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How Professional Advisors Protect Your Privacy

By: Investor Solutions

By: Investor Solutions

In a recent newsletter article, I wrote about the importance of protecting yourself against identity theft. But what happens when you personally take all of the necessary precautions to avoid being a victim but a professional that you work with doesn’t do the same? What follows is a discussion of steps your legal, tax and financial advisors should be taking to ensure your privacy.

Confirm identity of individual requesting account information

When a professional receives a call from a client or someone claiming to be a client, it is important that the individual confirm the person on the other end of the phone is in fact who they say they are. This can be done by having the “client” confirm his or her Social Security number, address or other information. Basically any type of personal information can be used as a safety check to ensure that you are who you say you are. Obviously, an advisor with whom you speak to on an ongoing basis or know well will not be asking you these questions as they are not necessary and will seem like less of a precaution and more of an inconvenience.

Refrain from giving out client information to unrelated third party

Remember client confidentiality? Legal, tax and financial advisors have a responsibility to you, their client, to protect your privacy and act in your best interest. As such, they should not be giving out personal information of any kind to a third party without your previous consent. If you need information sent to a third party, for example, if you are applying for a mortgage, your advisors should be aware of who to speak to and what information specifically they should provide the third party. A trusted advisor should never provide more information than they have been instructed to give.

Avoid discussing account information with family member without a Power of Attorney

A Power of Attorney is a legal document that is used to assign legal authority to another. The person who signs a Power of Attorney is called the Principal. The power of Attorney gives legal authority to another person called an Agent or Attorney-in-Fact to make property, financial and other legal decisions for the Principal.

There are circumstances in which professionals will need to communicate with members of a client’s family with regard to their financial or legal issues. Such circumstances might arise, for example, for an elderly client or one who is out of the country traveling. In these circumstances, it is imperative that the advisor do so only if the family member has an executed Power of Attorney. This will ensure that your information is shared only with individuals entrusted by you, the client, to look after your interests.

Abstain from sending completed documents containing sensitive information via email

Modern technology allows us to receive information almost instantly. But we have to make certain not to sacrifice our financial safety for the sake of convenience. When setting up investment accounts, for example, financial advisors will often times send you the account paperwork via email in order to expedite the process. They may even facilitate the entire account opening process by pre-populating the forms with personal information (i.e., Social Security numbers). Although this could potentially cause privacy issues for you, it can be avoided. This brings me to my next point.

Ensure documents sent via email are password protected

For legal, tax and financial advisors who have access to such sensitive information as Social Security, tax identification and account numbers, it is important not to include this type of information in emails that might be intercepted. When sending documents that contain such information via email, professionals should be certain to password protect those documents to ensure that they will not be opened by someone with malicious intentions.

Encourage the use of paperless statements

In this day and age of eco friendly, green practices, financial institutions offering paperless statements abound. Not only is it better for the environment, it can be better for your privacy. With no paper statements containing account numbers and balances, would be thieves will be left empty handed when they shuffle through your mail and find nothing but worthless junk. So, if your bank or credit union offers paperless statements, make sure to sign up. It will not only reduce paper clutter at home, it will help the environment and keep your personal affairs private.

Shred unnecessary documents containing personal information

When discarding paperwork with client sensitive information, throwing it in the trash just isn’t enough. For a minimal expense, professionals ought to invest in shredders that should be used to dispose of paperwork containing information such as Social Security numbers and account numbers.

Send self-addressed return envelopes with paperwork

Asking professionals to send you self-addressed envelopes may not seem like an obvious method to privacy protection, but it is. Transposition errors can cause confidential information to land in the wrong hands. By sending self-addressed envelopes to clients, professional advisors ensure that the sensitive information will reach the right person and not fall into unscrupulous hands.

By taking the necessary steps to avoid divulging private information, professionals will not only be protecting you from being a victim of someone else’s ill will, they are also protecting themselves. In this litigious society, protecting clients means protecting oneself. Talk with your advisors today and make sure that they are taking these precautionary steps.