Wealthy families need to observe certain disciplines in using social media so that reputations are protected and nurtured. The family office firm talks to FWR about some of the issues.

For the wealthiest of families, the headline-grabbing threat of cybercrime is reason enough to take care over how social media channels such as Facebook, Whatsapp or Linkedin are used. 

Besides the lurid tales of hackers stealing personal data, as happened recently with a massive ransomware attack that hit infrastructure systems and firms such as FedEx, the use of social media by different age groups raises another issue. The topic is whether people can publish sensitive or potentially embarrassing information in ways that can return to haunt that person later in life. There are stories, for example, of employers trawling through Facebook and other accounts for potentially embarrassing information about a job applicant. And the spreading use of Big Data means social media accounts can be tracked for investment habits, consumer tastes and other behaviors. It is a far cry from the discreet, even secretive world associated with old-style private banking and family offices. 

At GenSpring Family Offices, the US-based firm, social media is part of a broader reputation management advisory channel, Daisy Medici, managing director of governance and education, told Family Wealth Report in a recent interview. She says demand for advice on the matter is strong.

She talked about how an understanding of the use of social media and explaining the issues to families are parts of GenSpring’s offering. There has been a definite trend towards more discussion about the issue by clients, she said. 

Medici said that with families, a problem that is aired on social media about one person has the potential to taint the reputation of the entire family. Families should address how social media are used, she said. 

“Don’t befriend anyone whose name you don’t recognise. A problem is not being on top of your privacy settings and making friends with people you don’t know,” Medici continued. 

An issue is that different family members, sometimes because of age and varying experience, will have contrasting attitudes towards using social media. “We talk to parents about generational differences…we ask them to take a deep breath. This is not an `all or nothing’ approach,” she said. It is neither desirable nor feasible for families to take a draconian approach to using social media and banning its use, Medici, who has been at the firm for 11 years, said. 

As many wealthy families will have a public profile associated with a business and the sheer fact of such wealth, others will be keen, sometimes for malicious reasons, to pry and find out details via social media. As President Donald Trump’s own prolific tweets demonstrate, many high-profile persons can draw controversy through social media, and may regret it later. 

Medici said all generations, when looking back at their lives to date, might regret certain actions but with the social media era, many of these episodes are caught forever, to some degree, in a digital way. Asked if Millennials, for example, who are famed for being fans of technology, might regret heavy social media use later in life, Medici cautioned against a censorious approach, noting that for many people of all ages, social media can be immensely positive in drawing together networks of friends and career professionals

GenSpring is not alone in counselling wealthy families about what a digital footprint can mean. Reputation management goes back a long way. The libel laws of the US and certain other countries such as the UK are a case in point. Even further back in history, duels were fought to the death over reputation - modern life has in some ways improved. And  social media and its reputational impact is a natural subject area for lawyers. The international law firm, Withers, for example, explicitly mentions reputation management as one of its points of advice for clients. It advises clients on online bullying, misuse of personal data and “revenge porn”, among other threats. 

In another example, the private banking and investment group at Merrill Lynch had a recent guide, called Does Your Family Need a Social Media Policy? That document runs through a whole range of threats and issues, such as vulnerability to hackers, setting online rules for family members and etiquette in use of social media. For example, Merrill Lynch’s briefing note said: “These days, the boundary between who you are `IRL’ (Internetspeak for `in real life’) and online is increasingly blurred - and for younger family members, the line between the two may scarcely exist. And with notions of public and private very much in flux, there’s a real danger that your children’s digital footprints could affect their lives - or your entire family - in ways that are difficult to anticipate but that could cause lasting damage. Consider that more than half of teenagers have given out personal information, including photos and physical descriptions, to someone they don’t know, and that nearly a quarter have had private or embarrassing information made public without their permission.”

To illustrate how social media and technology are becoming important concerns for ultra-wealthy families, in May, Citi Private Bank issued a report, entitled Family Offices and Cybersecurity. The bank examines where family offices are vulnerable, advises them on how to be more robust and considers future implications. The report is written by Edward Marshall, a director in the global family office group at Citi Private Bank. 

No need to be paranoid
Medici said it is a mistake for people to take the default position of just avoiding social media altogether. These channels are so embedded in modern life, and so useful and enjoyable, that it is plainly unrealistic to go off the grid. The key is to educate, educate, educate. Sharing facts and real life stories of unfortunate situations can move many people, young and old, to take a more conservative approach to their social media use. In the end, advisors can help client families to understand the potential dangers and work together to learn the limits and craft some practical guidelines for protecting families’ reputations, she said. 

There is no doubt that for some in the wealth management space, having a social media account remains a worrying issue. And it is clear that not all people are content to try and live with social media. At one recent summit hosted by FWR in New York, a panellist told delegates that if he had one piece of advice for clients about guarding privacy and reputation, it would be: “Take down your Facebook account.”