct regular cybersecurity risk assessments
• Create a robust governance framework
• Focus on employee training
• Continuous monitoring and detection of threats
• Conduct regular instant-response exercises
• Review cybersecurity insurance

For many smaller RIAs, the immediate challenge is finding the proper solutions for modern-day compliance strategies. Many are turning to external compliance technology companies to fulfill these needs.

Data privacy & security for RIAs: Built-in, not bolted on

In today’s data-driven environment, the risks tied to client information are higher than ever and for RIAs, protecting that data isn’t optional. Regulatory expectations around data privacy, cybersecurity, and storage integrity are increasing – as is the cost.

Unfortunately, most small firms aren’t equipped with enterprise-grade protection, and piecemeal fixes like shared drives or email attachments simply don’t cut it. That’s where RIA Compliance Technology stands apart.

Your data, protected by design

At RIA Compliance Technology, data privacy isn’t an afterthought; it’s built into the foundation of everything we offer. Our platform was designed by compliance professionals who understand what’s at stake, and we’ve implemented multiple safeguards to ensure sensitive information is protected at every touchpoint:

• Encrypted cloud storage for secure, anytime access
• Role-based access controls to limit visibility to only what’s necessary
• Secure forms for collecting personal data without relying on unsecured email
• Audit-friendly logs that track access and changes across your documents

Unlike generic document-sharing platforms or bulky enterprise systems, our compliance platform delivers purpose-built protection for RIAs, with simplicity and cost-effectiveness in mind.

A proactive approach to evolving risks

We also stay ahead of emerging security trends like concerns around quantum computing’s potential to compromise modern encryption. While that risk remains theoretical for now, our commitment is to ensure that RIA Compliance Technology clients remain resilient and future-ready, with tools that evolve alongside new threats and regulations.

At the end of the day, your clients trust you with their most personal financial information. Trust RIA Compliance Technology to help you protect it – with solutions that are secure, scalable, and designed specifically for your firm’s needs.

The value of client trust and a competitive edge

Among the vast fines handed out by the SEC, it is estimated that over $200 million related to cybersecurity violations in the calendar year to November 2024. These fines covered issues such as inappropriate cybersecurity procedures, lapses, and failure to report incidents in the allotted time scale.

The SEC and other regulatory fines are usually announced in the public domain to strengthen transparency within the regulatory industry. Consequently, failing to abide by cybersecurity regulations can erode years of goodwill and client trust. For many companies, the reputational damage is often much greater than the regulator fines.

As the regulatory burden continues to grow, there is a need to ensure that investment is forthcoming to comply with the regulations and to be used for the great benefit of your business. As an RIA operating in a competitive marketplace, it’s essential to not just focus on either regulation or enhancing your business but bring them both together.

Gaining client trust

A recent survey by PwC found that 87% of consumers would take their business elsewhere if the company holding their sensitive data had insufficient data protection. On a global basis, 79% of investors consider cybersecurity and data privacy crucial in their investment decisions. A proactive approach to data protection and broader cybersecurity will not only ensure you fulfil your regulatory requirements but can also attract new clients in its own right.

Competitive edge

Competition is intense considering the growing number and broad range of financial services companies operating in the US and overseas. Even though the main focus will always be on the quality of services provided, if cybersecurity and data protection are essential to individuals, this could provide a valuable competitive edge. Even though there is a temptation to see expenditure on cybersecurity as a cost, it should be seen more as an investment.

Cost-benefit analysis

When considering cost-benefit analysis, we naturally look toward the potential savings from operational disruptions caused by cyberattacks. Numerous reports highlight cost savings of up to 40% per cyber incident. Considering that the average cyberattack’s overall cost is millions of dollars, these are considerable savings!

There is also the need to invest in your cybersecurity, continually updating technology and services, but there is another angle to consider. A study by Dimensional Research and Check Point found that:-

• 49% of organizations use between six and 40 security products
• 98% of organizations manage their security products with multiple consoles

Aside from the security risk of using multiple products and platforms, integrating various products under one provider could result in substantial cost savings. One platform doing this exceptionally well is RIA Compliance Technology– with all of their compliance solutions managed on one, secure, dashboard, you can rest knowing your data is being stored safely from start to finish. 

Cybersecurity trends shaping the future of compliance

Just as AI-driven tools are often behind cyberattacks, they will also be integral to cybersecurity in the financial services industry and the wider business arena with benefits including:

• Real-time threat detection
• Advanced threat protection
• Enhanced incident response
• Use of behavioural analysis
• Automated security processes
• Adaptive learning
• Scalability as businesses grow

The rise of zero-trust architecture

There has been an increase in the use of zero-trust architecture, best described as “never trust, always verify”. This is becoming the gold standard for many companies as it assumes no user, device or system inside or outside a network is inherently trustworthy.

To some people, the principles and the features of zero-trust may seem a little “over-the-top”, but for RIAs and others operating in the financial services industry, this adds a valuable layer of protection.

Conclusion

In 2025, the convergence of cybersecurity and compliance is pushing RIAs to prioritize robust measures to protect sensitive data and meet evolving regulatory standards. With the financial sector remaining a prime target for cybercriminals, RIAs face escalating risks, particularly ransomware and third-party vulnerabilities, alongside increased regulatory scrutiny from bodies like the SEC.

Due to limited resources, smaller RIAs are especially vulnerable, making compliance a costly and time-consuming challenge. However, for many, leveraging the services provided by compliance technology companies is a long-term solution. Streamlining cybersecurity processes, ensuring adherence to regulations, and providing scalable, cost-effective tools to mitigate risks and maintain client trust in a competitive market.

Contact RIA Compliance Technology today for expert guidance to ensure you are fully equipped to meet cybersecurity and compliance challenges in 2025 and beyond.