LLQP Segregated Funds & Annuities · Component 1.1 · 35% of the exam
A client's dependants and family responsibilities matter to an investment recommendation because:
- They create liquidity needs, affect risk capacity and shape estate objectives
- BThey set the management expense ratio, since insurers price family contracts differently from individual ones
- CThey do not matter, since a segregated fund recommendation depends only on the investor's own objectives
- DThey determine the fund's returns, since family contracts are pooled in a separate account
Correct answer: A) They create liquidity needs, affect risk capacity and shape estate objectives
Personal situation is a listed fact-finding element. Dependants influence both risk capacity and the estate features that make segregated funds attractive.
Why the other options are wrong
- BMERs are set by the insurer and do not vary by family size.
- CFamily obligations affect risk capacity and estate planning directly.
- DReturns are market-driven and identical for every holder of the fund.
Exam tip
Dependants → liquidity, capacity for risk, beneficiary planning.
Common mistake
Ignoring estate objectives when profiling a client with dependants.
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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