IFSE Institute Exam LLQP Topic 2 Question 2 Discussion

Actual exam question for IFSE Institute's LLQP exam

Question #: 2
Topic #: 2

Emma, an employee at MagicLand, is part of the company's group registered retirement savings plan (RRSP). During her tenure, she accumulated over $70,000 in the plan and all of her contributions are invested in segregated funds. She meets with Jun to invest in an individual segregated fund. Jun tells her that there are some differences between group and individual segregated funds.

How are Emma's group segregated funds DIFFERENT from an individual segregated fund?

AThey have higher sales charges.

BThey charge switching fees.

CThey offer death benefit guarantees at a special rate.

DThey have lower management expense ratios (MERs).

Show Suggested Answer

Suggested Answer: D

Group segregated funds typically have lower Management Expense Ratios (MERs) than individual segregated funds because group plans benefit from economies of scale and pooled investment options. LLQP highlights that group plans often have reduced fees compared to individual plans due to collective investment and reduced administrative costs.

Options A and B are incorrect as group plans typically feature lower costs and don't often charge switching fees. Option C is incorrect as individual segregated funds typically have more flexible death benefit guarantee options, not special rates in group plans.

by Dana at Oct 22, 2024, 06:37 AM

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