What are AUM fees?

Definition: This is the most common client fee structure used by RIAs. The fee is expressed in basis points (bps), and is calculated against the total assets under management in the client’s account. While variations exist, the most common approach is to charge the fee on a quarterly pro-rated basis.

When used in an RIA context: “The RIA charges their typical client a 1% AUM fee for the services they provide.”

See also: Episode #126, Assets Under Management, AUM, Basis Points