What is meant by the principal-agent relationship in fiduciary services?

The principal-agent relationship in fiduciary services is characterized by the agent being authorized to act on the principal's behalf. This relationship is fundamental to fiduciary duties, as it defines the trust and responsibility bestowed upon the agent to manage the principal's interests.

In this context, the agent is expected to act in the best interests of the principal, which involves a duty of care and loyalty. This means that the agent must prioritize the principal's needs and make decisions that are beneficial to the principal, often involving financial or legal matters.

When exploring the other choices, it's clear that they do not accurately reflect the essence of the principal-agent relationship. While the agent must act within the scope of their authority and in alignment with the principal's interests, the correct answer underscores the core aspect of this relationship: the responsibility of the agent to act on behalf of the principal, thereby establishing a connection that is built on trust and fiduciary duty.