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What is Assets Under Management?

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  • Written By: K.M. Doyle
  • Edited By: W. Everett
  • Last Modified Date: 19 November 2016
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Assets under management is the combined value of all of the investments that are held or managed by a brokerage firm or investment advisor on behalf of clients, or the assets held by a single client. Assets under management (AUM) is a measure of the success of a firm or a broker, since the number grows as new clients come to the firm or broker, or as existing clients’ investments appreciate. In the United States, once a firm has more than $30 million US Dollars (USD) in assets under management, it must register with the Securities and Exchange Commission.

An investor’s assets under management may determine the type of services he receives from his advisor or brokerage firm. Many firms have thresholds, above which investors will qualify for additional services. The client’s investable assets may also determine if he is qualified for a certain type of investment, as some investments have minimum purchase requirements.

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An investor who has a significant amount of money to invest will often put that money with an investment advisor who will determine how to invest it. This service is called money management or investment management, because the investment advisor is actively managing the money. To do that, the advisor will buy and sell investments according to their potential, according to the research of the advisor and/or his firm. The investor will determine how much autonomy he wants the advisor to have. Some investors want to approve every trade, and others only want to be informed if an entire position is liquidated or if a trade is above a certain dollar amount.

For high net worth individuals, many advisors offer a more comprehensive service known as wealth management. In addition to investments, these advisors may offer tax or accounting services as well as financial planning or estate planning. Wealth management services are typically offered for a fee that is calculated as a percentage of the client’s assets under management.

Additionally, banks may offer private banking services to high net worth clients. Private banking services include traditional investments such as mutual funds, as well as more sophisticated investments such as hedge funds. Like wealth management services, private banking may also include other services such as financial planning, estate planning, or accounting and tax services. The success of a private bank is also typically measured by its assets under management, so it is in the bank’s best interest to manage all of a client’s money, and to ensure that the money grows as much as possible.

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