When recommending a custodian for assets, what duty does the CFP have?

• A. Ensure custodian is registered with the state.
• B. Ensure custodian is qualified, reputable, and aligns with client's best interests and confidentiality.
• C. Ensure custodian offers the lowest fees regardless of quality.
• D. Ensure custodian is the largest firm.

Answer: (B)

The duty being tested is the CFP’s fiduciary obligation to act in the client’s best interests when recommending a custodian. This means performing due diligence to ensure the custodian is qualified and reputable, and that the arrangement serves the client’s objectives while protecting their confidentiality. In practice, this involves checking that the custodian has solid regulatory standing and financial stability, and that it has strong privacy and information-security practices to safeguard client data. The recommendation should align with the client’s needs, risk tolerance, and long-term goals, not simply focus on fees, size, or whether the custodian is registered somewhere. So the best match is choosing a custodian that is qualified, reputable, and capable of protecting the client’s interests and confidentiality.