Money Ninja

To see Sara’s introduction to this blog post, Money Ninja.

With scams and fraud on the rise, sometimes it’s harder to stay rich than to grow rich. The world is full of haters and hackers, and once the wrong person gets hold of certain details, it’s a nightmare to get your life back. You’ve got to be stealthy like a ninja about protecting your financial privacy. Here are some street smart moves you may want to make.

Restrict Disclosure of Personal Information. The best way to avoid identity theft is basic common sense. As mentioned in previous blog posts, all that matters to people anymore is Facebook, Twitter, video games and text messaging. The age of Big Data and social media brings great advantage but also great risk.

I commonly see my connections on LinkedIn and Facebook displaying their birthdays on their profiles. This is a huge red flag. A hacker can do quite a bit with just the month and day of your birth. There is no business reason that your connections need to know your birthday. It’s great that all of your friends on FaceBook will send you a text message on your birthday, but is it really worth the risk of having your life savings stolen because you made a sensitive piece of data available to the public?

Adjust privacy settings on social networking sites to allow access to limited populations. Never disclose your hometown or date of birth on such sites. Log on of all your sites (Twitter, LinkedIn, FaceBook, etc) and then view your profile as someone from the public would.

Even in social situations, don’t let your guard down. Be careful about disclosing personal details such as where you work or live. White collar criminals are very sophisticated and they know whom to target. Sadly, people sometimes use social or romantic relationships as a way to take advantage of other people. Don’t make their job easy.

Change passwords frequently. Change all passwords every six months, and be sure that no one password duplicates another, even if nobody else knows it. If you can’t remember all your passwords and you have to write them down, take the following precautions. Save all passwords on a flash drive, password protect the file and/or flash drive, and lock it in a secure storage facility such as a safe or safety deposit box in a bank. Similarly, it is prudent to avoid duplicating security questions, or the codes you state when you call telephone help lines.

Invest in a secure safe or vault. A lockable, fireproof safe can be purchased for less than $100. Store all sensitive documents, (wills, credit reports, social security cards, birth certificates, licenses, passports, bank or brokerage statements, medical records, keys, passwords) in the safe. Perform this process for all family members. It is also useful to keep a digital archive of the abovenamed important documents on a flash drive that you store in this safe. You should password protect the flash drive itself and/or the individual documents. If you can’t afford a safe, the bank where you have a checking account may provide access to a safety deposit box for free or a small yearly fee.

Shred all sensitive documents. It’s imperative to dispose of paper documents safely. A small shredder can be purchased inexpensively. Be sure to shred everything with your name on it – even mailing labels. All receipts for credit card purchases should be shredded, even if they don’t have your full account number.

Use caution when logging on. Even for home computers, don’t click on options to “remember password” to facilitate logging onto sites. Remember that computers store your private information in cookies. Everywhere you go on the Internet, you’re leaving a footprint that somebody can trace. For this reason it is not prudent to pay bills or access sensitive information (banking, brokerage, healthcare) from work or public portals. These matters can wait for your private computer at home.

Stay on Top of your Credit Routinely. You are able to order a free credit report annually by visiting While this information isn’t always completely up to date (it may lag by a few months), you are able to view all open lines of credit, student loans, etc. Investigate anything suspicious. This document should also display entities that have requested a copy of your credit; that’s worthy of a glance as well. While a credit report can be ordered for free, a tallied credit score can be requested for a small sum of money. You should know your credit score. If it’s good, you want to protect it. If it’s fair or moderate, start getting back on track.

Check all brokers on SEC website, even if someone knows them. Don’t blindly trust referrals—do your research and background check. A friend’s stamp of approval of a financial advisor or broker is not enough to go on. Keep in mind that this person will have access to highly sensitive information about you and your family, such as social security numbers, your net worth, and where your life savings is safe kept. Once you open the doors to the wrong person, it’s a nightmare to get your life back.

Before doing business with any financial advisor or broker (even if they are a friend), it’s a good idea to verify all licenses (CFA® charterholder, CPA, attorney, insurance salesperson). Ask for the license number and confirm directly with the licensing bureau itself. Visit the SEC Broker/Advisor check website and research any disciplinary actions against the firm or individual. Registered investment advisors are required to send you their Form ADV Part II Brochure, which states if they have any criminal history. Give it a quick pass to make sure the person really is who they say they are. Always do a Google search on the person’s name as well. Both of these precautions are free.

If there is any criminal history, drop them cold. You should adopt the attitude that there are many financial advisors out there and nobody is good enough to deserve a second chance when they have a history of wrongdoing.

Conduct Due Diligence on Private Investments. Remember that the hedge fund industry is the slimiest show on the planet. Choose non-publicly traded instruments such as hedge funds wisely, because before you invest even one dollar the due diligence process is expensive and time consuming. A thorough diligence is required for all private placements, whether a hedge fund, private equity vehicle, or initial public offering of stock.

A proper diligence examination goes beyond the normal background check. An investigation of the fund strategy and its financial condition are required, along with a verification of all important relationships with service providers. Future blog posts will address this subject more thoroughly.

You should be sure that the choice of investment warrants the large outlay of time and attention necessary to be sure it’s sound. Doing it yourself might not be adequate, and outsourcing is expensive; this service starts at around $5k for a one time investigation.

Taking measures to shield yourself from identity theft is about as fun as going to the dentist. It’s not the most exciting thing in the world, but just as you invest your money, you need to invest time protecting your money.


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