Prudent-Person Rule (redirected from prudent person rule)

Prudent-Person Rule

A legal maxim restricting the discretion in a client's account to investments that a prudent person seeking reasonable income and preservation of capital might buy for his or her own portfolio. Also called the Prudent Man Rule.

Notes:

This rule is intended to protect investors using the services of an investment advisor from shady, risky, or otherwise poor investments, such as penny stocks.

See also: Advisor, Blue Chip Stock, Broker, Fixed Income, Government Security, Penny Stock, Preservation of Capital, Treasury Bond