Creating a Project-Based Financial Planning Agreement

Client agreement documents will require various sections to adequately cover all services, responsibilities, limits, and liabilities.  Below we have covered five areas where most advisors need to customize their own hourly or project-based client agreements.  Boilerplate language may be included elsewhere to adhere to appropriate state and federal laws.  

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A sample agreement is below.  All documents and contracts should be reviewed by a qualified legal and/or compliance professional before using them in practice.  The sample agreement may not be applicable in all states or jurisdictions in its current form depending on your practice.  

Services/Scope of Work

It can be tempting to offer services that include everything under the sun to cast a wide net for clients, especially when it is based on a time-bound project or hourly engagement.  However, maintaining a focus on your core services will double down on your practice’s core competencies.  Clients should want to come to you for what you do best, even if they only want it for a short period of time.  

It can be more work to create a mutually defined scope of work for each project-based engagement but will allow you to provide more surgical attention to the client’s parameters.  Specific agreement on language, expected activities, meeting cadence, and results will protect both client and advisor from misalignment of goals.  

Client Responsibilities

Clients should be responsible for supplying complete and accurate information for use within the financial planning process. While not exhaustive, it can be beneficial to summarize the topics and type of information that a client should be prepared to supply.  Any information that is requested by you, the advisor, or that the client deems relevant to their situation should be included in the list of summary information.  Additionally, throughout the length of the engagement, the client should be responsible for updating you with any relevant changes that take place or with any actions taken on financial matters.  

While it can be covered in the liabilities section as well, it is important to include an acknowledgment by the client that you will not be liable for any losses, missed opportunities, costs, or claims that could occur based on the client’s failure to supply accurate information or follow advice.   

Timeline

This may be as simple as defining the engagement as open-ended, or time-bound based on a specific length of time or end date in the future.  If the project depth and length are contingent on the discovery process, bake that step into your process by revisiting and updating the client agreement with that new information.  

Be diligent in accurately framing the length of any project.  If the clients need ongoing financial advisory work and expect to continue working with you for more than a year, steer them towards your AUM fee or ongoing payment structure if one exists. 

Cost/Fees

Define both relevant fee structure(s) and the range of fees that you expect for any project-based work.  If you offer both hourly or fixed-cost fees per project, allow for customization of the agreement so you can be specific about exactly what the costs for the services would be.  It should be clear to the client what their expected costs will be.  Additionally, it is critical for your business that the client has acknowledged that they have agreed to that amount and the billing timeframe.  

Different clients may have different comfort levels with payment methods, but it is better to offer one or two options for payments than leave it up to the clients to decide how they want to pay.  It is easier than ever to complete digital payments for your financial planning work.  Your billing software or CRM should have various options to accept credit cards, ACH transfers, or schedule payments in the future.  

Disclosures

The primary purpose of a disclosures section is to summarize the documents and information that clients receive as part of their onboarding with you as their new advisor.  Clients should acknowledge receipt and review of your Form ADV Part 2 and privacy and information security policies.  

Additional contract sections will vary but common sections to include are (not an exhaustive list):

a. Arbitration

b. Confidentiality

c. Conflicts of Interest

d. Fiduciary Statement

f. Termination and Cancellation