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Assets under management is a metric that measures the market value of assets that an investment company manages for investors.

Views on exactly what assets under management means vary. Essentially, it refers to the amount of a person’s – or group of people’s – assets that a firm or individual controls. It factors the growth and decline of the investments, plus the amount of money the investor puts in and takes out.

Some financial institutions count bank deposits, mutual funds and institutional money in their calculations. Others limit their calculations to funds under discretionary management, where an advisor assumes responsibility for an investor’s account.

Regardless, it’s important that investors understand the concept and application of the term.

Many companies compare their assets under management with competitors to measure their success. And some advisors charge fees based on a percentage of their assets under management. Understanding how a financial advisor arrived at their assets under management figure helps an investor understand what he’s paying for.

It’s also important for determining whether an advisor must register with the SEC.

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