Assets Under Management. Common term and practice used by financial planners, whereby, a percent of your assets under the planner’s care is taken from the investor’s portfolio. Often is 1%. Some charge more, which is unreasonable. Question the ethics of this seriously. Ask your planner to convey the percent in dollar terms instead. Example: If you invest $500,000 when you start with your planner, the charge equates to $5,000 annually. Ask yourself, and s/he, what you are getting in return for your payment in terms of work and advice. As your account grows to $1,000,000, your planner’s take increases to $10,000 annually. Are you getting twice the benefit and advice and time? Doubtful. Given the new emphasis on the requirement of financial planners to be a Fiduciary, the AUM model has come under considerable scrutiny and criticism. LEARN MORE BY READING MY BOOK: FATAL FUNDS.
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