Question
The financial industry frequently experiences scenarios in which individuals (agents) act on behalf of an investor or client (principals). The corporate form of ownership explicitly
The financial industry frequently experiences scenarios in which individuals (agents) act on behalf of an investor or client (principals). The corporate form of ownership explicitly relies upon this institution with the Board of Directors and management acting on behalf of stockholders. Increasingly, many personal finance transactions also rely upon the use of intermediaries who act on behalf of customers, such as mutual fund managers, investment advisers, insurance agents, or stock traders. This relationship can create conflicts in which the agent does not act in the best interest of the principal.
- What do the verses listed above suggest about the likelihood of these conflicts?
- What is the ultimate source of the conflict? In other words, what causes individuals to act in a manner that is not in the best interest of the principal?
- From a financial perspective, what safeguards could be pout in place to protect the principal?
- When a principal is harmed, what recourse should be taken? What is a Christ-like response to these situations?
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