Financial advisors often know their clients for decades.

That long relationship can put advisors in a unique position to notice something that others might miss: a longtime client suddenly forgetting conversations, requesting unusual withdrawals, changing investment strategies without explanation, or allowing someone new to take control of financial decisions.

But recognizing that something has changed is the easy part.

What should an advisor actually do about it?

During a recent Financial Experts Network webinar, securities attorney Michelle Atlas-Quinn explored the difficult legal, ethical, and compliance questions that arise when advisors work with aging and potentially vulnerable clients.

One theme ran throughout the session: advisors aren't expected to diagnose a client or determine legal competency. They are expected to pay attention, gather facts, act in good faith, follow appropriate procedures, and document what they did and why.

Start With Your Fiduciary Duty

When situations involving aging clients become complicated, Michelle suggested returning to the foundation of the advisor-client relationship: fiduciary duty.

For RIAs and IARs, that includes a duty of care and loyalty, acting in the client's best interest, disclosing conflicts, and providing full and fair disclosure of material facts. Importantly, those obligations continue throughout the advisory relationship.

That sounds straightforward until an 87-year-old client tells you to liquidate a $2 million portfolio and send the money somewhere that doesn't make sense.

Is the client being exploited?

Are they experiencing cognitive decline?

Or are they fully capable and simply making a financial decision you wouldn't make yourself?

That's where things become difficult.

You're a Financial Advisor, Not a Doctor

An advisor's job isn't to diagnose dementia, Alzheimer's disease, depression, or another medical condition.

Nor is it the advisor's job to make a legal determination that a client is incompetent.

Michelle explained that competency generally involves the client's ability to understand, appreciate, and communicate informed decisions about their finances. Ultimately, legal competency is a determination for the appropriate legal process.

What advisors can do is recognize changes in behavior.

Suppose you've worked with a client for 20 years. One morning, she calls and instructs you to make a trade. Three hours later, she calls back upset and asks why you made it.

That's different from occasionally forgetting someone's name.

Other warning signs could include unexplained withdrawals, dramatic changes in investment preferences, a new person controlling conversations, unusual beneficiary changes, unpaid bills despite sufficient resources, or a client who suddenly seems unable to understand financial concepts they previously understood.

The key isn't simply the client's age.

It's what has changed.

Look for Facts, Not Just a Feeling

An advisor might say:

“Something doesn't feel right.”

That's a useful warning signal, but it's not where the analysis should end.

Michelle repeatedly emphasized a reasonable-belief, fact-based approach.

Instead of documenting, “Client seemed confused,” record what actually happened.

For example:

Client instructed us to sell the investment at 10:00 a.m. At 1:00 p.m., client called and said she did not remember authorizing the transaction.

That's a fact.

Similarly, an unusual withdrawal isn't necessarily evidence of exploitation. Maybe the client bought a new car and replaced a roof in the same month.

Advisors should ask questions and understand the circumstances before jumping to conclusions.

Clients Are Still Allowed to Make Decisions You Don't Like

Protecting an aging client doesn't mean taking away the client's autonomy.

That's an important distinction.

A capable 85-year-old client can spend money on an extravagant vacation, give a large gift to a grandchild, buy an expensive car, or decide to move investments—even when the advisor thinks it's a terrible idea.

As Michelle explained during the Q&A, these are adults, and advisors aren't their parents.

The challenge is distinguishing an imprudent decision from financial exploitation or a situation where diminished capacity may be affecting the client's ability to make an informed decision.

There aren't always bright lines.

That's why understanding what is normal for the individual client becomes so important.

Sometimes the Danger Is Someone the Client Trusts

When people think about elder financial exploitation, they may picture a stranger running an online scam.

That certainly happens.

But exploitation can also involve someone much closer to the client—a caregiver, friend, spouse, child, grandchild, or other relative.

Michelle described warning signs such as a new person suddenly appearing at every meeting, answering the client's telephone, controlling conversations, becoming involved in accounts, or directing transactions that don't appear to benefit the client.

One case Michelle discussed demonstrated how difficult these situations can become.

A female client discovered money missing from her account and initially blamed the advisory firm.

After investigating, the firm learned that the client's husband had obtained access to her online account, withdrawn money without her knowledge, and even created false account statements to conceal what he was doing.

