Assets Under Management

Definition

Assets Under Management (AUM) is the total market value of financial assets that an investment advisor or wealth management firm manages on behalf of clients. AUM is the primary revenue driver for wealth advisors, who typically charge a percentage-based management fee.

Context

AUM is a critical concept in the Deal Sourcery discussion of COI economics. Chris Reilly explains in Ep. 23 that when a business owner sells a company — particularly a $200M+ transaction — the resulting liquidity event generates substantial new assets for the owner's wealth advisor to manage. This AUM capture opportunity dwarfs any referral fees and creates a powerful incentive for wealth advisors to stay involved in the transaction process. This dynamic underpins the AUM Defense Strategy: if a wealth advisor doesn't bring their own independent banking partner, a larger bank with integrated wealth capabilities could capture both the deal mandate and the client's existing AUM.

Related Terms

• Centers of Influence — wealth advisors are Tier 1 COIs partly because of AUM incentives
• AUM Defense Strategy — concept built around AUM protection
• Boutique Investment Bank — independent banks that don't compete for AUM