LLQP Segregated Funds & Annuities · Component 1.1 · 35% of the exam
A client says she will not invest in fossil fuel companies. The agent should treat this as:
- AA reason to decline the engagement, since screened portfolios cannot be assessed for suitability
- BEvidence that she is an aggressive investor willing to sacrifice diversification for conviction
- CAn instruction to ignore, since investment decisions must rest on financial criteria alone
- A constraint to record in the profile, met by funds whose mandates suit her and her objectives
Correct answer: D) A constraint to record in the profile, met by funds whose mandates suit her and her objectives
A values-based exclusion is a legitimate constraint, and the agent's task is to find a mandate that respects it while still meeting the financial objectives.
Why the other options are wrong
- AScreened funds are assessed for suitability like any other.
- BAn exclusion says nothing about her appetite for volatility.
- CClient constraints are part of the profile and must be honoured.
Exam tip
Values are constraints, recorded alongside objectives.
Common mistake
Overriding a client's stated exclusion because it narrows the shelf.
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.