LLQP Segregated Funds & Annuities · Component 1.1 · 35% of the exam
A client's prior negative experience with a market crash means the agent should:
- AReassure her that markets have recovered from every crash, so her worry has no bearing on the plan
- BSell only GICs, since a client who has been burned should never hold market-based products again
- CSet it aside, since past experience is not one of the profile elements the curriculum lists
- Explore how it affects her willingness to accept volatility, and consider guarantees
Correct answer: D) Explore how it affects her willingness to accept volatility, and consider guarantees
Behavioural history predicts future behaviour. Products that help the client stay invested are part of a suitable recommendation.
Why the other options are wrong
- AReassurance that ignores her experience is misleading and does not address willingness.
- BGICs alone may under-serve her other objectives.
- CIt reveals willingness, which is a core profile element.
Exam tip
Past panic → address willingness; guarantees may help.
Common mistake
Dismissing a client's crash experience as irrelevant.
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.