Considering the Extent of Household Risk

The landscape of fraud has transformed significantly in recent years, with artificial intelligence (AI) playing a crucial role. AI-driven tools have made it more challenging to distinguish between legitimate communications and fraudulent attempts. Criminals now frequently employ sophisticated phishing scams that mimic major companies such as Amazon or PayPal.

Additionally, cybercriminals can gather substantial data from the internet, where individuals often share detailed personal information online. Armed with this knowledge, attackers can craft convincing messages targeted at potential victims—messages that may appear to be from friends or relatives via email or text.

Moreover, it is increasingly not just the wealth management client who faces risk but also their entire household. According to research by Tracy Goldberg, Director of Cybersecurity at Javelin Strategy & Research, a majority of wealth managers surveyed found that most of their clients have children under 18 living in their homes. This revelation raises concerns because households with minors are more prone to social engineering attacks.

Social engineering tactics, where criminals manipulate targets into cooperating, have become prevalent across various types of fraud. However, children can be particularly vulnerable due to their greater comfort and activity levels online. They often share personal details on platforms like YouTube or Instagram and participate in online communities such as Fortnite. As a result, if one member of the household falls victim, there is a higher chance that another family member will also face threats.

Elderly adults are also prime targets for cybercriminals. Many use social media and e-commerce platforms but may lack the necessary skills to recognize potential risks or resist social engineering techniques. Given that many adults care for elderly relatives, wealth managers must consider how to protect the entire household.

Securing Clients’ Identities and Accounts

While wealthy clients may face similar threats as other consumers, they have a valuable ally— their financial advisor. However, cybersecurity has often been overlooked by family offices. Advisors might have developed robust strategies to protect against property or medical emergencies but may not have considered the potential damage from cyberattacks.

“We can leverage our existing long-term relationships with clients to educate them on cybersecurity best practices,” Goldberg advises. “If they suspect a scam, knowing where to turn for help is crucial.”

One of the key recommendations in the report is that wealth managers offer white-labeled identity theft protection services. This involves partnering with a company offering such protection and customizing it for their high-net-worth clients at a reduced or even free rate.

Fostering Strong Relationships Through Cybersecurity

With the rising concern over fraud, wealth management clients are seeking guidance on how to protect themselves. By providing cybersecurity education and creating prevention plans, advisors can strengthen client relationships significantly.

Establishing trust in cybersecurity measures will help maintain these connections across generations. “Enhancing and reinforcing these relationships today increases the likelihood that children and grandchildren will continue to engage with our services,” Goldberg emphasizes.