LLQP Segregated Funds & Annuities · Component 1.1 · 35% of the exam
A client expects a large inheritance in two years. In profiling, the agent should:
- Note it as a possible future change, but base recommendations on current facts
- BRecommend borrowing against it, since the expected sum makes a leveraged investment safe
- CIgnore it entirely, since anything that has not yet happened has no place in the profile
- DCount it as current wealth, since the inheritance is certain enough to raise her capacity for risk
Correct answer: A) Note it as a possible future change, but base recommendations on current facts
Anticipated events are context, not current resources. Reviews will capture the change when it happens.
Why the other options are wrong
- BBorrowing against an expectancy is inappropriate; the money may never arrive.
- CIt is worth noting for review planning, even if not counted now.
- DAn expected inheritance is not yet hers and cannot be counted as current wealth.
Exam tip
Future expectancies: note, do not rely.
Common mistake
Raising the risk profile on the strength of expected money.
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.