Building a Digital Moat: Protecting Your Privacy & Financial Security

During the 1920s, a bank robber named Willie Sutton stole more than $2 million. As the story goes, after being arrested, Sutton was asked by a reporter why he robbed banks. His answer was probably apocryphal, but it’s gone down in legend anyway: “Because that’s where the money is.”

These days, thieves still go where the money is…usually by targeting private individuals who have a lot of it. But modern theft isn’t about lock-picking a safe or blowing a bank vault with dynamite. More often, it’s in the form of cyberattacks. One study in the UK found that 28% of high-net-worth individuals have experienced a cyberattack.¹ But any investor is potentially vulnerable, because nearly every investor has digital vulnerabilities that get targeted by thieves.

As your financial advisors, our job is to help you plan for the future you want to achieve. We’ve found that, with each passing year, protecting your privacy becomes increasingly important for securing that future. The good news is that while cybercrime, identity theft, and other forms of fraud are very real problems, you can protect yourself and your privacy with a little advanced planning. We like to think of it as building a castle. First, you must understand your vulnerabilities. Second, you must build the necessary walls, gates, and drawbridges to protect those vulnerabilities…with a wide, digital “moat” around it all.

Understanding Your Digital Vulnerabilities. In the old days, a robber like Willie Sutton would “case” a bank he wanted to rob, looking for entrances, exits, and blind spots. Cybercriminals do the same thing using your data. So, to protect your privacy and finances, you must understand exactly what modern-day thieves are targeting.

The first thing is evidence of wealth. Whenever money moves, it leaves a trail online. Real estate transactions are visible in public records. Major luxury purchases, investments, philanthropic efforts, inheritances, and awards are often easy to spot, too. Cybercriminals will also scrutinize social media posts, geotags, membership lists, and business and legal documents stored online, among other sources.

By doing this, cybercriminals can build profiles of the individuals they want to target… and the best way to do so. Here are a few of the ways they do this:

Data-Hacking. Cybercriminals often try to hack crypto wallets, financial institutions, online retailers, and public wi-fi networks to gain access to email accounts, passwords, credit card numbers, Social Security numbers, and other sensitive information. With this data, thieves are essentially stealing your digital identity so they can spend, transfer money, or apply for loans in your name.

Scamming. Using the profiles they’ve built, many cybercriminals will attempt to scam investors by targeting some aspect of their digital identity. This could be a phishing email that appears to be from your bank or an online store you use. It could be a text message that appears to come from the government or a local business you frequent. In these days of AI, it could even be a phone call or a voicemail that sounds like it’s from a friend or loved one. In every case, these messages are designed to trick you into revealing private information, transferring money, or downloading malware onto your device.

Hijacking Your Reputation. Most insidious of all is when cybercriminals use the data they’ve collected to threaten your privacy or reputation, usually in the form of blackmail or extortion. High-net-worth individuals, especially those who are business owners, public figures, or are otherwise visible within the community, are especially vulnerable to this.

How to Protect Your Privacy & Financial Security. So, now that we know where some of the vulnerabilities are, how do we shore them up? How do we build a “digital moat” that protects both our privacy and our money?

The most important thing you can do is take steps that reduce your digital footprint and make yourself less of an easy target. Using strong, unique passwords for every device, account, app, and login is absolutely critical — and having a password manager to generate and store these complex passwords is far safer than writing them down, storing them somewhere on your computer, or trying to memorize them.

Enabling multi-factor authentication (MFA) is nearly as important. If passwords are like adding steel gates to your personal castle, MFA is adding a drawbridge. MFA requires entering a second PIN, password, fingerprint, facial recognition, or a random code with a short expiration time to log in to any device or account. It can be a pain, but it makes it substantially more difficult for thieves to access your data. Keeping your devices updated and using firewalls and anti-malware software is important, too. So is backing up your data on a regular basis, and turning off features like Bluetooth, location sharing, and geo-fencing. Finally, reduce your vulnerability by never shopping or conducting transactions over unsecure networks, and by resisting the urge to “overshare” details about your personal life online. All this is the equivalent of reinforcing the walls around your castle, as criminals often target these areas, looking for gaps in your defenses.

Remember: Achieving the financial future of your dreams means protecting your financial present. Your privacy is a castle…and castles must be defended.

¹ “High-Net-Worth Individuals Are Cyber Targets,” Forbes, https://www.forbes.com/sites/richardlevick/2020/03/24/high-net-worth-individuals-are-cyber-targets–even-more-so-during-the-coronavirus-pandemic/