Final answer:
According to the Prudent Investor Act, a registered investment adviser should prioritize understanding Risk Tolerance when managing trust assets. This refers to ensuring investments align with the trust’s financial objectives and risk profile.
Step-by-step explanation:
Under the provisions of the Prudent Investor Act, a registered investment adviser should primarily consider the Risk Tolerance when investing and managing trust assets. This means ensuring that investments are suitable to the needs, objectives, and circumstances of the trust based on the trust's risk profile. Speculation and short-term gains, due to their inherent risks and unpredictable nature, are generally considered unsuitable. The act also does not require market timing, which is a strategy of making buy or sell decisions of financial assets by attempting to predict future market price movements.
Therefore, while an adviser can consider all these factors, the emphasis is on the risk tolerance, overall trust objectives, and long-term financial stability. This is rather than attempting to predict market fluctuations or aiming for quick financial gains.
Learn more about Prudent Investor Act