LLQP Segregated Funds & Annuities · Component 1.1 · 35% of the exam
A client's income will fall sharply when she retires in two years. For the profile this means:
- AHer contribution room disappears at retirement, so no further registered saving is possible
- Her marginal tax rate will likely fall, which affects the value of deductions and the plan choice
- CHer risk tolerance will rise, since retirees have more time available to monitor their investments closely
- DHer investment horizon ends at retirement, so all holdings should be in cash by that date
Correct answer: B) Her marginal tax rate will likely fall, which affects the value of deductions and the plan choice
A falling bracket changes whether a deduction is worth claiming now or carrying forward, and it shapes the choice between registered and tax-free vehicles.
Why the other options are wrong
- ARoom already earned is not lost at retirement.
- CTime to watch markets is not the same as capacity to absorb losses.
- DA retiree's horizon extends for decades of withdrawals.
Exam tip
Retirement usually lowers the bracket, which changes the plan choice.
Common mistake
Assuming a retiring client's horizon ends on the retirement date.
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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