LLQP Segregated Funds & Annuities · Component 1.3 · 35% of the exam
A client's need for 'liquidity' in retirement is addressed by:
- ALocking all funds into guaranteed products, since certainty of income removes the need for reserves
- BIgnoring it, since retirees rarely face the unexpected expenses that working clients do
- CAnnuitizing everything, since the monthly income can be saved up for large purchases
- Keeping part of the portfolio accessible for emergencies, annuitizing only the income floor
Correct answer: D) Keeping part of the portfolio accessible for emergencies, annuitizing only the income floor
Annuities are irreversible; liquidity needs must be met from other assets. Balancing the two is a core recommendation skill.
Why the other options are wrong
- ALocked funds cannot meet emergencies.
- BEmergencies happen in retirement too.
- CFull annuitization eliminates liquidity.
Exam tip
Annuitize the floor; keep liquidity for the rest.
Common mistake
Annuitizing a client's only accessible savings.
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.