Defining the Scope of the Engagement

Prior to providing any financial planning service, the financial planning practitioner and the client shall mutually define the scope of the engagement. The process of "mutually-defining" is essential in determining what activities may be necessary to proceed with the engagement.

This process is accomplished in the scope of engagements by:

 

  • Identifying the service(s) to be provided;

  • Disclosing the practitioner's material conflict(s) of interest;

  • Disclosing the practitioner's compensation arrangement(s);

  • Determining the client's and the practitioner's responsibilities;

  • Establishing the duration of the engagement; and

  • Providing any additional information necessary to define or limit the scope.

 

The scope of the engagement may include one or more subject areas. It is acceptable to mutually define engagements in which the scope is limited to specific activities. Mutually defining the scope of the engagement serves to establish realistic expectations for both the client and the practitioner.  This Practice Standard does not require the scope of the engagement to be in writing. However, as noted in the "Relationship" section, which follows, there may be certain disclosures that are required to be in writing. As the relationship proceeds, the scope may change by mutual agreement.