Final answer:
Engaging in self-dealing is considered a source of fiduciary liability because it represents a breach of the duty to act in the best interest of clients or beneficiaries. The correct option is a.
Step-by-step explanation:
One of the options listed is considered a source of fiduciary liability: Engaging in self-dealing. Fiduciary liability arises when there is a breach of fiduciary duty.
Roles such as trustees, investment advisors, or any individual or entity in a position of trust have a duty to act in the best interest of their beneficiaries or clients.
Self-dealing, which refers to a transaction in which a fiduciary acts in their own best interest rather than in the interests of their clients or beneficiaries, is a direct breach of this duty. Therefore, it is a source of fiduciary liability.
The other options like following the terms of the governing document, documenting asset reviews, and diversifying investments are generally considered responsible fiduciary practices, not sources of liability. The correct option is a.