The wealth management industry is full of meaningless jargon, acronyms and statistics. Assets Under Management (AUM) is one of the most worthless measurements of a firm’s success – here’s why.
Bigger is NOT better. Big AUM numbers mean you’re a good asset gatherer. Unfortunately, being a good salesperson has absolutely nothing to do with being a good advisor.
The best advisors focus on planning. The value of planning is not measured by AUM. So many firms get this wrong. They charge for AUM and investment management and “give away” planning advice for free. It should be the opposite. Planning is the value.
The biggest assets aren’t AUM. Often, the most valuable assets on a client’s balance sheet don’t qualify as AUM. Instead these assets are real estate or private businesses or other unmanaged assets. If an advisor is overly focused on AUM, they may ignore these massive assets to the detriment of the client.
The wealth management industry and much of the media who covers it are lazy. They want an easy way to tell the good companies from the bad. They settle on AUM because it’s a defined and measurable term. Unfortunately, it’s useless. The best advisors ignore AUM and focus on adding value and impacting their clients’ lives. Are you one of these advisors? Plug-in today