FINTECH VIEWS: Firms and Advisors Serving UHNW Investors Have No Room for Error When it Comes to Identity Theft

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Brian Werner | FORG

By Brian Weiner, Family Office Resource Group

Businesses spend billions of dollars on marketing each year to, in part, build and maintain authentic connections with customers. This is why successfully confronting identity theft and beefing up cybersecurity protections have become huge priorities for every imaginable type of business.

The risks in these areas are enormous. Maintaining a customer’s trust is next to impossible if you fail to protect their personal data and expose them to financial loss. Even so, blunders like this are becoming more common.

Last year, the public filed almost six million fraud and identity theft reports with the Federal Trade Commission. That represented a 16% increase over 2022, signaling that identity-related crimes are on the rise. Meanwhile, according to a recent study, losses related to such crimes neared $54 billion and impacted over 42 million Americans in 2023.

Enormous implications for industry, UHNW investors

Statistics like this should send shivers down the spine of everyone in our industry. It doesn’t matter whether you lead a large broker-dealer with thousands of affiliated advisors and billions in assets under management or have a small office space somewhere in Main Street, America, serving a few dozen mass-affluent clients.

Yet, identity theft is an especially acute concern for ultra-high-net-worth clients, along with the financial professionals and firms serving them. On the surface, the reason is obvious: such clients have outsized personal and professional assets, meaning the stakes are higher—literally. Yet, the implications are more widespread than that.

For one, many criminals targeting this group are shrewd operators and calculating. Whereas other demographics may have to confront issues like credit or debit card fraud, the challenges facing UHNW investors often are more complex.

In part, this stems from having more to lose. But the other issue is how UHNW individuals and families invest, with a significant portion of their assets tied up in various businesses, trusts, alternatives and other complex investments. This increases the likelihood of nefarious actors getting access to funds or committing crimes like real estate or wire fraud.

Further, consider the fallout for a firm if one of its UHNW clients becomes a victim of a cybercrime. Setting aside for a moment the financial losses (which could be substantial) and the time it would take to restore their identity fully (which may take months), think about what that would do to the firm’s reputation.

It would lose that client, and legal challenges could also follow. Either way, the damage to its reputation may be too much to overcome. It’s a small industry in many ways, especially in ultra-high-net-worth circles, so it’s close to a sure thing that prospects and other clients would find out.

And because no one wants to work with a firm that cannot protect them, further client attrition will likely follow. At the very least, the firm can forget becoming or remaining a major player in the UHNW space.

A top target

In our increasingly digital world, identity theft will only ratchet up in importance going forward. Data from the Identity Theft Resource Center suggests that financial services is now, more than ever, in the crosshairs of cybercriminals.

The organization reports that compromises in the sector surged by 67% in the first half of 2024 compared to the same period the year before. That makes it the most targeted industry, surpassing healthcare.

This trend should make it clear: Everyone in the industry needs to beef up their identity theft and cybersecurity capabilities. But given the stakes, the ultra-high-net-worth segment has to move faster than most.


Brian Weiner is the founder and CEO of the Family Office Resource Group (FORG), which provides a comprehensive family office program to support wealth management and other professional service firms