Protecting Vulnerable Adults
Firms may delay suspicious disbursements from seniors' accounts and report exploitation.
What is Protecting Vulnerable Adults?
NASAA's model act lets broker-dealers and advisers report suspected financial exploitation of an eligible adult to the Administrator and adult protective services, notify a trusted third party, and delay a disbursement for up to 15 business days, extendable by 10 more at the request of the regulator or adult protective services. FINRA Rule 2165 similarly allows a temporary hold for a 'specified adult' - age 65 or older, or 18 and older with an impairment - and firms ask customers to name a trusted contact person.
Protecting Vulnerable Adults: a worked example
A 78-year-old client suddenly asks to wire $200,000 to a new online friend overseas; the firm delays the wire and calls the trusted contact.
More terms in Ethics & Fiduciary Obligations
Form ADV Part 2 Brochure Delivery
Deliver 48 hours before the contract, or at signing with a 5-business-day exit.
Advisory Contract Requirements
Written, specific about fees, no assignment without consent, no waiver of rights.
Assignment of an Advisory Contract
Transferring a client contract requires the client's consent - including by change of control.
Performance-Based Fees & Qualified Clients
Allowed only for qualified clients: $1.4M with the adviser or $2.7M net worth (from June 29, 2026).
Prepaid Fees & Financial Requirements
Prepayment over $500, six months ahead, triggers net worth and balance sheet rules.
Custody
Holding, or having authority to obtain, client funds or securities.
Discretionary Authority
Deciding the asset, the amount, or buy versus sell - without asking first.
Third-Party Trading Authorization
Anyone other than the owner needs written authority to trade the account.