Skip navigation
Mission Impossible

Nine Common Privacy Planning Issues

Ensure that discussions and financial transactions are as secure and confidential as possible.

As our personal information becomes more intermingled and easier for complete strangers to access, many clients, particularly celebrities and high net worth individuals, are seeking solutions to secure their privacy.

During their panel Wednesday at the Heckerling Institute on Estate Planning, John F. Bergner, R. Kris Coleman and Mark Lanterman discussed some techniques planners can employ to ensure that the various discussions and financial transactions that they perform for and with their clients are as secure and confidential as possible. While the bulk of their presentation was somewhat technical and beyond the scope of this article, they presented eight compelling privacy issues (plus one of our own) that advisors may encounter.

  1. There Is a Basic Right to Privacy. Clients don’t need an independent reason to want to ensure their own privacy. Although the U.S. Constitution does not expressly grant a right to privacy, it is implied in the Bill of Rights and has been recognized by the Supreme Court. That being said, the line between an individual's right to privacy and the public's right to access certain information is often fairly vague. Each client presents a unique puzzle in this regard, so advisors must be prepared to apply their independent judgments.
  2. The Importance of Privacy Planning Will Increase as Technology Continues to Evolve. Our world has become increasingly connected and intermingled in the past several decades as a result of technology, and those links are only likely to increase in the coming years. With technology's inevitable continuing march into everyone’s lives, more clients will inevitably look for solutions to protect themselves and their information. Though the basic right to privacy mentioned above may become increasingly difficult to ensure, advisors should keep abreast with changes in the law and technology so that they can offer clients the most cutting-edge protections available.
  3. Absolute Privacy Is Difficult To Achieve. In today’s interconnected world, absolute privacy is basically a pipe dream. Unless a client completely removes themselves from civilized life, they will leave some digital footprint behind. This challenge is particularly acute for high-profile and/or high net worth individuals. Advisors should alert their clients to this reality and temper expectations where possible, since while many measures will serve to deter the general public—which is really all that most clients want—there is almost always someone out there who can access their information with enough effort.
  4. Proactive Planning Is Best to Avoid Disclosure of Confidential Information. Once the cat is out of the bag, it’s effectively impossible to get it back in. So, by its very nature, privacy planning must be proactive in order to be effective. This responsibility actually begins with the clients. If they are or have been careless with whom they share their confidential information, then even the most comprehensive privacy plan will be in vain.
  5. Every Strategy Has a Practical Impact. Though it may seem obvious, the fact that enacting an effective privacy plan may interfere with some aspects of a client’s life or business is often overlooked. Advisors should be up front about these potential issues and make sure that clients understand them before putting a plan in place. For instance, the panel offered the example of owning real estate through a trust or business entity. While doing so can shield the owner’s identity and other personal details, it also may increase transaction costs and create unique administrative problems. Clients need to understand and accept any such potential trade-offs, otherwise they will (rightly) likely hold their advisors responsible.
  6. Privacy Planning Requires a Cross-Disciplinary Approach. Much like wealth management as a whole, privacy planning is a collaborative science. One advisor can not sufficiently meet a client’s needs in this area. Depending on what exactly the client is involved in, they may require any number of specialized lawyers, accountants, financial planners and other advisors to adequately protect themselves. Advisors must be comfortable with this reality and be willing to engage in the team-based approach that’s required. Instead of getting territorial and looking petty, just think of it as a way to expand your network and add value for future clients.
  7. State and Local Laws Are Often Determinative. Where your client resides can make a huge difference. Much of the legal minutiae involved in ensuring client confidentiality is based in state law, so where your client resides can dictate the feasibility (or lack thereof) of certain strategies. Once again, if you aren’t familiar with the laws of the state in which your client resides, it’s best to bring in an outside expert.
  8. Strive to Elevate Ethical Duties Into Best Practices. Advisors have an ethical duty, either overt or implied, to maintain their clients’ confidence. Advisors should strive to transform this duty from a simple baseline for acting professionally to the level of best practice by incorporating precepts of privacy and security in their everyday work with all clients, regardless of whether it’s specifically requested.
  9. Expand Your Business in the New World Order. Republicans have been threatening to repeal the estate tax for the better part of two decades. With President Trump soon to be sworn in, it’s likely this promise will finally be acted on (at least as likely as anything can be when Trump is involved). For many estate planners looking to expand their reach beyond the usual tax planning, brushing up on the precepts of privacy planning could offer a useful alternative to add value for clients who may no longer need tax services.
Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.