LLQP Segregated Funds & Annuities · Component 3.1 · 25% of the exam
For a client with a moderate profile who is very anxious about losses, the recommendation may reasonably include:
- AThe most aggressive fund available, since a higher return will eventually reassure her about losses
- BNo investment until her anxiety has passed, since an anxious client cannot give informed consent
- A higher guarantee level than the profile alone suggests, because staying invested has real value, with the cost disclosed
- DA leveraged position, since the borrowed money means her own capital is never fully at risk
Correct answer: C) A higher guarantee level than the profile alone suggests, because staying invested has real value, with the cost disclosed
Suitability includes behaviour. A guarantee that prevents panic selling can improve realized returns despite its cost.
Why the other options are wrong
- AAn aggressive fund contradicts her anxiety.
- BMaking no investment under-serves the client's goals.
- DLeverage increases anxiety and risk.
Exam tip
Anxious client: guarantees have behavioural value; disclose cost.
Common mistake
Dismissing anxiety as irrelevant to product design.
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.