prudent man rule(redirected from Prudent Person Principle)
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Prudent Man Rule
prudent man rule
Prudent man rule.
The prudent man rule is the basic standard a fiduciary, who is responsible for other people's money, must meet.
It mandates acting as a thoughtful and careful person would, given a particular set of circumstances. A trustee, for example, observes the prudent man rule by preserving a trust's assets for its beneficiaries.
The prudent man rule has sometimes been described as a defensive approach to money management, putting greater emphasis on preservation than on growth. The newer prudent investor rule differs by putting greater emphasis on achieving a reasonable rate of return and by delegating decision-making to investment professionals.