LLQP Segregated Funds & Annuities · Component 1.1 · 35% of the exam
A client's stated income is far below what his lifestyle and assets suggest. The agent should:
- ARaise the recommended risk level, since the client's true resources are evidently larger than reported
- BIgnore the discrepancy, since the agent must accept what the client states on the form
- Ask clarifying questions, since inconsistencies are both a profiling and an AML red flag
- DReport him to the police immediately, since unexplained wealth is presumed to be criminal
Correct answer: C) Ask clarifying questions, since inconsistencies are both a profiling and an AML red flag
Inconsistencies must be resolved for accurate profiling and for AML compliance. Innocent explanations (inheritance, spouse's income) are common.
Why the other options are wrong
- ARaising the recommended risk has nothing to do with resolving an income discrepancy.
- BDiscrepancies undermine suitability and compliance and must be resolved.
- DInquiry precedes any reporting obligation; suspicion alone is not a police matter.
Exam tip
Resolve inconsistencies; note AML implications.
Common mistake
Filling in the profile without reconciling contradictions.
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.