LLQP Segregated Funds & Annuities · Component 2.1 · 30% of the exam
An 'asset allocation' decision refers to:
- Dividing the portfolio among asset classes according to the client's profile
- BChoosing which insurer will hold the contract, since each has a different fund line-up
- CMoving between cash and equities to catch market rises and avoid declines
- DSelecting individual companies whose shares are expected to outperform the market
Correct answer: A) Dividing the portfolio among asset classes according to the client's profile
Asset mix drives most of a portfolio's behaviour. Fund selection within classes is secondary.
Why the other options are wrong
- BInsurer choice is separate from allocation.
- CMarket timing is speculative, not allocation.
- DSecurity selection happens within asset classes.
Exam tip
Asset mix first, fund selection second.
Common mistake
Focusing on fund picks and ignoring the overall mix.
What this tests
CISRO competency component 2.1 — 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.