Individuals of great wealth have always been painfully aware of safeguarding their personal security. Given the rise of cybercrime and extreme criminal activity, coupled with new technologies and artificial intelligence, family offices may be more at risk than ever. As Nora Macaluso reports, it’s best to be proactive and start with a vulnerability assessment to see the pain points of the family’s current situation.
We also peer into the world of fly fishing this week. According to research by the wealth intelligence firm New World Wealth and the investment migration consultancy Henley & Partners, the sport has emerged as one of the top pastimes for the wealthy. We’ve come to realize that not only is the sport itself elite (Think guided tours and expensive equipment) but it also seems to happen in the most remote locations — like the Bahamas, Belize and Seychelles, a remote nation off the coast of South Africa.
As always, we appreciate any comments, ideas and insights that would make this newsletter more useful. I look forward to growing this family office community with your help. Please email me at [email protected].
HANDPICKED: With increase in cyberattacks, wealthy families prioritize integrated protection
By NORA MACALUSO
Geopolitical tensions, a rise in cybercrime and criminal activity overall, and growing media exposure mean that ultra-wealthy families need security now more than ever, said experts in the field. Advances in artificial intelligence and other sophisticated technologies are blurring the line between cybersecurity and physical security, they said.
“Physical security and cybersecurity are not separate entities,” said Matt Peters, vice president of protective services at Guidepost Solutions. “Their shared goals aim to prevent unauthorized access, damage and theft and ensure the well-being of individuals and asset owners.
“A breach in one realm can jeopardize the other."
Peters sees digital vulnerability as one of the top security issues for wealthy families. “We have seen a massive increase in nefarious cyber activity — including hacking, fraud, ransomware, data breaches and blackmail,” he said.
Families that have conducted comprehensive assessments of their security programs “are astonished at how much information is readily available” through public records, Peters said. “I’ve yet to see one family who does not have that one teenager or grandmother who does not overshare personal information on social media.”
Wire fraud “continues to be the major threat” in cybersecurity, said Stefan Ludlow, chief technology officer at Cerity Partners LLC. A fraudster will often hack a client’s personal email and find a history of frequent wire transfers, then wait for the next request to take place and pose as the client and change the recipient bank information through an email to the wealth manager, he said.
There’s “some visibility around AI voice impersonation for public figures,” Ludlow said, though he added that he has not yet seen this "in the wild personally.”
Christian West, an executive protection program architect at Executive Support and Logistics, said he hasn’t seen any security breaches involving AI, but it’s “definitely something that’s going to be exploited.” On the plus side, AI has made security systems smarter, he said.
Ramping up security doesn’t necessarily mean spending money on security systems, said Paul Viollis, CEO of Viollis Group International, a global intelligence, security and investigation consulting firm serving affluent individuals.
“It’s not about going out and hiring a protection team,” Viollis said. “It’s about understanding the risks that your general lifestyle brings and putting the preemptive risk mitigation measures in place.
“Really identifying whether or not a family or family members should be more closely examining their security measures starts with more closely examining their own lifestyle."
One measure everyone should take regardless of lifestyle is making sure that a vetting process exists for contractors and others with access to the family’s assets, security professionals said. In the physical world, that means knowing the workers who install security systems as well as anyone else who might be able to find a way in, they said.
Online, security starts with email. “Email is the pathway into your life,” Viollis said.
“If there’s a keystone to risk, it’s what the world can find out about you,” he said. “For a family office, if you’re having a liquidity event, how many people know about it? How much does the world know about what events you attend, your affiliations, your social media footprint?"
Security consultants can conduct a lifestyle vulnerability analysis — a “deep dive” into a family’s exposure, including monitoring of the deep web and dark web. Determining where the vulnerabilities are is the most cost-effective way to take the right steps, said Viollis.
How to find the right security consultant for the job
Referrals are the route most families take, but even so, “individuals need to do their own due diligence on potential firms,” said Peters of Guidepost Solutions. References for past work are unlikely to be available, given the need to protect clients’ identities, he said. But it’s possible to request insurance certificates and licenses as well as copies of nondisclosure letters and letters of engagement.
“Embrace the vetting process,” Viollis said. Crimes are rarely committed by strangers, so it’s important to make sure everyone with access to the family can be trusted, he said. A thorough background investigation is “not cheap,” he said, but it pays to make sure everyone who comes close to the family or the home is trustworthy.
“With things going on internationally, there are significantly more threats than there have been in recent years,” said Kevin Craig, assistant vice president at Porzio Compliance. That makes “situational awareness” key for ultra-wealthy families, said Craig, who recommends a security strategy that takes into account all potential vulnerabilities.
He recommends finding a consultant “who can interface with law enforcement partners domestically and internationally, as well as intelligence communities.”
Offline, security experts stressed the need for situational awareness at home and while traveling. Travel arrangements need planning, and even local trips like kids’ routes to school should vary from day to day so criminals are kept guessing, they said. And Instagram posts of vacations and special events can wait until the party is over.
