But financial advisers use the AUM fee model because it aligns their interests with their clients' interests. As the client's assets grow, so does the adviser's fee, which incentivizes the adviser to make investment decisions that will increase the client's wealth. Conversely, that annual AUM fee will drop whenever the portfolio’s value drops.
Is Aum a financial institution?
AUM isn’t the whole story of a financial institution, however. A firm with two high-net-worth clients, each with $5 million in assets, will have more in AUM than a firm with 25 clients, each with $100,000 in assets. However, the second firm has seen 23 more people choose it to handle their money than the first firm.
What is assets under management (AUM)?
Assets under management is a way to measure the amount of money that is managed by a firm or entity such as a fund. Here’s what you should know about AUM including how it’s calculated and what it means for your fees. Assets under management measures the market value of the investments managed by a particular firm or fund.