The situation illustrated why advisors should pay attention when a client's normal withdrawal patterns suddenly change.

A simple call asking, “We noticed some activity that's different from your usual pattern. Is everything okay?” could potentially uncover a much larger problem.

A $50,000 Wire to Mexico: When the Custodian Becomes a Partner

Another memorable example involved an older client who had already lost money in a timeshare scam.

The client was subsequently contacted by someone claiming to be associated with a Mexican federal agency. He was told that his lost money could be recovered—but first he needed to send a substantial registration fee.

The client attempted to wire $50,000 to Mexico through his custodian.

The advisory firm's assistant gathered information about the transaction, but the situation was eventually escalated to the firm's chief compliance officer. The CCO recognized the warning signs and raised concerns with the custodian.

The custodian blocked the accounts and involved its fraud team while the advisor and custodian worked to help the client understand that he was being targeted by another scam.

The case illustrates two important lessons.

First, custodians can be valuable partners when an advisor suspects exploitation.

Second, every employee needs to know when something should be escalated.

The assistant didn't have to become an elder-abuse expert. She needed to recognize that something was unusual and move the issue to someone equipped to handle it.

Your Custodian Doesn't Replace Your Fiduciary Responsibility

There's another side to that lesson.

If the custodian approves a transaction, does that mean the advisor is protected?

Michelle's answer was no.

Custodians have their own responsibilities, fraud procedures, and resources, but their involvement doesn't eliminate the advisor's responsibility for what the advisor observes and does.

In many cases, the advisor knows the client far better than the custodian does.

That means communication between the advisor and custodian can be critical when something unusual occurs.

Trusted Contacts Are Much Easier to Get Before You Need Them

One of the simplest preventive measures discussed during the webinar was the trusted contact.

A trusted contact gives the firm someone it can reach when certain concerns arise.

But a trusted contact isn't a power of attorney.

The person doesn't automatically have authority to trade, withdraw money, or make financial decisions for the client.

Michelle suggested making trusted contacts part of the firm's regular process for clients of all ages.

Think about the alternative.

It's much easier to ask a healthy 55-year-old:

“As part of our normal process, we'd like someone we can contact if we're ever unable to reach you or become concerned about your well-being.”

That's a very different conversation from approaching an 85-year-old client who has begun showing signs of memory loss and suddenly asking for permission to call their daughter.

Making the request routine helps reinforce that it's a protective measure—not an attempt to take control away from the client.

And Review Those Trusted Contacts

Obtaining a trusted contact 10 years ago isn't necessarily enough.

Relationships change.

Children become estranged. Friends move away. Spouses die. The person a client trusted at age 60 may not be the person they want involved at age 75.

Michelle suggested periodically confirming that the trusted contacts on file are still the people the client wants the advisor to contact.

If a client refuses to provide one?

Document that you asked.

During the Q&A, Michelle suggested explaining that trusted contacts are part of the firm's normal process and are intended to help protect clients. If the client still declines, document the decision and respect it.

Be Very Careful With Family Members

Imagine that you've worked with a married couple for years, but the husband's IRA is solely in his name.

His wife calls and asks how much is in the account.

Can you tell her?

Not simply because she's his wife.

Michelle emphasized the importance of Regulation S-P and client privacy when aging-client situations arise.

Well-intentioned family members don't automatically have authority to receive private financial information.

That can include spouses, children, siblings, caregivers, and neighbors.

Even if you're convinced that the person calling has the client's best interests at heart, you still need to determine whether you're authorized to share the information.

That can put advisors in uncomfortable situations, but good intentions alone aren't a substitute for proper authority.

A Power of Attorney Is Different

A valid power of attorney may give another person authority to act for a client.

But don't simply see “POA” at the top of a document and assume the question is settled.

Michelle recommended determining whether the document is currently effective and exactly what authority it provides.

Some powers may be effective immediately. Others may be “springing,” meaning certain conditions must occur before the authority becomes effective.

When the language isn't clear, advisors may need to involve their compliance team, legal counsel, or potentially the attorney who drafted the document.

What About the Client's Children and Beneficiaries?

This can become emotionally complicated.

An adult child might tell an advisor:

“Dad shouldn't be spending this money. That's supposed to be our inheritance.”

But the advisor's fiduciary duty during the client's lifetime is to the client, not the beneficiaries.

