Advised Assets represent the total value of assets for which a financial advisor or management firm provides investment guidance, regardless of whether the assets are directly managed.
Advised Assets refer to the aggregate value of all assets that a financial advisor, wealth manager, or advisory firm provides investment advice on. This includes assets under direct discretionary management as well as assets for which advisory services are provided without direct control over investment decisions. The metric captures the scope of an advisor's influence over client wealth and can include various asset types such as equities, fixed income, alternative investments, and cash equivalents.
Understanding Advised Assets is pivotal in evaluating the reach and business scale of financial advisors and family offices. It impacts revenue models, as many advisors charge fees based on the total value of assets they advise on, even if they do not directly manage those assets. From a family office perspective, tracking advised assets helps in governance by clarifying which assets are subject to advisory guidance versus direct control, enhancing transparency and accountability. Furthermore, the classification influences tax planning and reporting since assets may have different tax implications depending on custody and management status.
A wealth manager advises a family office on a portfolio worth $200 million but only manages $150 million of those investments directly. The advised assets total $200 million, reflecting the advisor's comprehensive guidance scope, while the AUM stands at $150 million, denoting assets under direct management.
Advised Assets vs Assets Under Management (AUM)
While both measures relate to assets handled by an advisor, Advised Assets include assets on which advice is given regardless of management control, whereas Assets Under Management (AUM) only counts assets that the advisor manages directly. This distinction affects fee structures and reporting, with AUM often commanding higher management fees due to active portfolio oversight.
Does advised assets include assets that the advisor does not directly manage?
Yes, advised assets account for all assets on which the advisor provides investment advice, even if they do not have direct management authority over those assets.
How is advised assets different from Assets Under Management (AUM)?
Advised assets encompass all assets receiving advisory services, while AUM refers specifically to assets the advisor actively manages and makes investment decisions for.
Why is tracking advised assets important for wealth managers?
Tracking advised assets helps wealth managers measure the full extent of their advisory relationship, inform fee structures, and demonstrate business growth beyond just assets under direct management.
