Scope of Engagement Depends on Completeness of Information Provided
Prior to any recommendations and after all of the information provided has been analyzed, a determination of the scope of the engagement must be made by the financial advisor. Based on the completeness and accuracy of the information, a financial advisor must communicate to the client the impact on his conclusions and recommendations.
If a financial advisor is unable to obtain sufficient and relevant quantitative information and documents to form a basis for recommendations, the financial advisor must:
- Restrict the Scope of the Engagement to those matters for which sufficient and relevant information is available; or
- Terminate the Engagement Agreement.
Assuming sufficient information is provided, as requested, the financial plan and investment policy statement will be developed within the scope of the engagement. The strategy will require the identification of the following:
The scope of engagement between a financial advisor and his client is as useful as a map is to a navigator whose compass points to True North. Make sure the advice you receive is the result of a rigorous analysis designed to enhance the financial planning process.
