The Undisclosed $89,400: Data Integrity, Scope, and a Lender Letter

Identify the client first. Both spouses signed the engagement, so the client is the household, not Daniel alone. Information one spouse provides is generally owed to the client entity unless the engagement letter says otherwise. This is not a confidentiality problem between strangers; it is a data-integrity problem inside a single engagement.

Then test materiality. The omission is not a presentation preference. It moves the projection from 94% to 71% and it consumes roughly $1,900 per month of debt service at blended rates near 24%. A plan that excludes it is misleading even if every other number is correct.

Apply the duties. The fiduciary duty of care requires recommendations grounded in accurate client data. Integrity and competence prohibit delivering a knowingly incomplete deliverable. There is no duty to conceal, and no duty to confront Daniel publicly either.

What you do:

• Meet Daniel alone first. State the numbers and the effect on the projection, without moralizing about the spending.
• Offer a neutral presentation: the debt appears as a liability with a payoff schedule, not as an accusation.
• Offer a joint meeting and a referral to a credit counselor or a CPA for the business-float question.
• Document the conversation, the date, and Daniel's instruction in the file.
• If Daniel still refuses, do not issue the projection. Either re-scope the engagement in writing to something you can honestly deliver, or terminate with written notice and refund the unearned portion of the fee.

What you do not do is issue the 94% plan with a small footnote and hope. The footnote does not cure a number you know is false, and the mortgage lender is an unrepresented third party who will rely on it.

Decline. The statement is untrue on the facts you hold: there are $89,400 of liabilities, one of them 60 days delinquent, and the funded ratio is 71%, not fully funded. Signing it is a misrepresentation, it may constitute mortgage fraud, and it exposes you to lender claims, errors and omissions exposure, and regulatory discipline. Your obligation not to misrepresent runs to third parties as well as to clients.

Separate the legitimate need from the illegitimate one. The client wants documentation for a pre-approval. That need can be met without falsehood:

• A letter that states only verifiable facts: engagement date, scope, that a plan was prepared, and the assumptions used.
• A statement of projected retirement income under stated assumptions, clearly labeled as a projection, not a guarantee or a statement of net worth.
• A referral to the lender's own requirements, which normally concern income, assets, and credit, not a planner's opinion.

Handle the pushback. Daniel will frame the refusal as costing the family the house. Reframe: a letter that a lender later discovers to be false is far more damaging, and the 71% projection itself is fixable over time. Offer a 12-month debt-reduction plan with a target debt-to-income ratio as a concrete path to the pre-approval.

Document. Record the request as made, your refusal, and your explanation in the file. If Daniel indicates he will obtain the letter elsewhere, that is not your problem to solve, but the file should show you did not participate.

Do not silently absorb the new work, and do not ignore it. The financial planning process is iterative: data gathering, analysis, and recommendation must reflect what you now know. Discovering credit card debt and a delinquent account is a fact that changes the analysis no matter what the scope says.

Document the discovery. Note the date, the source (authorized credit pull), and the effect on the projection. If you later deliver any work product, that record is what shows you did not overlook it.

Re-scope in writing. Offer an amended engagement adding a cash-flow and debt-management module, with a revised fee that reflects the added work. If the clients decline the expansion, you may still deliver the original scope, but only with a written limitation statement identifying the excluded data, the effect of the exclusion (71% versus 94%), and a recommendation to address the debt with a specialist.

Consider whether to proceed at all. Two clients with directly conflicting instructions, plus a request to mislead a lender, is a relationship risk as well as a technical one. Declining the engagement, with a refund of unearned fees, is a legitimate professional choice and often the better one.

Check the mechanical points. Confirm that authorization to pull credit exists from both spouses, that the engagement letter states how information is shared within a joint client household, and that your errors and omissions coverage is not implicated by anything already delivered. Going forward, add a clause to the template engagement letter making joint-household information sharing explicit.