Wealth management firms operate as custodians of their clients’ most sensitive financial information—from investment portfolios and estate plans to tax strategies and personal identification details. This privileged position comes with tremendous responsibility: safeguarding these digital assets against increasingly sophisticated cyber threats while maintaining operational efficiency.
The stakes are substantial. According to IBM’s Cost of a Data Breach Report 2023, financial services face an average breach cost of $5.9 million—significantly higher than the global average. For wealth management firms specifically, breaches extend beyond financial losses to damaged reputation, broken client trust, regulatory penalties, and potential legal liability.
Simultaneously, the regulatory landscape continues to intensify. The EU’s Digital Operational Resilience Act (DORA), effective January 2025, explicitly mandates encryption of data in use for financial institutions operating in European markets, with similar requirements emerging globally.
Data Security Challenges
Wealth management operations present unique data security challenges that stem from the industry’s fundamental need to actively process and analyze sensitive information.
Active Data Use Creates Vulnerability Windows
Wealth management professionals require constant access to client information to perform essential functions:
- Portfolio analysis requires detailed examination of client holdings and transaction histories
- Risk assessments demand processing personal financial information
- Tax optimization necessitates reviewing sensitive income and asset information
- Estate planning involves handling deeply confidential family and financial details
- Client reporting requires aggregating and presenting comprehensive financial data
Each of these functions traditionally create moments when data must be decrypted and processed in plaintext form—precisely when it’s most vulnerable to unauthorized access.
Expanding Attack Surface
The threat landscape continues to expand in concerning ways:
- Increased targeting by sophisticated threat actors who recognize the high value of wealth management data
- Supply chain vulnerabilities through integration with third-party providers and vendors
- Insider threats from employees with legitimate access to sensitive client information
- Advanced persistent threats specifically designed to target financial services firms
- Evolving ransomware tactics that increasingly involve data exfiltration before encryption
A particularly alarming trend involves “low and slow” attacks—sophisticated intrusions where attackers maintain persistent access to systems for extended periods, gradually exfiltrating valuable data while evading detection.
Inadequacies of Conventional Encryption Methods
The wealth management industry, like most of the financial sector, has traditionally relied on two primary forms of encryption:
Data-at-Rest Encryption
This approach secures information when stored in databases, archives, or backup systems. While essential, it has a fundamental limitation: data must be decrypted before it can be processed or analyzed. During critical operations like portfolio analysis or tax planning, sensitive information transforms into plaintext—creating a window of vulnerability.
Data-in-Transit Encryption
This methodology protects information as it moves between systems, using protocols like TLS/SSL. While effective for securing communications, once data reaches its destination system for processing, it typically exists in an unencrypted state.
The critical gap becomes evident when considering operational reality: client data doesn’t merely exist in storage or occasionally move between systems—it’s constantly being processed, analyzed, and manipulated as part of core wealth management activities. This creates a persistent vulnerability that sophisticated attackers increasingly target.
As one security researcher noted, “Attackers don’t need to break encryption algorithms when they can simply target data during the moments it exists in plaintext.”
Adopting Encryption in Use
Encryption in use represents a paradigm shift in data security, enabling wealth management firms to maintain protection of sensitive client information throughout its entire lifecycle—even during active processing and analysis. Unlike traditional approaches that require decryption for data utilization, encryption in use allows computation and operations on encrypted data while it remains in a protected state.
Key Capabilities
Encryption in use technologies provide several crucial capabilities for wealth management operations:
- Encrypted search enables finding specific client information without decrypting entire datasets
- Secure computation allows portfolio analysis while data remains encrypted
- Protected analytics supports investment strategy development using encrypted historical data
- Secure multi-party computation enables collaboration with external partners without exposing underlying data
- Confidential querying permits database operations without creating plaintext vulnerabilities
Benefits for Wealth Management Firms
The implementation of encryption in use delivers transformative advantages specifically aligned with wealth management priorities:
- Comprehensive Security: By eliminating the encryption gap, firms achieve true end-to-end protection for client data throughout its entire lifecycle.
- Regulatory Compliance: Forward-thinking firms can address emerging regulatory requirements for data-in-use protection, such as those specified in DORA.
- Client Trust Enhancement: The ability to assure clients that their sensitive financial information remains encrypted at all times creates a powerful differentiator in a trust-based industry.
- Risk Mitigation: Even in the event of a perimeter breach, encryption in use ensures that attackers gain access only to encrypted data, not usable plaintext information.
