For assets under management (AUM), the advisor or firm serves as a fiduciary, with its fiduciary duties determined by whether it is acting as an investment adviser, trustee, or other type of advisor.  The firm may or may not be required to consult with the owner of the assets or another party before exercising its discretion to manage the assets. 

Authority over AUM is provided by and defined in an investment advisory agreement, trust agreement, financial services agreement, or other governing document. It may be subject to restrictions or guidelines in an investment policy statement or similar arrangement between the firm and the owner of the assets.

A firm’s assets under management are distinct from its assets under advisement (AUA).  AUA describes assets for which a firm is paid to provide advisory services, but either those services are not continuous and regular or the firm does not have the authority to use its discretion to implement transactions involving them.  

AUM and AUA services are provided by various types of firms subject to different regulatory oversight and reporting requirements, including registered investment advisers (RIAs), broker-dealers, banks, public trust companies, private trust companies, and single family offices. In the U.S., the SEC regulates an RIA’s Form ADV that must show how AUM is calculated.  

When comparing AUM or AUA for different types of firms, it is important to obtain explanations of how each firm calculates these amounts.  Some firms include AUM in their calculation of AUA without making it clear they are doing so, while others report AUM and AUA separately.  To address this problem if these amounts are being evaluated, firms should be asked to explain how they calculate their AUA.  If they include their AUM in that calculation, they should be asked to report the amounts separately.