What is the difference between aua and aum

Then the total market value of the assets under management would be INR crores. Sometimes the asset management companies also take into consideration the pension funds handled by them under asset under management formula. Also, sometimes overall cash, mutual funds, and fixed deposits are not considered. Instead, only the capital that can be traded by the executive on behalf of the client is calculated. For ex: — Changes in the price of a land in which money has been invested by the firm.

Keeping track of it is extremely important as it helps to manage funds better and to exit when returns are negative. AUM helps to build the market value of the firm. It can be used as a market tool to attract potential new customers, and it was able to generate sufficient returns. This increases the credibility of the Investment firm or brokerage house or portfolio manager, which will eventually help to get more clients and more capital for the investment firm.

The assets in an AUA situation are still controlled by the clients themselves. The financial service company simply provides what's called custodial services. In most walks of life, "custodial services" responds to the stuff janitors do - taking out the trash, sweeping the floors, unclogging the toilet.

Think of "custodial services" in the context of assets as the financial equivalent to that. It can include stuff like overseeing tax-related functions or providing accounting services.

It can also include a different context of "custodial," like having custody of something. The assets measured in the AUA figure includes assets that the company holds in custody for clients, though the firm doesn't actively manage the asset.

So, the company holds the stock certificates or the bonds for the client, and can sell them at the client's request. But the firm wouldn't make any decisions without the client instructing them to do so. What are Assets Under Management? The assets under management figure is the market value of all of the investment assets that a financial instituti What is Diversified Mutual Fund?

Advisors must go through training or meet criteria to qualify for participation in the program. There is often both a senior- and junior-level version of the program, differentiated by how much flexibility is given to the advisor in building portfolios. Separate Account: Programs in which asset managers administer portfolios of individual securities for investors in discretionary separate accounts. A bundled asset-based fee often 1. There are three classifications of separate account programs; single-contract programs, dual-contract programs, and proprietary separate accounts.

Single-Contract Programs : Single-contract arrangements in which a sanctioned roster of asset managers is offered on the platform and in which sponsors determine minimums and management fees. Dual-Contract Programs : In dual-contract programs, there are a virtually unlimited number of managers available on the platform, and asset managers maintain an additional contract directly with the investor. Unified Managed Account: Discretionary and nondiscretionary fee-based programs for which multiple investment vehicles are used to build client portfolios in a single environment.

Overlay management is a necessary feature of UMA programs. Fee-Based Brokerage: Nondiscretionary, nonadvisory programs in which advice is only incidental to brokerage services. These accounts offer clients a flat, asset-based fee for all trading activity instead of a commission for individual trades.

These programs are not typically targeted to day traders, and are increasingly incorporating financial planning and advisory elements. Here, the advisor does not have discretion, or it is on a temporary or limited basis. Clients are charged a fee in lieu of commissions, but there cannot be a separate fee charged for advice.

Advisors who offer these accounts and their firms need to register only with the NASD and have only a suitability responsibility to the client. In late March , the D. Therefore, Cerulli no longer reports assets for fee-based brokerage programs. Discretion: For the purposes of analysis, separate account programs are no longer broken out between discretionary and nondiscretionary. Cerulli analysts believe this will allow for a more concise view of discretionary and nondiscretionary trends among other programs.

With the elimination of fee-based brokerage in 3Q , a significant portion of assets were transferred into rep-as-advisor programs, because of the advisory nature of the program. The former fee-based brokerage assets are now included in the discretionary breakdown from 4Q to present. Discretionary: The home office or advisor has the ability to make changes, adjustments to asset allocations and investment managers without getting the express authorization of the clients.

Nondiscretionary: Arrangements where advisors and firms make recommendations regarding manager selection and asset allocation; however all control over the portfolio is retained by the client. Client must authorize all changes made to the portfolio. Due to the flexibility the advisor has to build client portfolios, fee-based brokerage, rep as advisor, and rep as portfolio manager are classified as open programs.

Advisors and clients do not have the flexibility to adjust asset allocations or change managers. Open: As the name suggests, these programs offer advisors a great degree of flexibility in building fee-based portfolios for clients. Asset managers are hired as research providers and periodically submit portfolio holdings information to a program sponsor or overlay manager for individual investors. This type of separate account is most often used within a unified managed account UMA program.

Cerulli defines multiaffiliate a. In contrast, we define managers of managers as those who work largely or solely with unaffiliated subadvisors. The definition of OCIO and breadth of services provided under these types of relationships is wide-ranging. The types of firms offering outsourcing are diverse, and include global asset managers with outsourcing divisions, managers of managers, former CIOs who offer dedicated OCIO services, and investment consultants that typically also provide traditional consulting services.

