Anthony Fittizzi of US Trust spoke to Family Wealth Report about how managing “digital assets” has become a crucial element of modern wealth management and financial planning.

US Trust, the private wealth management arm of Bank of America, recently extended its Financial Empowerment Program by adding new modules focused on the risks to family wealth in an increasingly online world.

The firm certainly isn’t alone in its view that managing “digital assets” has become a crucial element of modern wealth management and financial planning - the issues of data protection and identity theft have become hot topics globally among many industry sectors, particularly in light of various security violations that have affected institutions and individuals. 

Expanding the Financial Empowerment Program to raise awareness among wealthy clients and their children or heirs about protecting the value of their digital assets - as well as about online reputation, privacy and security - was thus a natural next step, Anthony Fittizzi, a wealth strategist at US Trust, told Family Wealth Report.

As Fittizzi noted, citing Benjamin Franklin: “It takes many good deeds to build a good reputation, but it only takes one bad one to lose it.”

Dangers

It goes without saying, but should be acknowledged nonetheless, that nobody with an online presence - regardless of their net worth - is immune from the threat of a potential cyber attack. However, given the sensitive nature of wealth management, it is clear why this is such a pressing issue for those working in the industry and, crucially, their clients.

“Our biggest role in the private wealth management space is to protect our clients, protect their assets and protect them financially. Identity theft is an example, where, if we are proactive and talk to our clients about preventing some of these issues, we can save them money, hassle, time and any potential ‘clean up’ they might have to go through. We are a fiduciary company and it is our mission to serve and protect,” said Fittizzi, who was heavily involved in the creation and implementation of US Trust’s new modules on digital topics.

Issues around online reputation management, protecting digital assets and identity theft were “coming closer to the forefront” when US Trust launched its Financial Empowerment Program around eight years ago, Fittizzi said. However, the areas of focus back then were more on “investing 101,” protecting assets through traditional means and understanding life events - particularly in light of the financial turmoil seen in 2007, 2008 and 2009.

“As the world and economy has evolved, we’ve seen a bigger push towards looking at some of these digital issues. It’s an area that is going to continue to evolve as the technological and online world continues to evolve too,” Fittizzi said.

For instance, 15 or 16 years ago, no one really had cell phones, he noted. Yet, in another ten years or so, we could be looking at a completely different situation and set of technology.

“At that point, the Financial Empowerment Program will evolve again,” he said.

Digital assets

The term “digital assets” - while there is no absolute definition - is typically broken down into four categories: personal digital assets (photos, videos, emails, music, medical records and blogs, etc); social digital assets (information stored on social websites such as Facebook, Twitter and LinkedIn); financial digital assets (PayPal, tax documents and various online banking-related accounts); and business digital assets (such as domain names, blogs, patient/client information, intellectual property and file storage.) The list within each of those categories could go on.

US Trust has outlined four steps – to be taken note of by both advisors and their clients - to help manage and protect digital assets: 1) Prepare a digital inventory 2) securely store the digital inventory 3) update and backup the inventory regularly, and 4) update one’s power of attorney and will to ensure the proper administration of digital wealth.

“As more data is stored online and everyone goes ‘paperless,’ it’s becoming more and more important that people inventory, plan and have something in place so that successors can manage those assets,” Fittizzi said.

But should someone know what your passwords are and know where all someone’s digital media is? The answer is typically “yes,” according to Fittizzi.

“But it should be one person or a small, trusted group of people. What you don’t want is all these assets floating around, with no one aware of where they are,” he said.

Online reputation

In a recent Forbes survey, nearly half of respondents said they had changed their opinions about doing business with certain individuals after reviewing online content they had posted.

As online content is hard to remove completely, US Trust believes that individuals should focus on minimizing or eliminating, where possible, anything that they would not want others to see.

“It behoves all of our clients and their children – and indeed everyone – to be very responsible and thoughtful about everything we post online. People have instant access and judge very quickly,” Fittizzi said.

Identity theft

“There is recognition that there is no such thing as ‘quiet wealth’ anymore,” Jonathan Crystal of Frank Crystal & Company said previously in an article on Bloomberg. 

In 2012, ACE Private Risk Services, the high net worth personal insurance business, added complimentary identity protection and fraud resolution services to its personal insurance program, in a move signaling the importance of these issues in wealth management.

“Privacy is critical to our clients because their substantial assets, prominence in their community, and rapid adoption of new high-tech devices make them prime targets for identity attacks,” Gary Raphael, senior vice president of risk consulting, said at the time.

As Raphael put it: “All it takes is one misplaced smart phone, and a whole life can be opened up to prying eyes. Other conveniences such as mobile banking, online shopping, and social networking can also expose our clients to financial and reputational damage.”

In the words of Fittizzi: “Just like everything in life, it is important to be thoughtful, be organized and have a plan. A lot of what we do in the wealth management world is a lot of what we all do in life every day.”