LLQP Segregated Funds & Annuities · Component 1.1 · 35% of the exam
A client says he has 'no idea' how his existing investments are allocated. In the profile this is:
- AA reason to decline, since a client who cannot describe his holdings cannot give informed consent
- BIrrelevant, since the new recommendation will be assessed entirely on its own merits
- CEvidence of a high risk tolerance, since he has been comfortable not monitoring his portfolio
- An investment knowledge finding and a reason to obtain statements before recommending anything
Correct answer: D) An investment knowledge finding and a reason to obtain statements before recommending anything
What the client already holds determines whether a new recommendation adds diversification or concentrates an existing exposure, and the statements are the only reliable source.
Why the other options are wrong
- AThe client can be helped; the agent simply needs the statements.
- BA recommendation cannot be suitable if the existing portfolio is unknown.
- CInattention is not a measure of tolerance for loss.
Exam tip
Get the statements before you recommend.
Common mistake
Recommending a fund that duplicates what the client already owns.
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.