Why Safeguarding Digital Assets Needs to Be a Client Conversation

A new planning conversation for a new world

As the world increasingly moves online, it’s crucial for Advisors to integrate digital assets into the planning conversation because it’s often a topic that clients have never thought about before. The reaction is typically a real “aha” moment when brought up in an estate planning capacity as most people connect the term assets to real estate or investment portfolios. Simply put, it’s time to broaden the discussion.

From intellectual property like a podcast, blog or Facebook page to cryptocurrencies and rewards programs, what happens to digital assets when your client is incapacitated, or passes on? Just bringing this to light can have a huge impact and make them look at items differently because they’ve previously never considered their value – whether sentimental, monetary, or both.

Take inventory – it matters

As a first step, we often sit down with clients, and an inventory list, to help them think about what digital assets they have. It’s about taking stock of all the moving parts and then carefully going through each to really bring a necessary level of awareness to this part of their life. There are clients who might say they don’t care what happens to their Facebook or Instagram profile when they’re gone, but we’ve encountered real-life scenarios where this has become a major issue. For example, we had a female client pass away, and her son and daughter had different opinions on what to do with her Facebook profile page. One wanted to remove the photos entirely, while the other wanted to memorialize her profile.

This family conflict could have been avoided altogether – a proactive approach really helps the power of attorneys (POA) and executors to provide clear direction on how these matters should be handled, versus leaving them to navigate themselves. In this case, both children likely would have respected their mother’s wishes.

Digital assets can become even more complex when there is monetary value, like with cryptocurrencies, or Air Miles. How would you divvy this up to beneficiaries? It’s necessary to take the client through these possibilities because often they forget about these seemingly little pieces of the puzzle. Ultimately, these are also decisions that will have to be made, and it’s better if your client can make them instead of somebody else.

Keeping ‘password current’ is vital

Once you’ve created an inventory list, the challenge is keeping it current. This includes creating a protected password log, because these often need to be reset, and the last thing you want is the next of kin not being able to access an album of family photos that were uploaded to the Cloud.

That is why it’s a real value-add for an Advisor to include this as part of the planning process to get them thinking about these different pieces. With my clients, we have an annual Spring planning session as a general touchpoint so we can ensure that the list and passwords are still up-to-date.

There’s also a need to review passwords to make certain they are strong/different enough so that digital assets are protected and secure. We recently had a case where we received an email from a client’s personal address directing movement of cash, and it was written casually, in the way he would normally speak. Thankfully, our policy is to attain verbal confirmation, because the email of the client in question had been hacked.

It’s key to review these major platforms annually to protect against vulnerability, especially in situations where the same 8-character pin is used repeatedly. I also remind my clients to be mindful of selecting convenient options like “Remember my password”, particularly if you’re using different devices, as these scams are becoming increasingly sophisticated.

Another consideration once you’ve created an inventory is ensuring the client is aware of – and understands – the privacy policies for the online programs they’re using. Then they can determine if they’re comfortable keeping their profile on them, or not.

Decide, and then document

The final step is helping clients decide what they would want to have happen with the asset if they’re no longer able to care for it – and then documenting those decisions (which can be achieved through an estate specialist). Imagine someone has a digital wallet, or there’s money sitting in a PayPal account, or there’s a massive collection of reward points with a large dollar value attributed. Without direct wishes outlined, these issues can become quite contentious. (Pro-tip: Most lawyers today will add a clause specifically about digital assets. This is a great talking point and opportunity for Advisors – you can make your clients aware that this is something new, and may need to be added to their will, as so many end-of-life documents are outdated, or not complete.)

Before you integrate digital assets into your conversations, it’s vital to initiate the process and familiarize yourself first, and then reach out to an estate planning expert to acquire more knowledge on their side – from their offering, to what they’ve seen in practice. They often have practical examples of different cases and how matters were resolved, which really helps articulate and crystallize the message for your clients. The initiative will also make you stand out as an Advisor because it reflects that you’re looking at the big picture, and not just their investment portfolio. As part of your holistic approach, it’s another way to prioritize their best interests and long-term objectives.

For more insights on how to enrich your practice, contact your BMO Global Asset Management Regional Sales Representative.