LLQP Segregated Funds & Annuities · Component 1.3 · 35% of the exam
A client with a large non-registered portfolio near retirement fears a market drop just before she needs the money. Her need is for:
- Downside protection at a defined date, through a timed maturity guarantee or a shift to conservative assets
- BNothing, since a market drop before retirement is recovered by staying invested afterward
- CActive trading to move in and out of the market ahead of any decline
- DMore equities, since a larger portfolio can absorb a bigger decline
Correct answer: A) Downside protection at a defined date, through a timed maturity guarantee or a shift to conservative assets
A guarantee maturing at the need date directly addresses this fear. Timing the maturity date is the design point.
Why the other options are wrong
- BThe fear reflects a real risk that must be addressed before the need date.
- CTrading increases the very risk the client fears.
- DMore equities increase the risk she fears.
Exam tip
Defined-date protection → maturity guarantee timed to the need.
Common mistake
Selling a guarantee whose maturity date falls after the client's need date.
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.