It’s also important to make sure that home security systems are doing what they’re supposed to, said West. “Don’t just rely on what you bought a couple of years ago,” he said. “One of the things we see a lot is you buy a house that has relatively good security, and all of a sudden trees and bushes are covering the cameras.
“Security is, unfortunately, one of the things that’s here to stay, and it’s necessary. If you’re lucky enough to be in the ultra-high-net-worth space, you should always be vigilant.”
Ocean fly fishing emerges as the ultimate pursuit for the elite
By ALEC FOEGE
Ocean fly fishing has emerged as one the most popular pastimes of the ultra-rich, according to research by the wealth intelligence firm New World Wealth and the investment migration consultancy Henley & Partners.
It’s not hard to see why. Call it the thrill of the hunt.
“The fish are moving, the wind is blowing, the boat’s moving,” said Brandon Henley, owner of Florida Keys Fly Fishing in Big Pine Key, Florida. “And you literally have seconds to get the fly in front of the fish.”
Oh, and you’re in some remote, magnificent tropical location either in Florida, Belize, the Bahamas or Seychelles, a remote nation in the Indian Ocean about a 45-minute boat ride off the coast of South Africa.
“The beauty of the Seychelles is that it is untouched,” said Keith Rose-Innes, a co-founder and managing director of the Alphonse Fishing Co. in Seychelles’ Outer Islands. “It’s not civilized, so you don’t have overfishing here and the exploitation of the ecosystems. It’s like it was 100 years ago, or two or three or four hundred years ago.”
THE LATEST IN ECOTOURISM?
Ocean, or saltwater, fly fishing is quite different from its more familiar freshwater counterpart. For one, it’s often done from a flat boat, not standing in the water. That water is typically about four feet deep, and the best locations can be hard to reach. Also, because of the pristine conditions, those fishing can usually see the size and type of fish before trying to catch it.
The fishing is mostly catch-and-release, and ecosystem preservation is a major part of the experience. The Miami-based nonprofit Bonefish & Tarpon Trust states on its website: “Through science-based approaches, BTT is working to protect and enhance healthy, functioning flats fisheries and habitats in the Western Hemisphere, and restore those in decline.”
In Seychelles, local regulations require that all the fish caught are released, regardless of size. “The way we work with the fish is all oriented on the rotation of spots and sustainability,” said Rose-Innes. “The fish that gets caught gets captured in the water, and it’s left out for a very short period of time for a photograph to be taken and then goes straight back into the ocean and is released.”
The range of species you’re likely to encounter can run the gamut, depending in part on your location. In the Florida Keys, bonefish and tarpon are plentiful. Visitors to Seychelles can expect to snare barracuda, milkfish and bumphead parrot fish, among other species.
Henley typically recommends that groups commit to at least a week for an ocean fly-fishing vacation. Typically, they only make such trips once or twice a year, so it may take a day or two to learn or get back into the swing of things.
“The big thing people have a hard time dealing with is the wind,” Henley said. “The wind is always a factor in saltwater.”
Henley also recommends that participants practice at home before going on a trip: “A lot of people think, ‘I’m a good trout fisherman, I’ll do fine.’ And then they get here, and they get their butts kicked, because they’re not used to the wind and the fish moving so fast and all these different variables.”
FISHING IN STYLE
Hiring a seasoned guide is a must for any group planning an ocean fly-fishing expedition. Guides typically run $750 per day, with an additional $150-plus per person for lodging, Henley said. Right after Thanksgiving this year, Henley is moving his business to the Bahamas, where he said the saltwater fly fishing is even better than in the Keys.
He and his partners have built an all-inclusive lodge there and also will be offering overnight trips aboard a 50-foot Viking Sport Fisher.
Traveling to Seychelles from the U.S. usually requires flying to Qatar, Dubai, London or Paris before transferring to a flight to Mahé, the largest island in Seychelles. A sample trip would include another hourlong flight to Alphonse Island in one of the nation’s more remote atolls.
“We’ve got villas; we’ve got bungalows; we’ve got suites; and we’ve got a really big-budget, live-aboard catamaran,” said Rose-Innes. “We’ve got so many different options.”
LOOSE CHANGE
IRS urged to crack down on wealthy tax cheats in Puerto Rico: Twelve Democratic members of the House of Representatives asked the IRS to expedite a congressional request for information about efforts to root out people allegedly abusing tax benefits.
Rent surges for luxury apartments in Singapore and London: Luxury rents in some of the world’s biggest cities are surging, pushed higher by limited supply, frustrated house hunters and residents who are returning after the pandemic.
How a billionaire banker is helping elite U.S. colleges recruit talent: Byron Trott and his wife, Tina, have funded a $20 million initiative for schools to step up their recruiting in rural areas and underrepresented towns, from east Tennessee to Pecos, New Mexico.
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