What does "asset under management" (AUM) refer to?

"Assets under management" (AUM) specifically refers to the total market value of the investments that a financial advisor or firm manages on behalf of clients. It is a key metric in the financial advisory industry because it reflects the size and success of the advisory practice and can influence fees and revenue. AUM can include a wide range of investment vehicles such as stocks, bonds, mutual funds, and other securities and assets that the advisor is responsible for managing.

Understanding AUM is important for evaluating a financial firm’s performance and credibility in the marketplace. The higher the AUM, the more resources the firm typically has at its disposal to provide comprehensive investment services to clients. Additionally, AUM can impact the scale of operations, affecting everything from fee structures to the ability to attract new business.

The other options do not accurately define AUM. The number of clients served, total reserves held by a firm, and total commissions earned represent different aspects of a financial advisor's practice but do not reflect the value of the investments managed directly.