Aum finance8/28/2023 ![]() Why AUM MattersĪmong financial advisor firms, mutual funds and other financial institutions, AUM is quite a significant metric. Rather, it refers to the assets you’ve placed in her care. That’s not referring to all of the assets she manages. An advisor may charge 2% of your assets under management for her services. This is often the case when discussing financial advisor fees, for example. You might also hear your advisor use the term to refer to the value of the investments she’s managing for you alone. Usually, when you hear about assets under management, it’s referring to the entirety of the assets that the advisor or broker is managing at any given time. ![]() This is sometimes referred to as assets under advisement. Some money managers also include client bank accounts and separate mutual fund shares in their calculations, since they advise clients on how much to keep in the bank and how much to put in mutual funds. In its instructions to financial advisors for filling out Form ADV, the Securities and Exchange Commission (SEC) says to only include “the securities portfolios for which you provide continuous and regular supervisory or management services.” As a general rule, AUM refers only to the values of those funds that it’s directly managing and investing on behalf of its clients. Where institutions most frequently differ in formulating AUM is regarding which specific investments should be included in the calculation. The AUM is most important when considering a financial advisor to help you invest or when looking into a potential mutual fund to invest into. While some institutions have differing methods of formulating it, assets under management is the value of the investments that some entity is in charge of managing, typically on behalf of a client or many clients.
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