LLQP Segregated Funds & Annuities · Component 1.3 · 35% of the exam
A client who will depend entirely on personal savings for retirement (no pension) has a heightened need for:
- AAn all-equity portfolio, since only equities can grow enough to replace a missing pension
- Guaranteed lifetime income for essential expenses, through a life annuity or guaranteed withdrawal product
- CNo special planning, since government benefits provide the same floor a pension would
- DSpeculative investments, since the client must take more risk to catch up with pension members
Correct answer: B) Guaranteed lifetime income for essential expenses, through a life annuity or guaranteed withdrawal product
The 'income floor' concept: cover essentials with guaranteed sources, invest the rest for growth. Clients without pensions must build the floor themselves.
Why the other options are wrong
- AAll-equity exposes essentials to market risk.
- CPlanning is critical; government benefits alone are a low floor.
- DSpeculation endangers the base the client depends on.
Exam tip
No pension → build a guaranteed income floor for essentials.
Common mistake
Leaving a pensionless retiree's essential expenses exposed to markets.
What this tests
CISRO competency component 1.3 — 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.