LLQP Segregated Funds & Annuities · Component 2.4 · 30% of the exam
A member's investment choices in a DC pension plan are typically limited to:
- AAny investment the member chooses anywhere in the world, since the account belongs to the member and the sponsor has no say
- The line-up selected by the sponsor under CAP Guidelines, usually funds across risk levels plus a default
- COne fund chosen by the sponsor for all members, since the plan is pooled for administrative simplicity
- DIndividual stocks and bonds selected through a broker, since a pension plan must hold direct securities
Correct answer: B) The line-up selected by the sponsor under CAP Guidelines, usually funds across risk levels plus a default
Sponsors curate options; members choose within them. Agents may advise members within their licence.
Why the other options are wrong
- AMembers choose only from the sponsor's curated menu.
- CMultiple options are required under the Guidelines.
- DIndividual stocks are rarely offered inside a DC pension plan's line-up.
Exam tip
DC plan: sponsor-selected menu, member choice within it.
Common mistake
Advising a member to hold an investment not on the plan's menu.
What this tests
CISRO competency component 2.4 — Analyze the available products that meet the client's needs — which is weighted at 30% of the Segregated Funds & Annuities module. Written against the published curriculum.
More from component 2
- A segregated fund's 'guaranteed amount' after a partial withdrawal under proportional reduction is:
- A distinctive estate advantage of a segregated fund over a non-registered mutual fund held jointly with a child is:
- Segregated fund guarantees are most valuable relative to their cost when:
- A segregated fund's annual statement reports:
- Compared with a segregated fund, an exchange-traded fund (ETF) generally offers:
- A segregated fund's 'automatic death benefit reset' feature:
Practice the whole Segregated Funds & Annuities module
Timed sets weighted like the exam, and review of every question you miss. Free to start.