What advisors tell clients amid endless data breaches

Data security has become a perennial concern for pretty much anyone with a bank account, 401(k), health insurance, or even just a Social Security Number.

Last week, Fidelity Investments disclosed that personal details for more than 77,000 customers had been compromised in August, including Social Security Numbers, driver’s license information, and other sensitive data. And that was far from being the only recent case of a widespread data breach in the US. Other financial services companies, including TIAA, J.P. Morgan, and Interactive Brokers have also reported data breaches this year.

There have been about one billion stolen records so far this year, according to report this week from TechCrunch, and indications are that data breaches in 2024 could surpass the high seen last year. A big part of that is due to National Public Data being hacked earlier this year, resulting in hundreds of millions of Social Security Numbers being stolen. Massive data breaches have also affected AT&T customers and people whose medical claims were processed by Change Health.

It’s become all too common to get a data breach notice in the mail, along with an offer for free credit monitoring. That may leave some wondering whether data security is all but a lost cause.

“Many [clients] have expressed their deep concerns,” said Kevin Lam of Age Wisely Financial, in an email. He encourages people to freeze their credit reports with the major credit bureaus, use fraud alerts, and check accounts for suspicious activity at least monthly.

“Fortunately, my clients have not had a nightmare situation. I'd like to think my guidance has helped them to avoid the serious problems associated with data breaches,” Lam said.

Data security concerns have indeed come up in recent weeks with clients, said Eric Roberge, founder of Beyond Your Hammock. The first step people should take is freezing their credit, and that can also be done for children, though not as easily, Roberge said in an email.

“We tell our clients that we've personally done this, and that we believe taking that proactive step is a great preventative measure to keep your identity safe so even if some of your personal info is included in a data breach, it can't be abused as easily,” he said. Other basic steps include ensuring accounts have unique passwords that are updated regularly, possibly with the aid of a password manager, and using two-factor authentication for important accounts, he said.

“Finally, we tell clients that often, the best prevention for fraud is simply a combination of awareness (know what common scams are out there and stay alert) and a healthy dose of skepticism,” he said.

Another advisor, Ron Strobel, of Retire Sensibly, recently helped a client verify that a notice of a data breach and offer for two years of credit monitoring was authentic, he said in an email.

“It is very stressful to know that someone, somewhere might be attempting to access your finances. The two years of free credit monitoring seems insufficient because who knows how long your information is going to be floating around for others to see,” Strobel said. “There's always going to be that fear in the back of your mind that an attacker may come after your identity even after the two years is up. It also brings up the thought about how many data breaches have occurred without anyone noticing them.”

The issue is now so common that there should be a question about how the credit system in the US could improve, he said.

“Perhaps our political leaders should be working on a way to redesign the way we access credit. Relying so much on our Social Security Numbers seems foolish. There must be a better way to enhance security and prevent fraud and identity theft,” he said.

Still, it’s a good idea to help people protect themselves from being targets, said Tyler Smith, managing partner of BBK Wealth Management.

“We remind [clients] to avoid websites that are not secure – https is a secure site. http is not,” Smith said in an email. Further, “don't click on any links in text or email unless you know the person. If unsure, don't click. Call first,” and avoid using free or public Wi-fi for any business online, he said.

Amy Rosenow, of Bold Vision Financial, offers much of the same advice about credit freezing and monitoring and online vigilance.

“Some clients ask me about data breaches, but I also bring up data breaches with my clients proactively,” Rosenow said in an email. “The breaches are so widespread that I instruct my clients to act as if their Social Security Number has been posted on a billboard on a major metropolitan highway!”