- Operational Efficiency: Modern encryption in use solutions can maintain data protection without introducing prohibitive performance penalties.
- Secure Digital Transformation: As wealth management increasingly embraces cloud technologies and AI/ML for portfolio analysis, encryption in use provides the security foundation to support innovation without compromising protection.
Research from Ponemon Institute suggests that organizations with strong encryption strategies experience data breach costs that are approximately 29% lower than those without such protective measures.
Paperclip’s Solution
Paperclip SAFE® represents a breakthrough approach to the wealth management industry’s data security challenges, offering comprehensive encryption in use that protects client information throughout its entire lifecycle without compromising performance or usability.
Technology Foundation
SAFE is built on Searchable Symmetric Encryption (SSE) combined with proprietary data shredding technology, creating a robust security architecture specifically designed for operational environments where data must remain both protected and accessible.
Unlike other approaches to encryption in use that may introduce significant performance penalties, SAFE integrates seamlessly with existing wealth management systems through standard API connections, typically adding only milliseconds to database operations.
Key Capabilities
SAFE delivers several capabilities particularly valuable for wealth management operations:
- Always-encrypted data storage ensures client information remains protected at all times
- Encrypted search functionality enables finding specific client records while data stays encrypted
- Flexible implementation options support both cloud and on-premises deployment
Wealth Management Applications
SAFE enables several transformative security improvements for wealth management operations:
- Client Onboarding Security: New clients typically share their most sensitive financial information during onboarding. SAFE ensures this data remains encrypted from the moment of collection through every subsequent use.
- Secure Portfolio Analysis: Investment professionals can perform detailed portfolio analysis and rebalancing while client holding information remains encrypted.
- Protected Client Communications: Client reports, investment recommendations, and other sensitive communications can be generated using encrypted data.
- Secure Multi-Party Collaboration: Wealth management often requires collaboration with external specialists like tax advisors or estate planners. SAFE enables secure information sharing without exposing underlying client data.
- Compliant Data Archiving: Historical client records can remain both encrypted and searchable, supporting compliance requirements for data retention while maintaining security.
Conclusion
The wealth management industry faces a critical inflection point in data security. As custodians of their clients’ most sensitive financial information, firms must evolve beyond traditional security approaches that leave data vulnerable during active processing—precisely when it’s most valuable and at risk.
Encryption in use technologies, particularly Paperclip’s SAFE, offer wealth management firms the missing piece in their security framework—enabling protection of client data throughout its entire lifecycle, even during active portfolio analysis, reporting, and client service activities.
By implementing encryption in use, wealth management firms can:
- Strengthen client trust by demonstrating best-in-class data protection
- Address emerging regulatory requirements proactively
- Create operational resilience against both external and insider threats
- Enable secure digital transformation initiatives
- Develop a meaningful competitive differentiator in a trust-based industry
As cyber threats continue to evolve and regulatory requirements grow more stringent, encryption in use has become a practical necessity for forward-thinking wealth management firms. For those committed to protecting their clients’ most valuable assets, this technology represents a fundamental enhancement to both security posture and client value proposition.
Visit www.paperclip.com/SAFE to learn more or contact Paperclip to schedule a demonstration of how SAFE can transform data protection in your wealth management practice.
References and Citations
- IBM Security. (2023). Cost of a Data Breach Report 2023. IBM. https://www.ibm.com/reports/data-breach
- IBM Security. (2023). X-Force Threat Intelligence Index 2023. IBM. https://www.ibm.com/reports/threat-intelligence
- European Parliament and Council. (2022). Digital Operational Resilience Act (DORA). Regulation (EU) 2022/2554. Official Journal of the European Union. https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32022R2554
- Ponemon Institute & IBM Security. (2023). Cost of a Data Breach Report 2023. IBM. https://www.ibm.com/reports/data-breach
- National Institute of Standards and Technology. (2023). Security and Privacy Controls for Information Systems and Organizations (SP 800-53 Rev. 5). NIST. https://csrc.nist.gov/publications/detail/sp/800-53/rev-5/final
- Cybersecurity and Infrastructure Security Agency. (2023). Zero Trust Maturity Model. CISA. https://www.cisa.gov/zero-trust-maturity-model
- Paperclip. (2025, January). DORA Compliance: Encryption Solutions & Requirements. https://paperclip.com/dora-regulations/