These people should look into using tamper-evident bags. Makes it obvious asap if someone tried to touch them, and they will know exactly if their security has been breached or not.

Thats why ideally, you should have a backup in more than one location when possible. Also you can use materials that gives you a higher chance of surviving a fire.

There are hardware wallets that will reset to factory settings after a few failed pin code attempts. Also you can set them so, that the passphrase(if used) needs to be typed in manually after each unlock. Which makes theft pointless. By that time you will have enough time to move your coins to a new wallet that is safe.

Multiple locations.

Youre not storing anything on that exchange. Youre giving ownership over the coins to that exchange and they owe you the same amount back. This doesnt mean your coins are just sitting there and being kept safe for you. Theyre not your coins anymore. They can now do what they want with it. Theyre not letting them sit still. They give out more fake paper coins than they actually have in their reserves. Manipulating the prices and the supply on that exchange. Theres no way to verify the balance sheet of a company for any of us and not even proof of reserves will change that. And when they go bankrupt trough this scam, youll have to fight to get anything back. Leaving you with nothing.

Coins on an exchange are not yours, your transactions can be censored, your wealth can be confiscated, you wont have any privacy and everything is archived, the supply gets inflated, the price manipulated and the reserves looted and forged. This is the complete of Bitcoin was invented for. Its was made to prevent these things.

And the only way to prevent this is trough self-custody. There is no way around it. Theres not a single situation where exchange custody benefits you more and is safer than self-custody, when you take the other aspects into account. It is not hard or complicated to keep backups of 12-24 words safe. Write down potential threats and find a security model that works. Theres no reason or justification to voluntarily give custodians this kind of power. It is literally against your own interest. Self-custody is the only way to protect your own interest/ rights and helps your investment succeed.

You dont try to drive a car trough the ocean and then wonder why you get rekt and it doesnt work anymore. And in the same way it makes zero sense to try to use Bitcoin in an custodial way. Learn how to self-custody safely(easy) and you will be fine and Bitcoin will be fine.