LLQP Segregated Funds & Annuities · Component 1.1 · 35% of the exam
A client's 'source of funds' for an investment must be recorded because:
- AIt is not required, since the agent's only concern is whether the money is invested suitably
- BIt determines which fund is suitable, since inherited money and earned money have different profiles
- AML rules require it for large deposits, and the source also informs the profile
- DIt sets the guarantee level, since insurers offer higher guarantees on money from a business sale
Correct answer: C) AML rules require it for large deposits, and the source also informs the profile
FINTRAC obligations apply to life insurance companies and agents for segregated funds and annuities. Source of funds is also planning context.
Why the other options are wrong
- AAnti-money-laundering rules require the source of large deposits to be identified.
- BFund choice follows the profile, not the origin of the money.
- DGuarantees are contractual and unrelated to the source of funds.
Exam tip
Record source of funds: AML compliance and profiling.
Common mistake
Accepting a large cash deposit without documentation.
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.