The total market value of securities portfolios for which an SEC-regulated registered investment advisory (RIA) or other firm provides continuous and regular supervisory or management services for a client.
AUM may consist of liquid or illiquid assets for which a firm or advisor has a fiduciary responsibility to oversee and manage, using their full discretion, on behalf of the client. It may not represent the full set of assets a client may have altogether, since some of those client’s assets may be held and managed by other advisors or firms. But it does represent the set of assets that are managed by one particular advisor or firm.
For example, an advisor may directly manage a variety of asset accounts for a client under a formal client agreement, granting the firm discretion to make decisions about the assets within defined limits. The client may also ask the advisor to include in the overall financial and investment planning several outside accounts that are managed by others but part of the client’s total wealth. The portion of the client’s wealth directly managed by the advisor comprises the assets under management (AUM) while the additional outside assets are part of assets under advisement (AUA).
AUM and AUA are commonly used in wealth management pricing models where a client is charged a fee based on a percentage of AUM or AUA.
See Also: AUM
Woodson, William I., and Edward V. Marshall. The Family Office: a comprehensive guide for advisers, practitioners, and students. Columbia University Press, 2021.
Investopedia. “Assets Under Management.” Last modified June 1, 2024. https://www.investopedia.com/terms/a/aum.asp#toc-what-are-assets-under-management-aum
