Protecting our senior clients from financial exploitation is one of the most vital roles we play as financial professionals. Recently, we’ve seen a concerning rise in suspected elder fraud across the industry—ranging from romance scams, phishing, and credential theft to the painful reality of family member exploitation.

With adults aged 50 and older now making up roughly 37% of the U.S. population (over 125 million people) and more than 11,000 Americans turning 65 every day, proactive client protection is essential. As our clients navigate the physical and cognitive aspects of aging, staying sharp on regulatory safeguards is our best shared defense.

Key Regulatory Safeguards: What You Need to Know

Since NASAA introduced its Model Act in 2016, most states have enacted firm protections for vulnerable adults. At the federal level, FINRA Rule 2165 grants financial professionals and firms actionable tools when exploitation is suspected:

  • Transaction & Disbursement Holds: We can place temporary holds on both fund disbursements and securities transactions if you reasonably suspect financial exploitation.
  • Extended Hold Durations: While initial holds apply for up to 15 business days, updated rules allow extensions up to 55 business days (and up to 145 business days if subject to court orders or state agency reviews).
  • Safe Harbor Protection: Mandatory reporting to local Adult Protective Services (APS) and state regulators comes with immunity from administrative or civil liability when acting in good faith and with reasonable care.
  • Trusted Contact Disclosures: Information sharing remains strictly protected and limited to a designated Trusted Contact Person—provided they aren’t suspected of the exploitation.

Warning Signs to Watch For

Early identification is our strongest tool. Keep an eye out for these subtle indicators during client interactions:

Red Flags: Diminished Capacity

  • Difficulty understanding routine or simple financial concepts
  • Noticeable memory loss, cognitive confusion, or repeating questions
  • Investment decisions that sharply conflict with their established long-term goals
  • Sudden, out-of-character refusal to follow routine investment advice

Red Flags: Potential Financial Exploitation

  • Sudden involvement of previously unseen relatives or third parties claiming authority
  • Abrupt, unexpected changes to Powers of Attorney (POA), beneficiaries, wills, or trust documents
  • Unexplained excitement over a sudden “windfall,” prize, or lottery, paired with secrecy

Action Plan & Best Practices

  1. Notify Compliance Immediately: If you spot any warning signs, escalate your concerns to the Compliance Department right away.
  2. Leverage the Trusted Contact: Compliance and advisers can reach out to the client’s designated TCP to check on their well-being. Ensure every new onboarding includes a TCP (a close friend, family member, attorney, or CPA—never the adviser).
  3. Initiate Proactive Discussions: Talk with clients early about long-term care plans, updated POAs, and estate planning before cognitive issues arise.

Helpful Resources

Client-Facing Resources:

Advisor & Professional Resources:

Jane Riley

Chief Compliance Officer