MY WIFE AND I TAKE some over-the-top precautions to protect our financial accounts. Why? After 40 years of working, our life’s savings boil down to digits stored on computers. No one anymore holds stock and bond certificates, stuffs money in mattresses or buries gold in the backyard. The integrity of those digits is all important.
Here are our 11 strategies—which go way beyond the normal account and password protection recommendations:
We only deal with major institutions. Several friends have their retirement funds invested through small, boutique wealth advisors. I know of one advisor who operates on his own out of his house. These small advisory firms likely provide great service. But to me, they seem ripe for mischief. Bernie Madoff is just one of many rogue investment advisors who have gone astray with Ponzi schemes or excessive commissions.
We maintain 13 financial accounts split up among eight institutions—unlike many friends, who have consolidated all assets into one huge account. Just like portfolio diversification, we feel institutional diversification lowers risk, by reducing the fallout from a cyberattack or other issues with any single institution, while also marginally broadening our investment choices.
We separate our investment accounts from our daily cash management and banking accounts. Except for occasional cash transfers from two investment accounts, these various accounts aren’t linked. The low interest rates of recent years minimize the penalty for maintaining larger bank cash balances.
For our larger investment accounts, we utilize two-factor authentication, and also must painstakingly locate and input cumbersome passwords for each log in. We almost never save investment account passwords on any device. We don’t use any password manager or other lockable software, and we don’t maintain a spreadsheet with a list of passwords. We also feel “the cloud” isn’t our friend when it comes to protecting financial and other information.
Likewise, we don’t use account aggregation services or download financial data to budgeting, tax or other software. Instead, we manually update our gross assets—our balance sheet—and our budget every six months. This ensures our accounts remain segregated and discrete. We also feel semi-annual updates are sufficient to allow us to tweak estimated tax payments and rebalance our investments. Unlike many friends, we don’t spend much time sweating daily, monthly or quarterly changes in the markets or our accounts.
We have some retirement accounts that we never access digitally, so there’s no username and password to be stolen. The investment selections for these accounts are in a set-it-and-forget-it mode.
We never access investment accounts from our phones, a notebook computer or some other portable device. Never, ever. Most friends trade stocks, review balances, move money and complete other financial transactions with ease from their cellphone anywhere in the world. We know our approach is old school. But with a conservative and diversified portfolio, we never feel compelled to take prompt investment action. In an emergency, we could always call our financial institutions.
We only use one device to access the larger accounts, which is locked up when traveling.
Like most folks, we probably do not change passwords frequently enough, especially as our logon routines are so cumbersome. The good news is, we don’t have to sync new passwords on multiple devices.
We regularly download account statements, but these aren’t readily found in the event of a house break-in. Retaining these backups could prove invaluable, should any institution have problems with its own records.
We have advised our kids about the location of our accounts and passwords.
John Yeigh is an engineer with an MBA in finance. He retired in 2017 after 40 years in the oil industry, where he helped negotiate financial details for multi-billion-dollar international projects. His previous articles include Hers, His and Ours, Unloaded and Getting Schooled.
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I follow many of the same strategies to protect financial accounts. Like you, I don’t trust the “cloud” to store my credentials. Consequently, I use a free open-source password manager (KeePass) to store credentials locally on my home computer. This makes it easy to manage many unique, complex passwords. I don’t see the value in maintaining relationships with eight different institutions. In my opinion, this increases complexity without providing additional security benefits when compared to using two or three major institutions instead.
Last edited 4 years ago by Richard L
james mcglynn
7 years ago
The unique passwords etc. are a royal pain the bane of all this-but necessary for now. Have you added a VPN for another layer of security? Also (borrowed from a book I read recently) recently created a separate email account exclusively for financial accounts. Segregated from personal accounts-and spam! Makes it easier to monitor without wading through junk. Also makes it easier upon death to show offspring where everything is. Here is the ONE account to monitor. Great tips.
We have considered an exclusive financial email account, but we haven’t quite gone there yet. We do have a family email account (all online transactions and plenty of junk emails/phishing) which is separate from personal email accounts (not much junk). Fortunately, Apple, Google and Microsoft all continue to improve their junk mail sorting. The importance of solid email account protection is that password resets often are allowed via email.
John Yeigh is an engineer with an MBA in finance. He retired in 2017 after 40 years in the oil industry, where he helped negotiate financial details for multi-billion-dollar international projects. His previous articles include Hers, His and Ours, Unloaded and Getting Schooled.
I follow many of the same strategies to protect financial accounts.
Like you, I don’t trust the “cloud” to store my credentials.
Consequently, I use a free open-source password manager (KeePass)
to store credentials locally on my home computer.
This makes it easy to manage many unique, complex passwords.
I don’t see the value in maintaining relationships with eight different institutions.
In my opinion, this increases complexity without providing additional security benefits when compared to using two or three major institutions instead.
The unique passwords etc. are a royal pain the bane of all this-but necessary for now. Have you added a VPN for another layer of security? Also (borrowed from a book I read recently) recently created a separate email account exclusively for financial accounts. Segregated from personal accounts-and spam! Makes it easier to monitor without wading through junk. Also makes it easier upon death to show offspring where everything is. Here is the ONE account to monitor. Great tips.
We have considered an exclusive financial email account, but we haven’t quite gone there yet. We do have a family email account (all online transactions and plenty of junk emails/phishing) which is separate from personal email accounts (not much junk). Fortunately, Apple, Google and Microsoft all continue to improve their junk mail sorting. The importance of solid email account protection is that password resets often are allowed via email.