Answer
AUM is a key indicator of the total value of assets managed by a financial institution or family office on behalf of clients.
Definition:
AUM stands for Assets Under Management. It represents the total market value of investments—such as stocks, bonds, real estate, and alternative assets—that a financial institution, wealth manager, or Family Office manages for clients.
Significance in Wealth Management:
AUM reflects both the scale and responsibility of the institution. Higher AUM typically means:
- Greater bargaining power with banks and custodians
- Broader access to exclusive investment products
- Enhanced ability to negotiate fees and secure liquidity
Calculation:
AUM is not static—it fluctuates with market performance, new deposits, and withdrawals.
For example:
If a Family Office oversees USD 200M in equities, USD 50M in private equity, and USD 50M in real estate, its AUM totals USD 300M.
Why It Matters to Clients:
- Helps assess the size and stability of a Family Office or wealth manager.
- Indicates experience in handling complex portfolios.
- Often used to benchmark service tiers (e.g., Private Banking vs. Ultra‑High‑Net‑Worth desks).
FAQ:
Q: Does AUM include leverage or borrowed funds?
A: Generally no, it reflects client assets under management, not liabilities.
Q: Is a higher AUM always better?
A: Not always—smaller offices may provide more personalized service despite a lower AUM.
User Comments:
- “Knowing our AUM helped us negotiate better custody fees.”
- “We track AUM quarterly to measure our Family Office growth.”
Editor’s Note:
AUM is more than a number—it’s a snapshot of responsibility, scale, and trust.
Tags: AUM, assets under management, family office metrics, portfolio management