LLQP Segregated Funds & Annuities · Component 2.4 · 30% of the exam
An agent who services a group plan is asked by one member for individual advice about her own account. The agent must:
- collect the information needed to know the client and document the basis of the recommendation
- Bgive general information only, since individual advice is never permitted in a group setting
- Cdecline entirely and refer the member back to the employer's human resources department
- Drely on the enrolment data already supplied by the employer as a complete client profile
Correct answer: A) collect the information needed to know the client and document the basis of the recommendation
Once the agent gives advice to an individual, the usual obligations apply. The agent must gather personal and financial information, assess suitability and record what was recommended and why, just as for any other client.
Why the other options are wrong
- BIndividual advice is permitted; it simply brings the full set of obligations with it.
- CReferring the member away is unnecessary when the agent is licensed to advise.
- DEnrolment data is not a client profile and would not support a suitable recommendation.
Exam tip
Advice to an individual triggers the full know your client duty, group plan or not.
Common mistake
Treating group plan members as exempt from the usual suitability requirements.
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.