What is the definition of "assets under management" (AUM)?

The definition of "assets under management" (AUM) is the total market value of assets managed by an adviser. This encompasses all the investments that the adviser has been entrusted to manage on behalf of clients. AUM is a critical metric in the investment advisory industry as it reflects the size and scale of the advisory firm. Additionally, it can influence an adviser's fee structure, as many firms charge management fees based on a percentage of AUM. Understanding AUM is essential for compliance professionals because it helps to gauge the firm's capacity in handling client funds and assists in the evaluation of regulatory requirements associated with the level of assets being managed.