What is the main purpose of conducting prior due diligence on holdings selected?

The main purpose of conducting prior due diligence on selected holdings is to ensure accurate recommendations and information. This process is essential for investment advisers as it involves thorough research and analysis of potential investments. By performing due diligence, advisers can assess the financial health, risks, and overall suitability of the investment for their clients’ portfolios. This directly impacts the quality of advice given to clients, ensuring that recommendations align with their investment objectives and risk tolerance.

In addition to enhancing the reliability of the information provided to clients, effective due diligence also helps in identifying any potential issues that could affect the investment's performance. This proactive approach not only builds trust with clients but also serves to protect advisers against potential liability for unsuitable recommendations.

The other options do not align with the core purpose of due diligence. Compliance regulations exist to ensure that advisers follow certain legal and ethical standards, but they are not the primary reason for conducting due diligence. Increasing transaction fees and limiting client access to information directly contradict the ethical principles of investment advising, which focus on serving the best interests of the client.