LLQP Segregated Funds & Annuities · Component 1.3 · 35% of the exam
A client's need analysis should distinguish 'essential' from 'discretionary' retirement expenses because:
- ADiscretionary expenses must be guaranteed, since they are what makes retirement enjoyable
- BEssentials can be exposed to risk, since government benefits cover them in any event
- Essentials define the income floor to guarantee; discretionary spending can come from variable sources
- DIt does not matter, since the total income need is what determines the plan and the products chosen
Correct answer: C) Essentials define the income floor to guarantee; discretionary spending can come from variable sources
This distinction drives the allocation between guaranteed and market-based income.
Why the other options are wrong
- ADiscretionary spending can flex with markets.
- BEssentials need certainty; government benefits are a low floor.
- DThe distinction structures the whole plan.
Exam tip
Essentials → guaranteed; discretionary → variable.
Common mistake
Treating all retirement spending the same.
What this tests
CISRO competency component 1.3 — 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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