Michelle emphasized that distinction during the presentation.

At the same time, beneficiary disputes can emerge after a client's death.

A child may later question why Mom changed a beneficiary, made large gifts, liquidated investments, or took substantial withdrawals during the final years of her life.

That's another reason contemporaneous documentation matters.

If the advisor believed the client clearly understood what she was doing at the time, documenting that observation can be just as important as documenting concerns.

Build the Escalation Process Before the Crisis

When a vulnerable-client issue arises, the firm's response shouldn't depend on who happens to answer the telephone that day.

Employees should know:

What are the red flags? Who do I tell? What happens next?

Michelle recommended clear internal escalation procedures.

A process might look something like:

Employee → Advisor → Compliance → CCO → Legal Counsel/Custodian

The exact process will vary by firm.

What's important is that employees understand it before they're confronted with a confused client, suspicious withdrawal, unusual third-party influence, or potential financial scam.

And Then Document Everything

Documentation may be one of the strongest protections available to both the client and the advisor.

When concerns arise, record what you observed, what the client said, transaction details, conversations with the client, who was consulted, what the custodian said, whether a trusted contact was involved, and why the firm ultimately took—or didn't take—a particular action.

The goal isn't to create a file filled with opinions about a client's mental condition.

It's to create a factual record of what happened and how the firm responded.

That record could become extremely important years later if a regulator, beneficiary, attorney, or court asks why a decision was made.

AI Meeting Notes Could Help—But They Create Their Own Risks

An interesting question during the webinar involved AI meeting assistants.

For aging clients, an accurate record of conversations could be incredibly valuable.

But AI-generated notes shouldn't automatically be dropped into the permanent client file without review.

Michelle recommended conducting due diligence on the AI provider, understanding whether and how the vendor retains client information, and having someone who actually attended the meeting review the notes for accuracy before they're archived.

That's especially important because a small AI transcription mistake can dramatically change meaning.

“Please don't make that withdrawal” is very different from “Please make that withdrawal.”

And once AI-generated notes are retained, they may become discoverable in litigation, regulatory proceedings, or beneficiary disputes.

Five Questions Financial Advisors Should Be Asking

1. How do I know when normal forgetfulness becomes a real concern?

There's no simple age or single behavior that determines it. Look for changes that affect the client's ability to understand financial circumstances, strategies, risks, or instructions. Compare current behavior with what you know about that individual client and document specific observations.

2. Should every client have a trusted contact?

Michelle encouraged advisors to make trusted contacts part of their normal client process. Asking early—before there's a problem—can make the conversation much easier later. If the client declines, document that the trusted contact was offered and refused.

3. Can I contact a client's children if I'm worried about the client?

That depends on the authority and circumstances. Privacy requirements can restrict what information can be disclosed to unauthorized family members. A trusted contact or other proper authorization can provide more options, and certain protective disclosures may be permitted under applicable law. Firms should follow their procedures and applicable federal and state requirements.

4. What should I do when I see a suspicious transaction?

Gather facts, document what you observed, review your firm's procedures, and escalate the concern. Depending on the circumstances, that could involve compliance personnel, the custodian, a trusted contact, legal counsel, or the appropriate protective agency. State requirements can differ, so advisors should understand the rules applicable to the client's situation.

5. What's one thing I can do now before any of this happens?

Review your process. Make sure trusted contacts are being collected and updated, employees know the warning signs, powers of attorney are handled appropriately, custodian resources are understood, and everyone knows where to escalate a concern.

The Bottom Line

Working with aging clients creates one of the most difficult balancing acts in financial advice.

Protect the client—but respect the client's autonomy.

Advisors aren't expected to diagnose cognitive decline or predict every instance of financial exploitation. But they are in a unique position to recognize when a longtime client's behavior suddenly changes.

Know your client.

Pay attention to changes.

Ask questions when something doesn't make sense.

Establish trusted contacts before you need them.

Understand who has legal authority.

Protect private information.

Know when to involve your custodian and compliance team.

And above all, document the facts and the reasoning behind your decisions.

Because when an aging-client situation becomes complicated, the question may eventually be less about whether the advisor made the perfect decision and more about whether the advisor can demonstrate a thoughtful, good-faith process focused on protecting the client's best interests.