LLQP Segregated Funds & Annuities · Component 3.1 · 25% of the exam
Fee-based versus commission-based compensation for a segregated fund recommendation:
- ANeed not be disclosed, since compensation is a matter between the agent and the insurer that does not affect the client
- BIs irrelevant to the client, since the management expense ratio is the same whichever structure is chosen
- CIs always fee-based for segregated funds, since commissions on insurance investment products have been prohibited
- Must be disclosed clearly, and the structure recommended should suit the client, not maximize compensation
Correct answer: D) Must be disclosed clearly, and the structure recommended should suit the client, not maximize compensation
Compensation disclosure and conflict management are regulatory expectations for insurance agents.
Why the other options are wrong
- ADisclosure is required.
- BIt affects the client's cost.
- CBoth structures exist.
Exam tip
Disclose compensation and conflicts.
Common mistake
Omitting compensation disclosure.
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.