LLQP Segregated Funds & Annuities · Component 1.1 · 35% of the exam
A client's 'investment experience' should be recorded because:
- AIt sets the fee the client pays, since experienced investors qualify for lower management expense ratios
- BIt is a licensing requirement, since only clients with documented experience may hold segregated funds
- CIt sets the guarantee level, since insurers offer higher guarantees to clients with more experience
- It shows whether the client understands volatility and can make informed decisions
Correct answer: D) It shows whether the client understands volatility and can make informed decisions
Experience is a KYC element. It affects how much explanation is needed and which products are appropriate.
Why the other options are wrong
- AFees are set by the product, not by the investor's experience.
- BThe client does not need a licence or a minimum experience level to invest.
- CGuarantees are contractual and unrelated to experience.
Exam tip
Record experience; it shapes disclosure depth and suitability.
Common mistake
Assuming a client who has held GICs understands equity funds.
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.