As the baby boomer generation continues to age, financial firms are seeing a steady rise in complaints, arbitrations, and enforcement actions tied to senior investors. Issues ranging from diminished capacity to outright financial exploitation have pushed senior protection to the forefront of regulatory scrutiny. Reflecting this trend, the Financial Industry Regulatory Authority (FINRA) has once again reinforced its expectations in the 2026 Annual Regulatory Oversight Report.
While the Report does not introduce new rules, it sends a clear signal: FINRA expects firms to not only comply with existing senior-protection requirements, but to demonstrate that compliance through robust documentation, training, and supervisory systems. Temporary account freezes and trusted contact persons (TCPs) remain two of the regulator’s most important tools in safeguarding vulnerable customers.
What FINRA’s senior investor rules require
FINRA’s framework for protecting senior investors is anchored primarily in Rule 2165 and Rule 4512. Together, these rules are designed to give firms both the authority and the responsibility to intervene when exploitation risks arise.
Rule 2165 permits firms to place a temporary hold on disbursements of funds or securities from accounts held by customers aged 65 or older when there is a reasonable belief of financial exploitation. The rule is intended to give firms time to investigate suspicious activity without permanently restricting a customer’s access to their assets.
Rule 4512, meanwhile, requires firms to make reasonable efforts to obtain contact information for a trusted contact person. FINRA has repeatedly emphasized that TCPs are not powers of attorney and have no authority to trade or move funds. Instead, they serve as a resource when concerns arise about a customer’s well-being, capacity, or potential exploitation.
When firms rely on Rule 2165 to delay transactions or disbursements, they are generally required to notify the TCP in writing—unless the trusted contact is suspected of involvement in the exploitation itself.
Investor Takeaway
Where FINRA is seeing compliance gaps
In its 2026 Report, FINRA identifies several recurring weaknesses in how firms implement and document senior investor protections. Among the most notable findings is a lack of sufficiently detailed policies and procedures governing how financial advisors and supervisors identify, escalate, and document suspected exploitation.
FINRA also found that some firms failed to make reasonable efforts to collect trusted contact information from customers, or did not clearly explain to clients when and why a TCP might be contacted. In other cases, firms lacked adequate records demonstrating that advisors and supervisors had received proper training on senior investor risks.
These shortcomings, FINRA suggests, undermine the effectiveness of Rules 2165 and 4512 and expose firms to both regulatory risk and potential liability.
Best practices firms are expected to adopt in 2026
To address these gaps, FINRA’s Report highlights a set of effective practices that firms should consider incorporating into their supervisory frameworks. At a high level, FINRA expects firms to move beyond passive compliance and adopt proactive, system-driven approaches to senior protection.
Recommended practices include actively educating customers about senior fraud risks, emphasizing the importance of designating trusted contacts, and maintaining clear documentation of all training provided to advisors and supervisors.
FINRA also encourages firms to deploy operational safeguards, such as system alerts that notify advisors when an account lacks a trusted contact, and clearly defined escalation procedures for suspected exploitation. Some firms have gone further by creating specialized internal teams focused on elder abuse, diminished capacity, and vulnerability-related issues.
Investor Takeaway
What this means for firms and investors
FINRA’s renewed emphasis on senior investor protection underscores a broader regulatory reality: demographic shifts are reshaping compliance priorities. As the investor population ages, regulators expect firms to anticipate vulnerability risks and act decisively when red flags emerge.
For firms, the message is clear. Policies must be practical, training must be documented, and supervisory systems must function in real time—not just on paper. For senior investors and their families, the continued focus on trusted contacts and temporary account freezes provides an additional layer of defense in an increasingly complex financial environment.