Protecting your assets is a central part of any wealth management strategy. While most of us may plan for the usual threats, taking precautions such as installing home-security systems and working with trusted advisors, not all of us are vigilant about the possibility of cybercrime.
Yet cybercrime affected 143 million Americans in 2017, with financial losses totaling US$19.4 billion. According to a 2017 Campden Research study, more than a quarter of ultra-high-net worth (UHNW) families, family offices and family businesses, with an average wealth of $1.1 billion, have been targeted by a cyberattack, yet 38 percent lack a comprehensive cybersecurity plan.
If you fall into that category, you could potentially be more vulnerable to an attack by savvy cyber thieves.
"Hackers that target high-net-worth individuals have done their homework," says Stacy Bertrand, manager of information security strategy and metrics at City National Bank. "They know they have money and that they have something to steal."
But it's not just financial resources that make these families more vulnerable to a cyberattack. It's also often their public status and lifestyle choices that may make them more susceptible.
Lifestyle cues used for social engineering attacks
Social engineering involves the use of social media to mine your information. Hackers can gain clues about things like wealth status, property ownership and investments through private details that individuals choose to share publicly on social media. Cyber thieves can then use social media to facilitate a scam.
These thieves use a wide range of techniques to try and trick you, says Eduardo Kieffer, director of Cyber & IT Risk for RBC in the United States.
“They might use familiar subject lines or spoof a trusted sender to try to get you to open an email or click a link," Kieffer says. “Email fraud works by impersonating someone you already know and trust."
Setting ground rules for social media use with you family members can be an effective way to combat the social engineering threat. For instance, you may wish to restrict the types of photos or information shared through social media, or insist family members set their account visibility to private-only.
Public status adds risk
In general, says Bertrand, high-net-worth individuals (HNWIs) are more searchable online. Someone who owns a company, holds a C-suite position, frequently makes large donations to charity or is a public figure has a highly-visible online presence, making it easier for cyber thieves to profile them as potential victims.
"Hackers are able to perform sophisticated spear-phishing attacks with the information they receive from searching the internet," says Bertrand. Spear-phishing involves the use of fake emails which lure you into clicking a link, downloading a file or sharing sensitive personal or financial information that can be easily exploited.
Most cyberattacks start with a phishing email, which is also one of the most common ways computers are infected with malware. To prevent this from happening to you, it's always best to take the "better safe than sorry" approach and pick up the phone to verify the email is actually coming from the person you believe it is.
Lack of centralization can make cyberattacks easier
Having a broad network of people who aid in managing your wealth can also be a boon for hackers.
"Typically, clients we work with have a financial team," says Bertrand. "Because more people are potentially involved managing various aspects of your financial plan, hackers have more wiggle room to build convincing stories that do not need to be verified."
Bertrand offers two tips for protecting yourself when you have a larger team, or widespread assets.
First, "high-net-worth individuals need to develop a 'trust but verify' process," she explains. "This means that people or companies who work with these individuals need to know what they are allowed to approve and what they need to call and verify." In the best-case scenario, employees should verify all emails and phone calls with you prior to transferring money.
The second tip is to understand where your assets are held. You don't necessarily need to aggregate all your assets in one place but you should have visibility and transparency with regard to where your accounts are located and what's in them.
High-net-worth households have the means to pay up
The use of ransomware — a software program which blocks access to systems or data until a ransom is paid — also poses a threat to HNWIs. An estimated 4,000 ransomware attacks occur each day, and while businesses are often the target, individuals and family offices aren't immune.
Because HNW households have the resources to pay the ransom, cyber thieves are betting many of these individuals would prefer to pay up rather than dealing with a locked computer.
Preventing ransomware begins with protecting your personal and financial details and ensuring basic security practices are followed down the line by employees and any other individuals who have access to your information.
Luxury locations are a target for wireless spoofing
When you're traveling, you may find yourself using public and open wireless networks or hotspots to get online. But these networks are particularly unsecured, even when they require a password. Hackers are taking advantage of this fact and targeting luxury hotels and airport lounges where they know HNWIs will be using their laptops and phones.
Never log in to password-protected websites that contain sensitive data, such as your bank accounts, social media channels or email, when using public Wi-Fi. If you need to use a Wi-Fi hotspot, consider using a virtual private network (VPN) to secure your connection.
Recognizing and understanding the various ways in which you may be a target of cyber fraud is an important step in protecting your assets. With this knowledge you can have a conversation with the professionals who are managing your assets to ensure they're properly equipped to identify and handle a cyber threat. You'll also be able to take your own precautions so you don't unknowingly make it easy for a cyber thief to target you.
This article originally appeared on CNB.com. City National Bank is an RBC company. This report is for general information and education only and was compiled from data and sources believed to be reliable. City National Bank does not warrant that it is accurate or complete, nor does City National Bank represent that the information provided, if followed, will provide a complete safeguard of your information. City National Bank maintains security procedures designed to help prevent unauthorized access to your accounts and your information.
RBC Wealth Management, a division of RBC Capital Markets, LLC, Member NYSE/FINRA/SIPC.