LLQP Segregated Funds & Annuities · Component 1.1 · 35% of the exam
A client insists on a product unsuitable for her profile. The agent should:
- ASell it and record that the client was warned, since the client bears responsibility for her own choice
- Explain why it is unsuitable, document the advice and her decision, and consider declining
- CComply without comment, since the client is entitled to buy whatever product she asks for
- DAdjust the profile so that the product becomes suitable on paper, since the client's wishes govern
Correct answer: B) Explain why it is unsuitable, document the advice and her decision, and consider declining
Suitability obligations persist even when the client directs. Documentation protects both; some transactions should be declined.
Why the other options are wrong
- AA warning alone does not cure a breach if the transaction is clearly harmful.
- CSilent compliance breaches the suitability duty.
- DFalsifying the profile is misconduct.
Exam tip
Unsuitable client-directed trade: advise, document, possibly decline.
Common mistake
Adjusting the KYC form to match the product.
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.