What does 'disclosure' mean in financial services?

In financial services, 'disclosure' refers to the practice of providing necessary information to clients so they can make informed decisions regarding their financial matters. This ensures transparency and helps clients understand the risks, benefits, and implications of the financial products or services offered to them. Effective disclosure fosters trust and allows clients to assess the full scope of their choices, enabling them to make decisions that align with their financial goals and risk tolerance.

By prioritizing this aspect of transparency, financial institutions comply with regulatory requirements that mandate clear and honest communication. This is crucial in building a strong relationship between the client and the service provider. In contrast, keeping client information confidential, limiting communication to written formats, or only engaging in verbal communication after transactions do not align with the essence of disclosure, which emphasizes proactive and comprehensive information sharing.