Question 13 - CSI IFC Exam Questions [May 2026 Update]

Q: 13

Sarah and Kyle are a married couple. They are both 34 years of age and work as teachers. Their combined annual income is $130,000. They are able to save $800 each month. They own a home worth $340,000 with a $120,000 mortgage. Since they work for the same employer, they have the same defined benefit pension plan. Other than a tax-free savings account (TFSA) in Kyle’s name with $5,000, they do not have any other assets. They are avid sailors and want to save towards a purchase of a sailboat. For the type of sailboat they want, they estimate it should cost around $65,000. They want you to recommend an investment for their monthly savings to help them achieve their goal faster. What question should you ask them next?

Options

Correct Answer:

Explanation

The couple has clearly stated their goal (a sailboat), the cost ($65,000), and their savings capacity ($800/month). However, the most critical missing piece of information for making a suitable investment recommendation is the time horizon. Asking about their investment objective for these savings will lead to a discussion about when they want to purchase the sailboat. This time frame is essential for determining the appropriate level of risk and the type of investment vehicle to recommend. A short-term goal requires a different strategy than a long-term one.

Why Incorrect

A. How would you feel if you lost part of your money in the short-term?: This assesses risk tolerance, which is crucial. However, the appropriate level of risk cannot be determined without first knowing the investment time horizon.

C. What is your net worth?: The couple has already provided sufficient information (assets and liabilities) to estimate their net worth, making this question redundant as the immediate next step.

D. How much do you make individually each year?: While useful for detailed tax planning, their combined income and savings rate are sufficient for this specific goal-based investment recommendation. It is not the most critical next question.

References

Mutual Fund Dealers Association of Canada (MFDA). (2021). Rule 2.2.1 ‘Know-Your-Client’. MFDA Rules. (Outlines the regulatory requirement to learn the essential facts relative to each client, including their investment objectives and time horizon).

Baldwin, B. G., & Falle, K. (2018). The new investment paradigm: A guide to personal financial success in the new millennium. John Wiley & Sons. Chapter 3: "Establishing Investment Objectives". (Academic text emphasizing that defining objectives, including a time horizon, is the foundational step in the investment process).

Canadian Securities Institute. (2022). Investment Funds in Canada Course Textbook, Volume 1, Chapter 2: The Know Your Client Communication Process, Section 2.2: Information about the Client. (Details the essential information to gather, prioritizing investment objectives and time horizon).

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