A Financial Plan Engagement Letter is a formal agreement. It is between a financial planner and a client. It outlines the services the planner will provide. Clients use this letter when they hire a financial planner. The letter describes the scope of work. It states each party’s responsibilities and the fees involved.
Planning to draft one? We understand it can be tricky. You’re in luck!
We’re sharing templates and samples. Use these Financial Plan Engagement Letter examples as your guide. Make the process easier. Tailor them to your specific needs.
Financial Plan Engagement Letter
[Your Company Letterhead]
[Date]
[Client Name]
[Client Address]
Dear [Client Name],
This letter confirms our engagement for financial planning services. We appreciate you choosing us.
Our services will include [Specifically list the services. E.g., retirement planning, investment analysis, insurance review, estate planning basics, etc.]. We will use information you provide to develop a personalized financial plan.
You are responsible for providing accurate and complete information. This includes financial statements, tax returns, and personal information. We will keep your information confidential.
Our fees are based on [Explain the fee structure. E.g., hourly rate of $X, fixed fee of $Y for the plan, percentage of assets under management, etc.]. Payment is due [Specify payment terms. E.g., upon delivery of the plan, monthly, etc.]. We will bill you [How often and how. E.g., monthly via email, etc.].
This engagement does not include implementation services unless otherwise agreed upon in writing. It also does not include legal or tax advice. Consult with appropriate professionals for those services.
Either party may terminate this agreement with [Number] days written notice. You are responsible for fees incurred up to the termination date.
Please sign and return a copy of this letter to indicate your agreement with these terms.
Sincerely,
[Your Name
How to Write Financial Plan Engagement Letter
Subject Line: Clarity From the Get-Go
- Craft a subject line that is both perspicacious and precise. Think: “Financial Planning Engagement: Setting the Course” or “Your Financial Roadmap: Engagement Agreement.”
- Avoid ambiguity. The subject should immediately inform the client of the letter’s import.
Salutation: Building Rapport From the Start
- Use a formal salutation (e.g., “Dear Mr./Ms./Dr. [Last Name]”) to establish a professional tone.
- If you have a pre-existing, affable relationship, using “Dear [First Name]” can feel more personable, provided it aligns with your firm’s ethos.
Introduction: Articulating the Purpose
- Begin by unequivocally stating the purpose of the letter: it’s an engagement agreement for financial planning services.
- Briefly allude to the forthcoming journey. A sentence like, “We are elated to partner with you on this financial endeavor,” sets a positive tone.
Scope of Services: Laying Out Expectations
- Delineate the exact services you will render. Be granular. Will you be crafting a retirement plan, investment strategy, or estate plan? Specify.
- Employ bullet points for clarity. For instance:
- Retirement Projections
- Investment Allocation Advice
- Risk Management Assessment
- Address any limitations. Note what is *not* included in the scope. This preempts future misunderstandings.
Fees and Compensation: Transparency is Paramount
- Explicitly outline your fee structure. Are you charging an hourly rate, a flat fee, or a percentage of assets under management?
- Provide a detailed breakdown. If using a percentage, specify the percentage and the assets to which it applies.
- Address payment terms: When are payments due, and what methods of payment do you accept?
Client Responsibilities: Collaboration is Key
- Enumerate the client’s responsibilities. What information do they need to provide, and by when?
- Examples include providing accurate financial statements, tax returns, and investment account details.
- Emphasize the importance of open communication and timely responses to your inquiries.
Closing and Signature: Formalizing the Agreement
- Use a professional closing, such as “Sincerely” or “Respectfully.”
- Include a line for the client to sign and date, signifying their acceptance of the terms.
- Retain a copy for your records. A digitized copy is acceptable, but ensure it is securely stored.
Frequently Asked Questions: Financial Plan Engagement Letter
This section addresses common inquiries regarding the Financial Plan Engagement Letter. Understanding this document is crucial for a clear and productive client-advisor relationship.
What is the purpose of a Financial Plan Engagement Letter?
The Engagement Letter outlines the scope of the financial planning services to be provided, clarifies responsibilities, and establishes the terms of the agreement between the client and the financial advisor.
What key elements should be included in an Engagement Letter?
Essential components include a description of services, fee structure, timelines, client and advisor responsibilities, confidentiality clauses, and termination terms.
Why is it important to carefully review the Engagement Letter?
Reviewing the Engagement Letter ensures both parties understand the services being offered, the associated costs, and their respective obligations, preventing potential misunderstandings or disputes.
What should I do if I have questions about something in the Engagement Letter?
It is advisable to discuss any ambiguities or concerns with the financial advisor before signing the Engagement Letter to ensure complete comprehension and agreement.
Is the Engagement Letter a legally binding document?
Yes, once signed by both the client and the financial advisor, the Engagement Letter becomes a legally binding contract that outlines the agreed-upon terms of the financial planning engagement.
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