Agency conflicts always exist in the investment management business because the entire industry is based on handling someone else's money.

Question

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Agency conflicts arise when a person (the principal) hires someone else (the agent) to act on their behalf, but the agent prioritizes their own interests over the principal's. In the investment management business, the investment manager (agent) handles someone else's money (principal), and may prioritize their own interests (maximizing their own fees or incentives) over the client's best interest. Therefore, agency conflicts are inherent to the investment management industry.

Agency Conflicts Always Exist in the Investment Management Business Because