Is a written financial planning agreement a contract?

Is a written financial planning agreement a contract?

• A. Yes, always
• B. Yes, if there is consideration
• C. No, never
• D. Only if signed by the CFP Board

Answer: (B)

In contract law, a written agreement becomes a contract when there is consideration—the exchange of something of value between the parties. A financial planning engagement letter typically outlines the planner’s services and, in return, the client agrees to pay fees. That payment (or other value the client gives in return for the services) satisfies consideration, making the written document a binding contract. If there’s no consideration—such as a promise to provide services without any payment or other value exchanged—the document isn’t a contract in the legal sense, even though it might spell out terms. Other elements of a contract include an offer, acceptance, and an intent to create legal relations, but consideration is the critical factor that makes the agreement enforceable. The CFP Board’s signature isn’t what creates a contract; board endorsement doesn’t substitute for contract law.

In contract law, a written agreement becomes a contract when there is consideration—the exchange of something of value between the parties. A financial planning engagement letter typically outlines the planner’s services and, in return, the client agrees to pay fees. That payment (or other value the client gives in return for the services) satisfies consideration, making the written document a binding contract.

If there’s no consideration—such as a promise to provide services without any payment or other value exchanged—the document isn’t a contract in the legal sense, even though it might spell out terms. Other elements of a contract include an offer, acceptance, and an intent to create legal relations, but consideration is the critical factor that makes the agreement enforceable. The CFP Board’s signature isn’t what creates a contract; board endorsement doesn’t substitute for contract law.