Look at Fredo's behaviors for the answer. At the wedding, which was a big social event and opportunity to network, Fredo chooses to get hammered. When Don Vito is shot, Fredo has a great opportunity to step up and gun those two bastards down as they ran away. Instead he fumbles his gun around (looking like he had never before even held a piece) and goes into shock. At Anthony's first communion party, he let's his wife make him look like a fool. He was an embarrassment to the family and not cut out for this business - plain and simple.