5 Cybersecurity Threats Facing Small Financial Firms—and How to Prepare
Small financial firms—CPAs, wealth managers, mortgage brokers, and boutique investment advisors—are increasingly in the crosshairs of cybercriminals. Why? Because they handle sensitive personal and financial data but often lack the dedicated IT resources of larger institutions. Cyber attackers know this makes smaller firms more vulnerable, especially when it comes to phishing, ransomware, and compliance gaps.For financial firms, protecting sensitive data isn’t just a compliance requirement—it’s also a fiduciary responsibility that underpins client trust. At the same time, regulators such as the Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), the Internal Revenue Service (IRS), and the Federal Trade Commission (FTC) demand that firms take measurable steps to protect client data. Non-compliance can result in fines, reputational harm, and even client loss.That’s where Tower 23 IT comes in. As a compliance-focused Managed IT and cybersecurity partner serving San Diego, Phoenix, and Tucson, Tower 23 IT helps small financial firms stay secure, resilient, and audit-ready. This blog post outlines the top cybersecurity threats facing small financial firms in 2025 and provides practical steps to prepare, so you can protect your clients and your business with confidence.
Threat 1: Phishing and Social Engineering
Phishing remains the most common—and effective—cyberattack method targeting financial professionals. Attackers send fraudulent emails or SMS messages, often impersonating trusted entities like the IRS or clients. These scams trick employees into sharing credentials, wiring funds, or downloading malicious attachments. These types of business email compromise (BEC) scams and ACH fraud attempts are increasingly aimed at smaller financial firms. Here are a few examples:
A CPA receives a fake IRS email requesting account verification. Clicking the link compromises login credentials.
A wealth manager gets “urgent” wire transfer instructions from a spoofed executive email. Funds are sent to a criminal account before the fraud is detected.
A mortgage broker receives a text message claiming to be from their bank’s fraud department, urging them to “verify” login details through a provided link.
An investment advisor is lured into downloading what appears to be a “prospectus PDF” from a new client—only to infect their system with malware that harvests sensitive account data.
Effective cybersecurity goes beyond installing the right tools—it requires a holistic, proactive approach. Many financial firms struggle to manage this on their own, which is why partnering with a trusted provider is essential. At Tower23 IT, we combine advanced threat detection with ongoing security awareness training to deliver multi-layered defense strategies tailored to your firm’s unique risks.We deploy advanced email filtering to block suspicious messages before they reach inboxes, combined with ongoing security awareness training to help employees spot and report phishing attempts.
Threat 2: Ransomware Attacks
Ransomware is a growing menace to financial firms. Cybercriminals encrypt critical files and demand payment for decryption keys that will restore data access. The downtime can cripple operations and cause lasting reputational damage.For firms handling client portfolios or processing mortgages, even a few hours of downtime translates into major financial loss—trades may go unexecuted, closings may be delayed, and critical portfolio reports could become inaccessible. Worse, ransomware groups increasingly target backup systems, knowing that financial firms depend on them to restore operations. For a broader perspective on how ransomware continues to evolve, read our previous post: The State of Ransomware in 2025: What Businesses Need to Know.
How Tower 23 IT Can Help
Our security experts can help you build a comprehensive cybersecurity strategy that includes proactive measures and rapid incident response capabilities. We provide managed security monitoring, regular data backups, and rapid recovery protocols to ensure that even if ransomware hits, firms can restore systems quickly without paying the ransom.
Threat 3: Insider Threats and Employee Negligence
Not every data breach is the result of an outside attack. Sometimes it is employees who—either maliciously or negligently—expose client data. Common risks include:
Lost or stolen laptops containing client tax returns or account statements
Weak or reused passwords on financial CRM systems
Accidental email misdelivery of sensitive investment information
Remote advisors storing data on personal, unsecured devices
These risks are often underestimated but insider vulnerabilities can be just as damaging as external cyberattacks, as our previous post explains: The Dangers Within: Understanding Insider Threats.
How Tower 23 IT Can Help
We implement endpoint monitoring, access controls, and multi-factor authentication (MFA). Our team also conducts ongoing compliance checks to ensure employees follow best practices for securing sensitive client information.
Threat 4: Compliance Failures and Cybersecurity for Small Financial Firms
Cybersecurity for financial firms isn’t just about stopping hackers—it’s also about meeting regulatory requirements. Failure to comply with the FTC Safeguards Rule, SEC cybersecurity guidelines, or FINRA data protection mandates can lead to heavy fines, client attrition, reputational damage, and even loss of operating licenses.For financial firms looking for clear guidance, our FTC Safeguards Rule Checklist provides a clear breakdown of what regulators expect and how small financial firms can stay audit-ready.
How Tower 23 IT Can Help
Our compliance audits and tailored reporting make it easy for small financial firms to demonstrate due diligence. From encryption to secure data storage, we help firms align with regulatory frameworks and pass audits with confidence.With over a decade of experience supporting regulated industries, Tower 23 IT delivers risk assessments, employee training, encryption, MFA, monitoring, and incident response planning. Backed by 24/7 monitoring and proactive management, we ensure our clients stay ahead of evolving compliance demands.
Threat 5: Cloud Vulnerabilities and Remote Work Risks
More financial firms are migrating data and applications to the cloud. While cloud adoption enables efficiency, it also introduces new risks:
Misconfigured cloud accounts that expose client data
Employees using insecure home or public Wi-Fi
Lack of monitoring for remote devices
Cloud misconfigurations and weak access controls are among the leading causes of modern data breaches—especially for small and midsize financial firms. Read more about Why Cloud Security Matters for Your Business.
How Tower 23 IT Can Help
We deliver managed cloud security services, enforce multi-factor authentication, and provide 24/7 monitoring to protect remote workers and client data no matter where work happens.
Checklist: Preparing Small Financial Firms for Cybersecurity in 2025
Here’s a quick reference checklist for financial firms looking to strengthen cybersecurity:
Enable Multi Factor Authentication (MFA) across all accounts
Regularly back up financial records securely
Train staff quarterly on phishing and social engineering awareness
Review compliance requirements every quarter
Confirm wire transfer authentication procedures
Secure tax filing and e-signature platforms
Regularly review audit logs for unusual access to financial accounts
Partner with a compliance-focused MSP like Tower 23 IT
Safeguarding Clients, Securing Trust
Cybercriminals don’t discriminate—small financial firms face just as much risk as large enterprises, sometimes more. The difference lies in preparation. By working with a compliance-focused IT partner, you can minimize threats, stay compliant, and build trust with your clients.Financial firms in San Diego, Phoenix, and Tucson trust Tower 23 IT to protect their data and ensure compliance. Contact us today for a compliance consultation for your financial firm.
We use cookies to ensure that we give you the best experience in our website. Unless you've selected "Allow", our website will deactivate the cookies session by default. Terms of Service
