LLQP Segregated Funds & Annuities · Component 1.1 · 35% of the exam
A client asks the agent to record her risk tolerance as aggressive so she can buy a fund the profile would otherwise exclude. The agent must:
- ARecord what the client asks, since the client is entitled to define her own tolerance for risk
- BRecord the requested score but add a file note explaining that the agent disagrees with the client's view
- Explain that the profile records an assessment, not a preference, and cannot be adjusted to fit a product
- DRecommend the fund without a profile, since the client has accepted responsibility for the choice
Correct answer: C) Explain that the profile records an assessment, not a preference, and cannot be adjusted to fit a product
Altering the profile to justify a transaction falsifies the suitability record, and the correct route is to advise, document the client's decision and let the file show what happened.
Why the other options are wrong
- ATolerance is assessed from evidence, not declared to suit a purchase.
- BA contradictory note does not cure a falsified assessment.
- DProceeding without a profile abandons the suitability obligation entirely.
Exam tip
Never move the profile to fit the product.
Common mistake
Adjusting a risk score after choosing the fund.
What this tests
CISRO competency component 1.1 — Assess the client's needs and situation — which is weighted at 35% of the Segregated Funds & Annuities module. Written against the published curriculum.
More from component 1
- The first step before recommending a segregated fund or annuity is to:
- A client's 'time horizon' for an investment is:
- 'Risk tolerance' in an investor profile refers to:
- A client says he wants 'high returns with no risk of losing money'. The agent should:
- Investment objectives are commonly classified as:
- Why is the client's marginal tax rate relevant to a segregated fund recommendation?
Practice the whole Segregated Funds & Annuities module
Timed sets weighted like the exam, and review of every question you miss. Free to start.