LLQP Segregated Funds & Annuities · Component 1.1 · 35% of the exam
A client's employer is being acquired and his job may end within the year. In the profile this should be recorded because it:
- ARaises his risk tolerance, since a client facing change is more willing to accept volatility
- Affects his liquidity needs, his capacity for risk and the reliability of his contribution plan
- CRequires the recommendation to be deferred until the acquisition has been completed
- DHas no bearing, since employment status affects income but not the suitability of an investment
Correct answer: B) Affects his liquidity needs, his capacity for risk and the reliability of his contribution plan
An interruption in earnings can force a sale at the worst moment, so a client facing one needs more accessible holdings and a contribution plan that can be paused.
Why the other options are wrong
- AUncertainty reduces rather than increases the capacity to bear losses.
- CDeferring leaves the client without advice at the time it is most needed.
- DEmployment stability is central to both liquidity and capacity.
Exam tip
Uncertain employment means more liquidity and a flexible contribution.
Common mistake
Setting up a rigid contribution plan for a client whose job is at risk.
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.