An AUM fee is any fee that investment advisers, mutual funds, and other financial professionals charge based on assets under management (AUM). AUM measures the total market value of all financial assets which an investment company, financial adviser, or institution manages on behalf of their clients/investors.
How are AUM fees charged?
AUM fees are essentially taken out of your account as a percentage of the account’s asset value. Suppose your adviser charges a 1% AUM fee and your account has $100,000 in it. This means that $1,000 would be taken out of your account for the year*.
AUM fees can be hiding in 401(k) plans in many different forms, including investment management fees, mutual fund expense ratios, custodial fees, and administrative expenses. In fact, the average industry AUM fee is 1.67%. You should take a careful look at your plan and learn exactly what’s being charged to your account.
Does Guideline charge AUM fees?
Guideline does not impose any additional AUM fees for its 401(k) services. However, mutual fund companies may charge an expense ratio calculated by dividing the fund's total operating expenses by the fund's AUM. The average expense ratio for a Guideline managed portfolio is 0.06%.
*Note: This example assumes no change in account value and a one-time charge at the end of the year. Though the published rate is annualized, fees may be taken out more frequently on a pro-rated basis – generally daily if charged by a mutual fund company, or quarterly if by an investment adviser. This means the actual amount you pay each year can vary, since your account balance varies day by day.