What is the primary purpose of disclosures in a financial proposal?

• A. To inform clients about risks and conflicts of interest, but omit costs.
• B. To provide a marketing overview of services.
• C. To inform clients of risks, costs, conflicts of interest, and limitations; ensure informed consent.
• D. To guarantee investment returns.

Answer: (C)

Disclosures in a financial proposal are all about giving the client a complete, transparent view so they can decide with real understanding. They should spell out the risks, the costs and fees, any conflicts of interest, and any limitations or assumptions behind the proposal. This level of detail helps ensure informed consent, because the client knows what could happen, what they’ll pay, who might benefit, and what may not be guaranteed. It also aligns with ethical expectations and regulatory standards in financial advice, reducing the chance of surprises or misunderstandings later. The other options fall short because they either omit costs, focus only on marketing without necessary specifics, or promise guaranteed returns, which isn’t realistic or appropriate.