LLQP Segregated Funds & Annuities · Component 1.3 · 35% of the exam
A client's need for 'currency diversification' arises because:
- AForeign investing is restricted, so a small foreign allocation must be used efficiently
- BIt does not arise, since Canadian markets are broad enough to provide full diversification
- An all-Canadian portfolio is concentrated in one economy and currency
- DCanadian funds are being phased out, so clients must move to global products
Correct answer: C) An all-Canadian portfolio is concentrated in one economy and currency
Home bias is a common gap. Segregated funds offer global options; foreign content limits on registered plans no longer apply.
Why the other options are wrong
- AForeign investing is permitted without limit.
- BConcentration in one economy is a real risk.
- DCanadian funds remain standard.
Exam tip
Diversify globally; currency adds volatility but reduces concentration.
Common mistake
Citing old foreign content limits that were removed.
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
Timed sets weighted like the exam, and review of every question you miss. Free to start.