OCIO providers advise on a range of services, including, but not limited to, investment planning, asset allocation, manager hiring and firing, asset-liability matching, and portfolio monitoring. The goal of overlay management is to simplify, centralize, and systematize a process that has been occurring throughout the fee-based industry for years. In its most basic form, overlay management facilitates the acceptance of model portfolios and the execution based on that model for client accounts.

Originally, the benefit of overlay was to systematically realize the tax-management features of separate accounts e. The overlay process sits between the intellectual capital of the asset manager i. Institutional assets not captured by the investment vehicles listed, as well as non-hedge fund alternatives. A set of financial services products with a distinct pricing and accounting structure, often bundled as a turnkey recordkeeping and administrative system for customer and more often intermediary use.

There are two types of platforms: external and internal. Portfolio construction is the approach by which investment portfolios are assembled and managed. Cerulli views portfolio construction as more holistic and investor outcome-focused than portfolio management, which we view as less encompassing and principally investment-centric.

Examples of approaches to portfolio construction include style-box diversification and core satellite investing. Money Manager: A financial advisor who builds portfolios of individual securities or funds for clients and focuses exclusively on asset management.

Investment Planner: A financial advisor who emphasizes asset management as their primary service, but may offer modular planning services such as retirement planning or education funding. Planning primarily focuses on investment, retirement, and education planning. Financial Planner: A financial advisor who develops complete financial plans for clients based on an extensive analysis of their assets and liabilities. The advisor provides financial planning services for clients on a personalized basis e.

Wealth Manager: A financial advisor who specializes in complex wealth management and transfer issues, including stock option planning, executive compensations, complex trust and estate planning, and charitable giving. Despite the differences between traditional advisory firms and other intermediary channels, households may not correctly identify the type of channel into which their primary provider falls. As a way to better interpret the respondent data, Cerulli analysts reassign or reclassify each individual respondent into a channel based on their responses to the firm name, whether they are assigned a representative or advisor, wealth levels, and the type of accounts they maintain with their provider.

The advisor could be employed by a private client group e. Trust , or a trust company e. Independent: Client works with an assigned representative who is an independent advisor including IBDs, dually registered advisors, and RIAs. Direct: Client maintains accounts with a direct provider e.

Retirement plan provider: Client has a qualified retirement account set up through their employer. The retirement plan provider is the firm that provides recordkeeping services for the plan. It is important to understand the distinction Cerulli analysts make when discussing the primary provider and primary advisor.

Primary providers deliver access to products or services through their platform. Primary advisors offer guidance in making the decision to purchase financial products or services.

Additionally, households place their trust in the opinion of their advisor. However, some households that have another trusted advisor when making final investment decisions will not have a primary advisor. Furthermore, other households will not maintain a primary advisor relationship because a portion of households do not rely on recommendations when making financial decisions. As all respondents in the survey maintain financial accounts, they are likely to have a primary provider.

The value provided to end-clients is access to products and services. The primary provider may be any type of firm at which the household maintains accounts including banks, direct providers, and advisory firms e. All households have a primary provider. Primary Advisor: Individual or firm that the household consults most often when making financial decisions. The value provided to end-clients are consulting on products and services and providing financial guidance and advice.

A primary advisor does not necessarily need to offer advice in the legal sense and may be a non-advisory firm e. TD Ameritrade. Not all households have a primary advisor.

Private Client Groups generally have a national presence, but only operating in select markets. Includes non k assets, money purchase plans, profit sharing plans, Keoghs, and Taft-Hartley DC plans.

The Productivity Index PX is a measure of advisor productivity as measured by AUM per advisor headcount in relation to the average productivity for the industry as a whole. Cerulli defines a professional buyer as any person or group using institutional-quality research to perform manager selection.

Cerulli considers retail asset managemen t to consist of investment management firms that pool the assets of individual investors and invest them in vehicles with declared financial strategies and objectives e. Cerulli defines a retail direct sale as any sale of an investment e.

Representatives are mainly salary-based, and new business development is largely a function of firm-level marketing and self-directed options. Any advice delivered is corporate and not advisor-based. Examples of retail direct sales or firms:. Retail Direct Investor Platforms Firms such as Charles Schwab and Fidelity that offer a wide selection of mutual funds from different fund families including no-load to investors via one broker and receive a single report.

These firms are increasingly providing advice and guidance services, such as financial planning, managed accounts, and calculators.