Many companies and individuals use assets under management (AUM) to determine the worth of their investment funds. These investments are dependent on a fund or company’s money flow, and money flow fluctuates with changes in underlying investments. Therefore, assessment of assets reports generated every 90 days provides a mean of assets managed with fluctuation details.

When a consultant for assets under management is under contract, that person has the authority to make financial recommendations as well as buy and sell securities for a client. That is why it is so important to know the investment manager’s experience, record of accomplishment and specialization. A financial adviser makes big decisions that affect short- and long-term financial goals, so consider the following assets under management information:

1. Investments included when calculating assets under management

2. Fees charged by an assets under management expert

3. Advisers competent to give assets under management advice

Action Steps
The best contacts and resources to help you get it done

Understand items included when calculating assets under management

Assets under management (AUM) include the total market value of a client's investments. To meet Security Exchange Commission (SEC) criteria for an AUM, portfolio managers or financial service companies must provide consistent supervision or management with discretionary authority over the investment account.

I recommend: The Center for Due Diligence provides an accurate description of SEC requirements for inclusion of assets under management. AdvisorMax and SourceMedia describe the part of securities portfolios needed to accurately calculate AUM.

Know your financial planner's charges for assets under management advice and action

Charges for assets under management consulting vary from a fee-based model (client pays a set amount continuously) to an advice-and-compensation model (adviser charges a percentage of the assets under management). The fee-based model is growing in popularity because, as long as the client is pleased with the portfolio, it guarantees a continuous flow of revenue for the planner.

I recommend: Penton Media provides an explanation with support for fee-based models, and Cable News Network discusses fair management fees.

Find a consultant for assets under management that works for you

You can blindly choose an adviser out of the phone book or methodically research financial planners. If you call a brokerage house out of the phone book, depending on the amount of money you have to invest, your assigned manager will more than likely have very little experience. When researching financial planners, be aware of the different designations planners earn and remember that a particular designation does not guarantee a planner that fits your needs.

I recommend: In an article by Bankrate on choosing a financial adviser, you will find designations for financial advisers and 10 questions to ask a perspective adviser. For more in-depth reasons to ask the top 10 questions when interviewing a perspective financial planner, and the option to search for a planner, see Certified Financial Planner Board of Standards.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Familiarize yourself with the terms of your financial adviser's contract (advisory availability, fees and practices)before deciding whether that particular assets under management expert is appropriate for your business.