LLQP Segregated Funds & Annuities · Component 1.1 · 35% of the exam
A client has a defined contribution pension at work with limited investment options. The profile should:
- ATreat it as cash, since the limited options mean the pension holds no meaningful market exposure
- Include the pension's holdings in the overall asset mix so personal investments complement them
- CRecommend cashing it out, since limited options make the plan a poor place to keep retirement money
- DLeave the pension out, since the employer's plan is outside the agent's scope
Correct answer: B) Include the pension's holdings in the overall asset mix so personal investments complement them
The whole picture matters. Personal investments should be chosen in light of what the pension already holds.
Why the other options are wrong
- AIt holds investments, not cash, and those investments carry exposure.
- CDC pensions are locked-in and cannot simply be cashed out.
- DThe pension is part of the client's assets and shapes the overall mix.
Exam tip
Include workplace plans in the overall asset allocation.
Common mistake
Duplicating the pension's equity exposure in personal accounts.
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.