Prudent Man Rule Legal Meaning and Definition

Here is a simplified definition of the legal term Prudent Man Rule.

Prudent Man Rule (noun): A legal guideline used in finance and investment, advising that fund managers or trustees should handle others' wealth as a cautious and sensible individual would manage their own. Its aim is to generate reasonable profits while minimizing potential risks. The "Prudent Man" symbolizes a hypothetical individual who makes thought-out, practical decisions to protect and increase investments.