LLQP Segregated Funds & Annuities · Component 3.1 · 25% of the exam
A recommendation for a client who values ESG (environmental, social, governance) investing should:
- ASet the preference aside, since investment selection must be based on financial criteria alone
- BAssure the client that responsible funds earn better returns, since well-governed companies outperform
- Consider responsible-investing funds that meet suitability, disclosing any cost or diversification differences
- DReject ESG funds, since a mandate that excludes whole sectors cannot be adequately diversified for any client
Correct answer: C) Consider responsible-investing funds that meet suitability, disclosing any cost or diversification differences
Client preferences are part of the profile; suitability still governs.
Why the other options are wrong
- AThe client's ESG preference is a legitimate part of the profile.
- BNo fund, ESG or otherwise, can guarantee better returns.
- DESG mandates are legitimate options.
Exam tip
Honour preferences within suitability; disclose trade-offs.
Common mistake
Promising ESG funds outperform.
What this tests
CISRO competency component 3.1 — Implement a recommendation adapted to the client's needs and situation — which is weighted at 25% of the Segregated Funds & Annuities module. Written against the published curriculum.
More from component 3
- A client's spouse must sign for:
- When the insurer requests additional information after the application (for example, source of wealth for a large deposit), the agent should:
- The implementation of a recommendation involving a switch from one seg fund to another within a contract requires:
- A client wishes to designate a charity as beneficiary of a segregated fund. Implementation should:
- For a deferred annuity implemented for a client, the agent should confirm:
- The agent's record of the implementation should be retained:
Practice the whole Segregated Funds & Annuities module
Timed sets weighted like the exam, and review of every question you miss. Free to start.