Identity theft, a phrase given little attention a generation ago, has now become a huge problem for consumers. Estimates place the number of victims of identity theft at more than five million each year. While compliance with government information-security guidelines and regulations is a good start, showing that your company exceeds expectations might give your firm a competitive advantage in the eyes of security-obsessed, affluent customers.

And have no doubt that affluent clients are concerned about security. In fact, one-third of the affluent have concerns about misuse of information by financial institutions, according to Spectrem Group research. This may be due to incidents in which large financial institutions allegedly lost information or may have been breached by computer hackers. But this sentiment is also reinforced by the fact that some retailers have failed to safeguard customer information. In August, 11 people were charged in connection with the theft of 40 million credit- and debit-card numbers by hacking into the systems of several retailers, including OfficeMax, Barnes & Noble, Sports Authority and DSW. Cases like these, though not connected to financial institutions, increase investors' anxiety and highlight the ongoing struggle to protect electronic information. Financial services organizations must be aware of these concerns and be able to develop procedures and technology that will assure clients of the integrity of their information.

Here's another telling result to consider: While 52% of the affluent believe that the government should be doing more to protect them from identity theft, fully 75% believe that their financial institutions should be doing more, according to Spectrem research. This is a pressing fear for them, and assuaging those fears will do much to encourage online, cost-saving interactions with clients.

As one indication of how important this is to affluent investors, it far outpaces concerns regarding retirement. Indeed, 52% view identity theft as a real concern in terms of electronic information, compared to 40% who have concerns about having enough assets to retire. About 38% worry about another act of terrorism and the resulting effect on the economy. Moreover, the affluent are among the most avidly targeted for identity theft scams, especially younger affluent investors (those under 55).

Assuring clients that you are safeguarding their information, and especially their electronic information, is vital. This must be done proactively, and it warrants a public relations campaign just to inform clients that safety is important to you, too.

Among those who are not concerned about identity theft, the leading reason is because they feel they are currently taking precautions to prevent it (41%). Another third (33%) either don't see this as a problem or feel they are secure because they don't use credit cards and/or computers.

A few more highlights: 53% of affluent women surveyed are very concerned about identity theft, as opposed to just 38% of men; and there is an even split in terms of gender for identity-theft victims. Also at risk are those with high incomes living in premium urban residences. That group is especially affected by one of the newest trends in identity theft; misusing a victim's current or previous address, with the high-risk targets being wealthy homeowners. The victim's details are used by someone living at the same address or a postal redirect is placed on the mail by the scammer.

Phishing Emails on the Rise

Phishing and spamming are on the rise, and more insidious than ever. The spammer's goal is to systematically acquire usable personal information such as passcodes, account numbers, Social Security numbers, addresses and names to exploit. Groups like these are increasingly run by organized crime syndicates and are very successful at what they do. They are almost impossible to arrest and prosecute, because cybercrime law is very new and difficult to enforce for many countries. The international aspects add another layer of difficulty for law enforcement.

Estimates indicate that 109 million U.S. adults received phishing emails in the last 12 months, as opposed to only 57 million in 2004. (Phishers attempt to fraudulently acquire sensitive information—such as user names, passwords and credit-card details—by engaging in electronic communication while masquerading as a trustworthy entity such as a bank or a company like PayPal.)

Though 96% of the affluent say they have taken steps to protect themselves from identity theft-including simple steps, such as using a paper shredder, installing security packages for their computer system and registering their credit cards—identity theft is still rampant, and shows no signs of going away. As newer and faster technology emerges, novel ways to scam and cheat people will always follow. Staying vigilant, wary and on top of the trends are the best ways to protect yourself and your clients now and in the future.