LLQP Segregated Funds & Annuities · Component 1.3 · 35% of the exam
A self-employed client with no pension asks what her greatest retirement risk is. The analysis should identify:
- ACreditor risk, since her business creditors can reach her retirement savings after she retires
- That she carries the whole burden of funding and longevity with no guaranteed floor
- CProbate fees, since a self-employed client's estate is usually more complex to administer
- DCurrency risk, since a business owner's income is more exposed to international markets
Correct answer: B) That she carries the whole burden of funding and longevity with no guaranteed floor
Without an employer pension there is no guaranteed layer beneath the government benefits, so both the saving and the risk of a long life fall entirely on her own capital.
Why the other options are wrong
- ACreditor exposure is a real but separate concern from funding retirement.
- CProbate is an estate cost, not a retirement funding risk.
- DCurrency exposure depends on the business, not on being self-employed.
Exam tip
No pension means no floor beneath the government benefits.
Common mistake
Treating a business owner's company as a retirement plan.
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.