As financial advisors, we are welcomed into an incredibly trusted role in our clients’ lives.
They rely on us to help guide their financial futures, but as they age, that relationship can take on the serious responsibility of recognizing when they may be losing the ability to protect themselves.
Over recent years, my team and I have noticed an increasing number of situations like this. We would get calls from family members concerned about a loved one, we would speak with clients who suddenly struggled to follow conversations that once came easily, or sometimes behavior simply changed in a way that raised questions.
Those moments made one thing very clear: we needed a better system to respond before a problem - or exploitation - happened.
We developed a seven page policy that addresses both diminished financial capacity and financial exploitation, because in practice those two issues almost always go hand in hand.
During a subsequent SEC audit, they specifically asked to look through the policy. It reassured us that we were tackling a problem regulators also recognize, even if guidance and legal structures are often lacking.
Having the policy wasn’t enough, though; everyone in the firm needed to be part of the solution. Anyone with client interaction now receives mandatory annual training under the Senior Safe Act. We wanted a culture where nobody hesitates to speak up, even if a concern is small or uncertain.
To support that, we created a documentation worksheet listing common signs of cognitive decline or financial exploitation.
If a meeting doesn’t feel right, an advisor can quietly record what they observed, perhaps just a single unusual detail noted for future reference. But several warning signs automatically trigger an escalation to a committee specifically trained to assess these situations.
We are financial professionals, not medical experts, so asking one advisor to independently determine whether someone is cognitively impaired places too much responsibility on one person.
The committee format removes that burden and ensures decisions are made collectively, objectively, and with the client’s best interest front and center. The committee reviews the situation, speaks with the advisor who raised the concern, and determines the next steps.
Sometimes the next step is simply adding a committee member to a future meeting, quietly observing whether the behavior persists, but it could involve reaching out to trusted contacts the client has already authorized. And in situations where concerns escalate into clear signs of exploitation, legal counsel and even law enforcement can be brought in.
Unfortunately, many cases of financial exploitation come not from strangers, but from trusted family or friends.
That reality has changed how we approach trusted contacts and we now strongly encourage clients, especially those 70 and older, to name at least two, ideally including someone outside the family such as an accountant, attorney, or long-time friend. It gives us additional paths when the person closest to the client may be the one causing harm.
Trying to protect vulnerable adults comes with its own risks. If we delay or decline a withdrawal because something appears wrong, a client could fire us and might even take legal action. But if we process a transaction that later proves to be fraudulent, we could be accused of enabling exploitation.
That uncertainty is one of the most difficult aspects of serving aging clients. We may be the first people to notice a troubling change, yet we operate with limited legal protection and unclear boundaries about what we can and should do.
The financial services industry is one of the most heavily regulated in the world, yet when it comes to this issue, advisors are often left guessing. I believe we need stronger, more consistent guidance and legal frameworks that allow advisors to take protective action without fearing punishment for doing the right thing.
More clarity doesn’t have to mean overwhelming regulation; it can mean clear guardrails and defined protections. As the population ages, a growing portion of clients will face these challenges, so we need to be prepared.
Cognitive decline is subtle and families who see someone every day might not notice the gradual changes. But when we sit across from a client after six or twelve months, those differences can be stark. We may be the first to see the risks and possibly the last line of defense.
We take that responsibility very seriously. Our policy is not perfect (no solution is), but it ensures that no advisor has to navigate these situations alone and no client slips through the cracks simply because we were afraid to speak up.
We’re here to manage wealth but we’re also here to protect the people behind it.
If you'd ever like to talk about how we safeguard aging clients or if your firm is exploring similar policies, I’m always happy to share what we’ve learned. We all deserve dignity and protection as we grow older.
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