An AUM fee is an annual charge equal to a percentage of the investments an advisor manages for you, usually billed quarterly from the account.
Assets under management (AUM) is the market value of the investments an advisor manages. An AUM fee scales with it: the larger the portfolio, the larger the fee in dollars, and many firms lower the percentage at higher balances.
AUM pricing often includes financial planning along with investment management. It is the most common fee model among fee-only firms, but it is not the only one; flat-fee, hourly, and subscription models exist for people who want advice without paying a percentage of their portfolio.
How to check
A firm's fee schedule, including breakpoints, is in Item 5 of its Form ADV Part 2A brochure.
Sources
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