Some might ask why a financial professional would talk about shredding. Shredding after all has nothing to do with Life or Accident & Sickness Insurance. Shredding has nothing to do with exempt market investments, mutual funds, segregated funds or GICs. Reducing the level of “paper” - either the digital or physical version - has nothing to do with reducing debt or taking out a credit card. So why is a financial professional talking about shredding?
Well, that is all true. There is not a direct link between shredding and the numbers that come along with a financial plan. Or put differently, while putting more money into an RRSP will bring someone closer to retirement, there is no corollary which says that putting more documents into shredder will do the same.
With that being said, if one shreds their financial documents properly, it does mean that that same person will increase their level of privacy. Shredding more reduces the ability of hackers, thieves, criminals and/or other “near-do wells” to do damage to your credit, credit report or credit history; and, that is why I speak on the issue of shredding. For, as a financial professional, I know that the proper destruction and disposal of your personal data reduces the points of contact in which someone can steal your personal information.
For example, think of a Bankers Box. If you don’t know the name, think of every movie or documentary involving lawyers, police officers or secretaries. They always have a box with files. Usually brown, the box is about one cubic ft in size (i.e. approximately 12 inches x 10 inches x 15 inches); and, they easily fit on, under or beside a desk. That is a Bankers Box. Their standardness means that they are used in offices, police stations, lawyers’ offices, banks and anywhere else paper files are stored. Furthermore, it makes the standardization of storage of records easier. That is why they have been used for over 100 years.
Given that I have dealt with them for almost all of my working life, I know that Bankers Boxes can be useful. Yet, I also know that it is easier to deal with 7 Bankers Boxes than it is to deal with 14. I also know that dealing with three is also easier than dealing with seven. I also know that it is easier to steal from more Bankers Boxes then it is to steal from a small amount of them.
This idea of proper purging of your information is made more relevant when one looks at the facts.
According to the 2015 BakerHostetler Incident Response Report, 1 in 5 data breaches involve paper records. So if you reduce the amount of unnecessary paper and properly dispose of the important documents in your possession, you will find that you will reduce the risk of identity theft, fraud or privacy breaches.
So what do you shred or dispose of? Obviously, we can think of bank statements, bills, income tax records statements and government documentation which is no longer relevant. But in this context, “shredding” includes how one gets rid of one’s computers, cellphones and other digital devices. These devices carry your information like passwords, bank account information and other items in this new world.
Or think of this, what would someone were to find or come into possession of your wallet or purse? Quite recently, a client of mind lost her purse. She was lucky an older lady turned it into a police station. However, when my client picked up her wallet, a police officer warned her about the amount of stuff she had in her wallet. The police officer said he could have taken out a mortgage with the information there. While he might have been embellishing a bit, the point was clear: keep a minimal amount of stuff in your wallet or purse.
That same logic can be passed on to the rest of your financial life too. Consequently, I end this piece where I begin: purge, shred and properly dispose of your financial records on a regular basis so that the nefarious few can’t get a hold of them.
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