Sadly, for many of the nine out of ten families who fail to solidify their legacies, both their financial capital and human capital is often depleted within just two generations.
Who are We Really Dealing with Here?
Contrary to conventional wisdom, the two-bit criminal doesn’t target the rich, preferring instead the low-hanging fruit of the more vulnerable, such as the elderly, the mom and pop shop, and just about any unsuspecting person with cash in his or her wallet. Rather, the wealthy are high-value targets for the more sophisticated criminal elements with access to technology and highly skilled specialists.
Utilizing advanced techniques once thought to be the exclusive domain of the FBI, these twenty-first century criminals, typically backed by a U.S.-based or international crime syndicate, conduct extensive surveillance as they search the depths of cyberspace for information. They will even penetrate their mark’s inner circle before launching their assault in the form of a cyber-attack, identity theft or fraud.
What are the Threats?
You’ve probably heard of “phishing,” a common technique used by cyber criminals to fool a person into responding to an e-mail that has been faked to look like it came from a real financial institution or government agency.
When high net-worth individuals are targeted, it’s appropriately called “whaling.” This technique involves sending personally addressed e-mails to with links that, when opened, will release a virus, such as ransomware or an undetectable spybot that can drill into the backdoor of your network to siphon off sensitive data.
Other common cyber-security scams include:
Vising – A similar technique called “vising” is used to mask the caller ID of a scammer to make it appear as if it is coming from a known financial institution or trusted advisor. Victims are tricked into providing personal information for purposes of “account verification.” Of course, HNW individuals should know that financial institutions rarely call to verify account information.
Spear-Phishing – Similar to phishing but it is harder to detect because the emails are created to look as if they come from a person you know, such as a colleague or a superior. The attacker may have studied your social media accounts to learn how to imitate a person of trust, using familiar references in the subject line of the email.
Keystroke Logging – One of the more pernicious forms of cyber-theft, “keylogging” is like having someone look over your shoulder as you use your computer, except it is done through a virus that has been dispensed into your operating system. From that point on, your every keystroke is recorded, including entries of passwords and sensitive account information.
Who Do You Trust?
Security experts point to the inner circle of the wealthy as the most likely sources of information leaks that can be used plan a criminal assault. “Trusting the wrong people” is said to be the greatest vulnerability of high net-worth people who rely on household staff, consultants, business associates, and advisors just to get through the day. Even the most thorough background check can’t uncover a disgruntled household staff member who is approached with an offer he can’t refuse.
Most cyber-security experts believe that the weakest link in the family security chain are the younger family members. Social media is a gateway for kids’ interaction with the world, which presents a substantial risk for wealthy families.
Tactical Steps to Cyber-Protection
There are a number of measures families can take to reduce their risk exposure, but it should start with a protection plan that touches on all aspects of security for the family. A thorough risk assessment enables families to understand their vulnerabilities and where they need to be proactive in closing them. In addition to ensuring your computers are protected with the latest anti-virus and firewall protection software, there are some tactical steps all families can take to protect against a cyber-assault.
- Take password management seriously. Whenever possible, set up multi-factor identification across all accounts. Password management software can help you securely store the info and generate random passwords.
- Set up banking alerts for notification. This should include any type of financial activity for all family members.
- Use separate devices to log into financial accounts. Don’t use business devices to access personal accounts.
- Consider encrypting and backing up your data. Doing so provides a strong defense against a ransom-based attack and protects your data in case you lose control of a device.
- Keep a list of all network-devices, including smartphones, computers, security systems, vehicles, appliances and Alexa-type devices. Make sure to check your devices periodically to ensure each is patched with the latest available firmware.
- Use a Virtual Private Network to access the web. A VPN acts as a protective, encrypted buffer between your device and anyone else who could gain access to the network.
- Permanently freeze credit to prevent unauthorized access to your accounts. A new law now makes credit freezes available for free among the three credit bureaus.
Education as the First Line of Defense
The best way to protect your family against cyber-attacks is to educate all members so they clearly understand the risks and threats the family faces. An effective protection plan needs the buy-in of all family members and staff who understand the importance of being aware of their surroundings, their actions and the company they keep.
You don’t need to go it alone. Have a cyber security expert help you assess your risks and install equipment and procedures for locking down cyber leaks. Working with an experienced security expert, you can develop a well-conceived, preemptive plan that can enable your family to live with greater peace-of-mind.
Venturi Wealth Management: Austin Wealth Manager
Venturi’s core mission is to help organize, plan, and manage all aspects of wealth for families and entrepreneurs with substantial assets and complex business and personal financial lives—so you can focus on doing the things that matter most to you. We manage more than $1 billion in assets, a significant portion in house, often eliminating additional layers of management fees. Founded in Austin, Texas, Venturi incorporates the city’s entrepreneurial energy into everything we do for our clients.
Partnering with the right people to help manage your financial livelihood is not a small step. The issues are complex. You may want to use an advisory firm to guide you through the process.