Assets under Management Agreement

An assets under management (AUM) agreement is a legal document that outlines the relationship between a financial advisor and a client. It is a critical document that establishes the scope of services offered, the fees involved, and the responsibilities of each party.

The AUM agreement allows financial advisors to manage their clients` investments and make decisions on their behalf. In return, the client agrees to pay the advisor a fee based on the value of the assets under management.

The agreement specifies the types of investments that will be included in the portfolio and the level of risk that the client is comfortable with. It also outlines the advisor`s responsibilities, such as providing regular reports on the portfolio`s performance, communicating with the client about any changes to the portfolio, and maintaining the necessary documentation.

One of the essential aspects of an AUM agreement is the fee structure. Most advisors charge a percentage of the assets under management, typically around 1%. This fee covers the advisor`s time and expertise and is a standard industry practice.

However, some advisors may also charge additional fees for specific services, such as financial planning or tax preparation. It is essential to clarify any additional fees upfront to avoid any surprises down the line.

Furthermore, the agreement specifies the terms of the relationship between the advisor and the client. It outlines the length of the agreement, any termination clauses, and any restrictions on the advisor`s ability to make changes to the portfolio.

In conclusion, an assets under management agreement is a crucial document that establishes the relationship between a financial advisor and their client. It is essential to review this document carefully before signing to ensure that both parties understand their rights and obligations. A clear understanding of the terms of the agreement can help avoid any misunderstandings or disagreements down the line.