I have a friend that is really invested into crypto. She is very enthusiastic about it and I learned a ton about Bitcoin and crypto from her. But then she told me something that scared me: she keeps ALL her Bitcoin in the exchanges rather than a hard wallet.
These two statements are contradictory. If she is knowledgeable enough to teach others about crypto, then they would not be doing this mistake. Misinformed is one possibility, another could be that they are unable to secure a device to keep a wallet software installed.
How do you convince people like that? I am worried Murphy's Law will hit her badly and she will lose her funds.
The best way for a person to learn their mistake is when they suffer because of that mistake. Nothing much for you to do here, I would say, in the contrary to what the responses above have been. Let them use crypto like this and then when a certain exchange gets hacked or goes limbo, they will learn their lesson. It is the hard way but it is the proper way for a layperson to learn.