Glossary
AUM (Assets Under Management)
AUM (assets under management) is the total market value of the investments a financial firm manages on behalf of its clients.
AUM is used two ways: as a measure of a firm's size, and as the base for the most common advisory fee structure, in which an adviser charges a percentage of the assets it manages each year (for example, 1% of AUM).
Why it matters in practice
When a fee is quoted as a percentage of AUM, the dollar cost scales with the account — 1% of $100,000 is $1,000 a year. An adviser's Form ADV discloses both its total AUM and its fee schedule, so the two can be checked rather than taken on faith. Investors comparing advisers may find it useful to convert percentage fees into dollars for their own balance.
Related terms: Fee-Only · Form ADV · Registered Investment Adviser (RIA) · Expense Ratio