The Investment Process Required by the Uniform Prudent Investor Act

Maloney, Eugene F.
November 1999
Journal of Financial Planning;Nov99, Vol. 12 Issue 9, p78
Academic Journal
This article discusses the investment process as required by the Uniform Prudent Investor Act, UPIA, in the U.S. There is, as of yet, little case law regarding the UPIA. Because of its significant changes from prior law, it is possible that it may take some time for the case law to develop. However, the Restatement, comments to the UPIA and other formative materials provide a wealth of background as to its intended purposes. The UPIA sets a more demanding process-direct standard for professional trustees than that of prior law. While the trust investment process has always been important, the UPIA adds substantive elements. A paper trail will be of little value unless it reflects an understanding and consideration of risk in accordance with the basic tenets of modern portfolio theory. The UPIA should protect a trustee who observes this process but puts at risk a trustee who does not, regardless of the success of the portfolio.


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