What happens if an asset manager fails to meet fiduciary duty?

Failing to meet fiduciary duty can lead to serious repercussions for an asset manager, primarily because fiduciary duty is a legal and ethical obligation to act in the best interest of the clients. When an asset manager does not uphold this duty, they risk legal consequences such as lawsuits or regulatory actions. This can result in financial penalties, loss of licenses, or other disciplinary measures that can significantly damage their reputation and career.

By contrast, options suggesting that they may receive additional compensation, improve their negotiation skills, or be rewarded with more clients do not align with the principles of fiduciary duty. In fact, breaches of this duty typically erode trust, making it less likely that they would gain more clients or be compensated further. Therefore, a failure to meet fiduciary duty primarily brings about legal consequences, emphasizing the importance of maintaining ethical standards in asset management.