LLQP Segregated Funds & Annuities · Component 3.1 · 25% of the exam
A client asks the agent to recommend 'the best fund'. The agent should:
- ADecline to answer, since naming a single fund would amount to a guarantee of its future performance to the client
- BChoose a fund from the insurer's list at random, since all of the funds have been approved as suitable
- CName last year's top performer, since a client who asks for the best fund expects the best recent return
- Explain that suitability, not past performance, drives the choice, and recommend a matching fund
Correct answer: D) Explain that suitability, not past performance, drives the choice, and recommend a matching fund
Chasing performance is a classic error. Suitability is the standard.
Why the other options are wrong
- AGiving suitable advice is the agent's job.
- BSuitability requires reasoning, not chance.
- CPast performance is not predictive.
Exam tip
Suitability over performance chasing.
Common mistake
Recommending funds by trailing returns.
What this tests
CISRO competency component 3.1 — Implement a recommendation adapted to the client's needs and situation — which is weighted at 25% of the Segregated Funds & Annuities module. Written against the published curriculum.
More from component 3
- A client's spouse must sign for:
- When the insurer requests additional information after the application (for example, source of wealth for a large deposit), the agent should:
- The implementation of a recommendation involving a switch from one seg fund to another within a contract requires:
- A client wishes to designate a charity as beneficiary of a segregated fund. Implementation should:
- For a deferred annuity implemented for a client, the agent should confirm:
- The agent's record of the implementation should be retained:
Practice the whole Segregated Funds & Annuities module
Timed sets weighted like the exam, and review of every question you miss. Free to start.