The Dos and Don’ts of Sharing Your Financial Data

Photograph by Anurag Banerjee

We tend to be discreet about our financial information, and understandably so. No one wants to fall prey to a financial scam or fraud. The concern is valid: If the data ends up in the wrong hands, it can be used to access KYC details, be sold to third parties, etc. But that doesn’t mean you shouldn’t share this information with anyone. Sharing your financial details with a qualified advisor or institution that helps manage your finances — after doing your due diligence by understanding its data privacy policies — can benefit you greatly. It can help you get personalised guidance and formulate a financial plan that is tailored to the state of your finances. You can protect yourself and still make informed decisions by trusting reliable experts with your information — simply put, it helps them help you. 

Your personal financial data usually falls into five buckets — your assets, liabilities, income, expenses, and insurance. A financial advisor uses these details to understand your current financial situation, and is then able to advise you on what areas require improvement, and how to go about making these adjustments. It’s also essential that you provide your trusted financial advisor or financial planner with a comprehensive picture of your finances, beyond the data that can be retrieved through account aggregators. This includes transactions and items that may not be associated with formal financial systems, such as lending money to or taking a loan from a friend. This in turn enables them to provide you with advice and strategies that align with your financial circumstances and objectives. 

An expert cannot prescribe solutions without first understanding what might have caused a problem you’re facing, or what informs your goals. Giving an advisor access to this information also helps them identify potential risks and opportunities in advance, and create a customised plan. 

 

“It’s wise to be mindful of who you’re sharing your financial data with. However, taking steps to determine whether or not to trust another party with your information can help you seek the help you need to get your finances in order.”

 

So, how do you know whom to trust with your financial data? Firstly, it’s important to look into the individual or organisation that you’re releasing information to. Check how many years of experience they have in the finance sector — only trust those with a credible track record. It also helps to visit their website to see what policies they have enacted to keep clients’ data secure. Trustworthy service providers usually have a published document or webpage that outlines the security and privacy measures that they have implemented. 1 Finance, for instance, has comprehensive data-protection protocols, including encryption, firewalls, and regular security assessments. You can also visit the SEBI website to check if any complaints have been registered against the entity you’re dealing with. According to SEBI guidelines, signing an agreement that assures data security and integrity is vital. Lastly, check their social media presence. Fly-by-night operators aren’t likely to have a robust social media presence, and may opt instead to communicate exclusively through messaging platforms like WhatsApp or phone calls. 

It’s also important to understand the other party’s intentions. You’re better off trusting a financial service provider with no vested interests. For example, 1 Finance is registered with SEBI as a Registered Investment Advisor or RIA, and has a fiduciary responsibility to its clients, which does not allow a conflict of interest. Also, keep in mind that sharing physical documents or sharing data via messages can leave you vulnerable. 

It’s wise to be mindful of who you’re sharing your financial data with. However, taking steps to determine whether or not to trust another party with your information can help you seek the help you need to get your finances in order. If you’ve found a reliable and credible financial advisor or service provider, sharing your financial data can make a world of difference for you.