LLQP Segregated Funds & Annuities · Component 1.1 · 35% of the exam
A client scores as 'balanced' on the risk questionnaire but says he checks his account daily and sold everything in the last downturn. The agent should:
- ARecord the client as aggressive, since active monitoring shows a high level of engagement with markets
- BDecline to proceed until the client has completed a second questionnaire from a different provider
- Treat the behaviour as the better evidence of tolerance, discuss the difference and document the conclusion
- DRecord the questionnaire score, since a standardized instrument is more reliable than a client's recollection
Correct answer: C) Treat the behaviour as the better evidence of tolerance, discuss the difference and document the conclusion
What a client did in a real decline is stronger evidence than what they select on a form, and the profile must reflect the behaviour the agent can actually foresee.
Why the other options are wrong
- AFrequent monitoring signals anxiety more often than appetite for risk.
- BA second questionnaire would not resolve the contradiction the agent has already seen.
- DA questionnaire contradicted by conduct cannot be taken at face value.
Exam tip
Behaviour in a downturn beats a questionnaire score.
Common mistake
Filing a risk score that the client's own history contradicts.
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.