LLQP Segregated Funds & Annuities · Component 3.1 · 25% of the exam
For a client with both registered and non-registered assets, 'asset location' suggests:
- APlacing investments wherever room happens to be available, since location has no effect on after-tax return
- BHolding everything non-registered, since registered plans convert favourable gains into fully taxed income
- Interest-bearing investments in registered plans and equity or capital-gains investments non-registered
- DHolding everything in the TFSA, since it is the only plan in which growth is never taxed at any point
Correct answer: C) Interest-bearing investments in registered plans and equity or capital-gains investments non-registered
Location optimizes after-tax returns without changing the overall risk. It is a recommendation refinement.
Why the other options are wrong
- APlacement affects tax and after-tax return.
- BHolding everything non-registered wastes registered room.
- DTFSA room is limited.
Exam tip
Interest → registered; gains/dividends → non-registered.
Common mistake
Putting a bond fund in the non-registered account and equities in the RRSP.
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.