LLQP Segregated Funds & Annuities · Component 1.3 · 35% of the exam
A client's need for 'income certainty' versus 'growth potential' is usually resolved by:
- AChoosing one, since a client cannot have both certainty and growth in the same plan
- A layered approach: guaranteed sources for essentials, growth investments for discretionary spending
- CAll annuities, since certainty of income is what retirees value above all else
- DAll equities, since long-run growth will eventually cover any shortfall in income that arises along the way
Correct answer: B) A layered approach: guaranteed sources for essentials, growth investments for discretionary spending
The layered or 'bucket' approach matches guarantee to essentials and risk to extras — the practical resolution of the trade-off.
Why the other options are wrong
- ABoth certainty and growth are real needs; the plan should serve both.
- CAll annuities loses growth and flexibility.
- DAll-equity portfolios expose essential expenses to market risk.
Exam tip
Layer: guaranteed for essentials, growth for extras.
Common mistake
Framing the choice as all-or-nothing.
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.