Even though I'm not a daddy, I wanted to weigh in on this too. ^.^
My little and I are in a relationship and have been before we discovered the cg/l side of things. When we first started to explore this, I honestly assumed it was physically intimate for him and proceeded that way at first because.... well I had assumed!
But he communicated with me that, at this point, it was more non-physically intimate for him and it was an easy shift to a non-physically intimate space for him. I will say that I was surprised to have him say that and for a moment felt like he didn't want me and was a tad self conscious but after a good conversation, all was at ease and we are way more organic and in tune with what his space needs to be now!
That being said, I think one of the keys to a good relationship (especially a cg/l one) is communication and if someone is not willing to communicate with you about the relationship, that is a large red flag. The position of a caregiver is not to demand things of their little/sub/etc... for personal gain. It is a back and forth and both parties should feel comfortable to speak their mind and desires honestly and then a decision can be made from there.