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CFP Board Provides Sample Engagement Letters

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Couple with advisor looking at contracts (Photo: Shutterstock)

The Certified Financial Planner Board of Standards said Thursday that it’s providing two sample engagement letters to help CFPs communicate to clients a CFP professional’s “duty to provide information” under the its newly amended Code of Ethics and Standards of Conduct.

The first is focused on engagement with a CFP professional for financial advice, and the second is focused on engagement with a CFP professional for financial planning.

The samples do not replace the CFP professional’s firm’s contracts, agreements or other legal documents or regulatory documents, such as Form ADV, Form CRS or any other documents required by federal or state regulators or the Financial Industry Regulatory Authority, CFP Board states.

The consumer-tested letters include input from CFPs “who requested sample engagement letters,” said CFP Board CEO Kevin Keller in a statement. The samples “use plain language to reduce consumer confusion, increase consumer trust, and reduce the number of questions a consumer may ask regarding the engagement.”

CFP Board developed the sample engagement letters through its Standards Resource Commission.

CFPs must tailor the letter to fit their practice and the client’s circumstances and should consult with their firm’s compliance officer.

While an engagement letter is not required to satisfy the duty under the Code and Standards, a CFP providing financial planning must provide the required information in one or more documents, CFP Board explains.

The Roadmap to the Code and Standards reference guide identifies many varieties of documents other than an engagement letter that a CFP firm delivers to clients that may contain the required information.