4 Reasons Why High Net Worth Can Also Mean Greater Fraud Target

Estimated Reading Time: 5 Minutes

As a wealth manager, you’re likely already aware of the many (added) risks your high-net-worth clients face. And while your goal is to help them grow and preserve their wealth, how much are you doing to achieve the latter?

Preserving their assets can come in many forms, but perhaps the biggest threat may be one you very well can do something about. A joint study by Experian and the Department of Justice (DOJ) showed that the affluent are 43% more likely to experience identity theft. Another recent study showed that 41% of high-net-worth individuals (HNWIs) have been victims of financial crime – with more than a third being targeted in just the past six (6) months.

We’ll detail the top four reasons why the numbers aren’t in your clients’ favor when it comes to fraud and scams – but we’ll also tell you how you can better protect them and their asset portfolio (and score some major loyalty points).

Key Takeaways

• High-net-worth individuals are 43% more likely to experience identity theft, making them lucrative targets for fraudsters due to their substantial assets and number of financial accounts.
  
  
• Addressing these risks can foster loyalty and trust with your clients, as many HNWIs are more concerned about their cybersecurity than their investment performance.
  
  
• Iris^® Powered by Generali's Wealth Management package offers comprehensive dark web monitoring, credit monitoring, high-risk transaction monitoring, and more to help protect your client's assets.

Four Reasons Why Your High-Net-Worth Clients Are at a Greater Risk of Fraud

#1 There are higher financial gains to be made.

This one’s obvious, but it still needs to be stated. HNWIs usually have significant assets and multiple bank accounts and investment portfolios, making them lucrative targets for identity thieves. This also means their credit lines, loans, and other financial accounts often have substantially higher limits. Access to these can allow fraudsters to quickly accrue large amounts of debt in the victim’s name before it’s ever detected.

Related to this, most HNWIs have varying income sources involving trusts, corporate entities, and partnerships (both domestically and internationally). These complexities can provide multiple entry points for fraudsters to exploit, especially if there are gaps in how these entities are managed or secured.

#2 Their status also means extensive personal data exposure.

HNWIs often have a higher public profile, whether through business activities, social engagements, or philanthropy. This exposure increases the likelihood that personal information is publicly accessible – and ripe for the picking by criminals. With enough personal information, fraudsters can use it to attempt to access existing accounts – or even open new ones.

Additionally, armed with these various data points, scammers can craft highly convincing phishing emails or messages. These communications might mimic legitimate institutions, like their bank or wealth manager (!), to trick them into revealing more sensitive information or performing specific financial transactions.

#3 Their home is likely buzzing with staff.

HNWIs often employ a range of personnel – from personal assistants, chefs, and housekeepers to nannies, bodyguards, and advisors – who come in and out of their homes on a daily basis. While most are trustworthy (and have likely undergone super stringent background checks), this does increase the number of individuals who have access to personal and financial information, nonetheless.

#4 They’re frequent travelers.

HNWIs often travel more, both for business and leisure. Frequent travel inherently increases exposure to risky situations where personal information might be compromised. When traveling, there's also a higher risk of losing personal devices like smartphones, laptops, or tablets, or having them stolen. These devices often contain a wealth of personal information and access to personal accounts, which can be exploited if they fall into the wrong hands.

Other risk-increasing situations include connecting to unsecured public Wi-Fi networks, sharing personal information with numerous entities, including hotels, airlines, and rental companies, and carrying critical documentation like passports.

Wealth Management Professionals: Address These Risks & Foster Loyalty

An Accenture study found that 77% of HNWIs are more worried about being hacked than they are about their investments declining in value. Given the above, they have every reason to worry.

Now, think about the kind of relationship you want to have with your clients. Is it one that engenders trust and good faith? By understanding and addressing these vulnerabilities with them, you can foster a more loyal and fulfilled client base. But, short of establishing and hiring a new cybersecurity arm for your firm, efforts like these can seem daunting.

That’s why Iris Powered by Generali makes it easy. We’ve put together the premiere Wealth Management Protection package for your clients. With comprehensive dark web monitoring and alerts, three-bureau credit monitoring, high-risk transaction monitoring and alerts, scam support*, 24/7 fraud resolution services, and $2M insurance fraud**, your clients can breathe easy knowing that what they’ve worked so hard for is protected.

And the choice is yours on how you want to offer it to your clients: You can have them simply check a box when enrolling and charge it as a separate fee; you can embed it into your services and pass the cost savings onto them; or reach out, and we can collaborate if your firm wants to do things a bit differently. We love coming up with creative solutions for unique businesses like yours.

Contact us today, and you can begin preserving your clients’ wealth in as little as 30 days!

*Iris^® Powered by Generali is not responsible or liable for the availability, safety, accuracy, or effectiveness of the techniques, products, tools, or resources used by Iris Powered by Generali in its ScamAssist^® service and customers’ access and use of ScamAssist is entirely at their own risk.

***Iris offers a variety of Identity Fraud Insurance plans. All plans include up to $1 Million in Identity Fraud Expense Reimbursement and Cash Recovery for unauthorized electronic fund transfers from Checking & Savings Accounts or Investment/Health Savings Accounts. Iris also offers an option for upgraded Identity Fraud Insurance with up to $2 Million coverage, Home Title Identity Theft Expense Reimbursement, and Cyber Extortion Expense Reimbursement.

Identity Fraud - Expense Reimbursement, Cash Recovery Aggregate, and Investment & HSA Cash Recovery benefits are underwritten and administered by American Bankers Insurance Company of Florida, an Assurant^® company, under group or blanket policies issued to Iris^® Powered by Generali for the benefit of its Members. Please refer to the actual policies for terms, conditions, and exclusions of coverage. Coverage may not be available in all jurisdictions. Review the Summary of Benefits at https://www.irisidentityprotection.com/terms-conditions.