Sue Bergin, President, Bergin Communications
The lifestyle of many affluent investors today is shaped by the “stealth wealth” mindset, according to the authors of New Elite: Inside the Minds of the Truly Wealthy. Stealth wealth refers to the general avoidance of conspicuous consumption – not “flaunting it.” These are the individuals who take steps to blend into the crowd, dress down or indulge only when surrounded by others of similar means.
According to the authors, over 90% of the wealthy spend on regular services, ranging from child care providers to cleaning services, pet sitting, cooks to personal trainers. Spending on services to make life easier brings a new challenge to the stealth wealth approach. As personal service providers are brought on board to help a family manage their busy lives, the likelihood of exposure to financial and personal matters increases.
Personal service providers often have access to the inner dealings of an individual, putting the wealthy at an increased risk for identity compromising crimes including financial, information, and medical identity theft.
- The most common is financial identity theft, which will impact approximately 15 million Americans this year. Typically, the thief accesses a victim’s accounts to steal funds or apply for credit in the victim’s name.
- Medical identity theft involves the use of another’s identity to get medical goods or services, like prescription drugs, cosmetic surgery, or to apply for disability benefits.
- Information theft involves seizing private information and on some occasions, requesting a ransom in exchange for releasing that information. For business owners, this can have a negative impact on future business if private information about clients were leaked.
Although CPAs, lawyers, and financial advisors may be among the service providers assisting a wealthy individual, they may not provide the level of oversight necessary to detect identity fraud.
A wealthy victim to identity theft has more than just money to lose. When someone gains access to personal and account information, the stealth wealth persona goes out the window. In addition to the financial toll, the victim often feels exposed, embarrassed and unsettled. Victims also typically become quite frustrated by the time-consuming task of trying to unravel the effects of the crime.
The longer a thief has unfettered access to your information, the greater the potential harm. The following five steps won’t help you prevent identity theft, but could minimize the potential harm caused:
- Enroll in a proactively monitoring service that alerts you to any potential breaches in your information security. Keep in mind, however, that a credit monitoring service is helpful in detecting unauthorized new credit accounts. The services will not detect unauthorized transactions on existing accounts.
- Ask your financial advisor if the wealth management software he or she uses to track accounts have any alert features which could notify you of investment or spending activity that extends beyond a certain threshold.
- Review and verify accounts statements and your records. Make sure each transaction makes sense and contact your brokerage firm or other financial institution immediately if something is amiss. The faster you respond the quicker the problem can be fixed.
- Check your credit report using AnnualCreditReport.com
- Consider freezing or locking your credit to prevent credit bureaus (e.g., Equifax, Experian, TransUnion) from releasing your credit report without your permission. Most businesses will not lend or allow someone to open a new account without first doing a credit check. Freezing or locking credit helps prevent someone from opening an account under your name. The three websites needed to freeze credit include: www.equifax.com/credit-report-lock/; www.experian.com/freeze; www.transunion.com/freeze
The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Holdings are subject to change. Brinker Capital, Inc., a Registered Investment Advisor.