What does due care require when providing financial planning services?

• A. Provide advice based on personal preference.
• B. Obtain appropriate knowledge, stay current, perform due diligence, ensure recommendations are suitable and aligned with client goals.
• C. Always push the most expensive option.
• D. Rely on unverified information.

Answer: (B)

Due care means bringing professional competence, diligence, and responsibility to every client interaction. In practice, this requires obtaining appropriate knowledge, staying current on markets, products, and regulations, and performing thorough due diligence before making recommendations. The goal is to ensure every suggestion is suitable for the client’s specific goals, time horizon, risk tolerance, and other constraints, and that the reasoning behind each recommendation is clear and grounded in the client’s situation. This also involves verifying information from reliable sources, avoiding personal preferences as the basis for advice, and not pushing options that are inappropriate or unnecessarily costly. When you apply due care, you tailor guidance to the client’s objectives and obligations, and you document the analysis and rationale to support the recommendations.