LLQP Segregated Funds & Annuities · Component 1.1 · 35% of the exam
A client holds a power of attorney for her mother and wants to invest her mother's savings. The agent must establish:
- AThe daughter's own objectives and risk tolerance, since she will be making all of the decisions
- BNothing beyond the document, since an attorney stands in the grantor's shoes for every purpose
- CThat the mother has been declared incapable, since a power of attorney operates only after that finding
- The mother's situation and objectives, and the scope the power of attorney actually confers
Correct answer: D) The mother's situation and objectives, and the scope the power of attorney actually confers
The investor is the grantor, so suitability is assessed against her circumstances, and the attorney's authority is limited to what the document and the law permit.
Why the other options are wrong
- AThe attorney acts for the grantor, not for herself.
- BPowers of attorney are limited instruments whose scope must be read.
- CMany powers of attorney operate before any finding of incapacity.
Exam tip
Profile the grantor; verify the attorney's authority.
Common mistake
Profiling the person in the room rather than the person whose money it is.
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
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