The Federal Trade Commission will tell you that, if your client gets hit with a full-fledged case of identity theft, he's going to spend up to 300 hours repairing the damage. The question is ... how many of those hours will be spent by you and your staff?

"It's not my problem!" you retort. Or is it? Aren't you the same advisor who tells your clients to come to you before all their other advisors? Don't you already offer to help them with all things financial? Isn't your marketing strategy one of letting them know you'll have their financial well-being under control? If so, then how can you abandon them when ID theft strikes? You can't.

What you can do, though, is help them prevent it. Many advisors are already learning that the problem of ID theft requires a proactive strategy. But do their efforts help, and do they even understand what identity theft really is?

What Is It, Really?

When Richard Feight used his credit card at one of a hundred different places recently, someone retained his card numbers. Says Feight, an advisor with Creative Financial Design of Lansing, Mich., "The thief was using my credit card in California at gas stations and supermarkets, and I've never even been to California." Feight simply called Citibank, identified the improper charges-which added up to about $2,000-and the company took them off his bill. After 90 days, everything was straightened out.

Is this identity theft? Technically, yes, though it's really more just run-of-the-mill credit card theft. It can occur when a waiter or store clerk copies the information from your card while running a charge. (Of course, with the proliferation of cell phone cameras, they can now just take a picture of the card.) Thankfully, credit card companies routinely forgive charges by unauthorized users if one's credit card information is stolen.

In another case, Lauren Lindsay's client left her purse in her car and a thief broke in and stole it. What he found was the client's checkbooks for two banks accounts-and two bank account numbers. The thief next figured out how to sign on to the client's online bill-pay service and was poised to extract money from her accounts. Says Lindsay, who is with Personal Financial Advisors LLC in Covington, La., "Fortunately, we closed the accounts before he could pay himself anything."

But that's not where it ends. Because the client had automatic bill-paying set up with some vendors, checks were bounced during the account-closing process. Adds Lindsay, "We not only had to help our client close her old accounts and open new ones with the bill-pay feature re-enabled, we also had to work to get back some of the fees she'd paid when electronic payments from the stolen account bounced." All in all, Lindsay guesses she spent several hours a week for six weeks helping her client undo this mess.

Is this a case of identity theft? Yes. And more complicated to fix than credit card fraud.

How about Richard Feight's second ID theft attack (yes, if you believe in luck, some people definitely need more of it). We all know identities can be stolen over the Internet, but who would see this scam coming? "I was speaking with someone in a chat room," says Feight, "and they said, 'Check out my Yahoo page,' providing me with a link. I logged into [what I thought was] Yahoo with my usual user name and password, but nothing came up. Then I discovered I was locked out of my own Yahoo account."

What's going on here? The thief craftily tricked Feight into giving up his user name and password, but how would he convert that into money? "He wasn't able to," says Feight, "because I use a different user name and password for Yahoo than I do for any of my financial accounts." If that weren't the case, the thief could have visited different banking sites until he found one where Feight's user name and password opened the door. As it was, though, Feight still could have been harmed. "I keep e-mails on Yahoo with PDF attachments, such as receipts for online purchases. Potentially, the thief could have found something of value in these e-mails before I got the problem cleared up."