HNW Individuals are Losing Money to Scams

The pandemic brought with it many unpleasant economic side-effects: problems in global supply chains and now, as the world tries to recover, rapidly rising inflation and interest rates.

It also brought a considerable increase in fraud as scams proliferated: romance scams, investment scams and impersonation scams all increased significantly. Phishing attacks were reported to have soared by 220% during the pandemic: the Guardian reported that more than £2.3bn was lost to fraud in a year.

Even these figures may be underestimates: people are sometimes reluctant to admit or report that they have been victims of fraud, with men less likely to admit that they have lost money than women and younger people.

We generally assume that frauds and scams happen to the less financially savvy. In fact – and worryingly – the opposite may be true. An article in City AM last month reported that almost 75% of self-employed wealthy individuals have fallen victim to financial fraud, with victims on average losing a reported £9,000.

Self-employed high net worth (HNW) individuals – defined as those with assets of more than £3m – are the most at risk with 74% of them saying they have been scammed and 41% losing money.

A quarter of HNW individuals now say that cybercrime is the biggest threat to their wealth – a short time ago it was ranked as the fourth biggest risk, behind inflation, Covid and exchange rates.

So, what can be done about it? It is very easy to trot out clichés such as ‘always be on your guard’ and ‘if it seems too good to be true it is too good to be true’. It is equally easy to say, ‘don’t use your dog’s name as your password’ and so on.

But cybercrime is becoming ever more sophisticated, with criminals from all over the world targeting HNW individuals. Why do such people so often fall victim? You suspect it is a combination of being targeted more often and being short of time: the self-employed do not acquire more than £3m of assets by taking it easy.

As financial planners, we’re tremendously proud of the relationship we have with all our clients – and yes, some of them would be classed as HNW individuals. We construct financial plans that meet their long-term goals, match those plans to their risk profiles and regularly update clients on the performance of their investments.

Having that sort of relationship with a well-established firm of financial planners is unquestionably one of the ways to protect against fraud but – as we have mentioned above – crime will always be with us, and criminals will always find new ways to try and steal people’s money. Witness the recent increase in cryptocurrency fraud targeted at young people, for example.

We are always here if you need to talk to us – whether it is about your savings and investments, or an out-of-the-blue ‘investment opportunity’ you have suddenly been presented with.

If you’d like to talk over your personal finances with me, don’t hesitate to get in touch. You can contact me on 01789 263888 or at