LLQP Segregated Funds & Annuities · Component 1.1 · 35% of the exam
A client tells the agent she wants to 'keep up with the market' after hearing about a colleague's returns. The agent should recognize this as:
- A behavioural signal to explore, since a goal defined by someone else's results is not a plan
- BA reason to decline the engagement, since a client comparing returns cannot be advised suitably
- CEvidence that her risk tolerance is high, which justifies an equity-weighted recommendation
- DA clear statement of her objectives, which the recommendation should now be built to match
Correct answer: A) A behavioural signal to explore, since a goal defined by someone else's results is not a plan
Comparison to others tells the agent nothing about the client's own horizon, capacity or purpose, and acting on it invites a sale that will not survive the next decline.
Why the other options are wrong
- BThe comment is an opening for discussion, not a reason to walk away.
- CEnvy of returns is not the same as capacity to absorb losses.
- DMatching a colleague's returns is not an objective the analysis can work from.
Exam tip
A benchmark borrowed from a friend is not an objective.
Common mistake
Building a portfolio around a return the client heard about.
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.