What Are Regulatory Assets Under Management (RAUM)?

Most financial advisors know their assets under management number off the top of their head. It's a benchmark for growth, a talking point with prospects, and a measure of how far the practice has come. But when it comes time to file Form ADV, that familiar AUM figure might not be the number you actually report.

The SEC has its own definition of what counts as managed assets, and it's narrower than what most advisors assume. The gap between what you think you manage and what the SEC says you manage can be significant, and getting it wrong has real consequences. Misreporting can trigger compliance violations, land you with the wrong regulator, or even raise questions about fraudulent advertising.

The challenge is that calculating this figure involves judgment calls. Does that 401(k) you review annually count? What about the account where you make recommendations but the client executes the trades? How do you handle assets placed with a third-party manager? The answers aren't always obvious, and the SEC's criteria require careful interpretation.

This article breaks down everything you need to navigate RAUM with confidence. We'll cover the formal definition and how it differs from traditional AUM and Assets Under Advisement, then walk through the specific criteria for what belongs in your calculation and what doesn't. You'll also find guidance on regulatory thresholds, common reporting mistakes, and the practices that keep your numbers accurate and defensible.

What Are Regulatory Assets Under Management (RAUM)?

Regulatory Assets Under Management, or RAUM, is the total value of client assets an investment advisor actively manages according to SEC rules. It's not just any money you touch or advise on. It's specifically the assets where you provide continuous, ongoing supervisory or management services

What counts as a securities portfolio? According to SEC guidelines, an account qualifies if at least 50% of its value is invested in securities. This includes stocks, bonds, ETFs, and similar instruments. Cash and cash equivalents count as securities for this calculation. Private fund assets get treated entirely as securities too, including any uncalled capital commitments that investors have pledged but not yet contributed. This means RAUM calculations tend to be broader than you might expect, capturing committed capital alongside invested funds.

The phrase "continuous and regular" is where many advisors get tripped up. It means more than meeting with clients periodically or giving occasional advice. You need to be actively managing or monitoring the portfolio on an ongoing basis. If you can't make or direct trades in the account as needed, those assets probably don't belong in your RAUM calculation. One compliance attorney put it simply. If you can't trade it, you can't count it.

RAUM gets reported in Item 5.F of Form ADV Part 1. Every registered investment advisor must calculate and report this figure at least annually on this form, which regulators and the public can access. The metric became a formal reporting requirement after the Dodd-Frank Act changes, creating a uniform way to capture data on assets managed by advisors across the industry.

Understanding RAUM at this level sets the foundation for everything that follows. It's not just a number you report. It's a precisely defined measure that affects your regulatory status and how you represent your business.

The Importance of RAUM for Financial Advisors

RAUM isn't just an internal metric you track for your own records. It's a regulatory requirement with real consequences for how your firm operates and who oversees it.

Your RAUM determines which regulator has jurisdiction over your practice. Advisors with under $100 million in RAUM generally register with state authorities. Those above $100 million can register with the SEC, and once you cross $110 million, SEC registration becomes mandatory. There's a buffer built into these rules to prevent constant switching. If your RAUM drops below $90 million, you have 180 days to transition back to state registration. Getting your RAUM calculation wrong could mean you're registered with the wrong regulator entirely, which creates compliance headaches you don't want.

RAUM also affects exemptions that determine your filing obligations. Private fund advisers with less than $150 million in RAUM can often operate as Exempt Reporting Advisers, avoiding full SEC registration while still filing abbreviated reports. Cross that threshold and you're looking at full registration requirements. Misreporting RAUM, whether intentionally or through sloppy accounting, can trigger enforcement actions that put your practice at risk.

The credibility dimension matters too. Many firms publicize their assets under management as a signal of scale and trustworthiness. Prospective clients often interpret substantial AUM as evidence of a proven track record. But this cuts both ways. Inflating your AUM by including assets you only advise on but don't actively manage is misleading at best and fraudulent at worst. The SEC has made clear that overstating assets under management constitutes deceptive advertising. RAUM exists partly to enforce honesty in how firms represent themselves to the public.

As your practice grows, crossing certain RAUM thresholds will trigger new regulatory responsibilities. This isn't necessarily a bad thing. SEC registration can bring prestige alongside additional oversight. But you need to anticipate these transitions and prepare your compliance infrastructure accordingly. RAUM growth reflects business success, and with that success comes a higher standard of regulatory accountability.

RAUM vs. Traditional AUM vs. Assets Under Advisement (AUA)

Financial professionals encounter several different "assets under management" terms, and mixing them up can create problems. Knowing the distinctions helps you communicate accurately with regulators, clients, and prospects.

Traditional AUM, or Assets Under Management, refers broadly to the total market value of assets a firm or advisor manages on behalf of clients. In casual industry conversation, AUM sometimes gets used loosely to include all client assets an advisor touches, even those without discretionary management. The key point is that not all AUM qualifies as RAUM. If a firm sticks strictly to the SEC definition in all communications, their AUM and RAUM figures would match. But many firms don't, which is where confusion and potential compliance issues arise.

RAUM is essentially the regulated subset of AUM. It excludes assets that aren't under ongoing management. If you create a one-time financial plan for a client's $500,000 401(k) but don't continuously manage that account, those assets don't count toward your RAUM. The distinction matters because RAUM focuses specifically on assets where you have authority and responsibility to actively manage or periodically rebalance under an advisory agreement. It's the strict, compliant version of AUM that regulators care about.

Assets Under Advisement, or AUA, represents a newer term gaining traction in the industry. AUA captures assets that an advisor advises on but doesn't directly manage. This includes held-away accounts like workplace retirement plans, stock options, real estate holdings, and other assets that factor into a client's overall financial picture. The advisor provides input on these assets as part of holistic planning, but can't trade or control them directly. AUA is typically larger than RAUM because it encompasses everything the advisor influences, not just what they manage day to day.

The SEC allows advisors to disclose a broader measure of "client assets managed" in Form ADV Part 2, which effectively captures AUA. But there are rules. You must label it separately from RAUM and document your calculation methodology. If you choose to present AUA in marketing materials or brochures, you need to keep records supporting that figure for at least five years.

Here's a simple way to frame it. RAUM is the money you directly manage. AUA is the money you advise on as part of a financial plan. One makes you the driver of those assets. The other makes you the navigator. Both roles have value, but regulators want to know which one you're actually playing.

The practical takeaway is straightforward. Never lump AUA into RAUM on regulatory filings. Regulators have given advisors latitude to report AUA separately, but overstating RAUM by including advisory-only assets is a serious compliance violation. Keeping these categories distinct protects your clients and keeps your practice on solid ground.

How to Calculate RAUM (Criteria for Inclusion)

Calculating RAUM requires a methodical approach. You need to identify which accounts qualify and which don't based on specific SEC criteria. Here's how to work through it.

Identify Securities Portfolios

The first step is gathering all client accounts that qualify as securities portfolios. The SEC's test is straightforward. An account counts if at least 50% of its value is in securities, including cash equivalents. If an account holds mostly non-security assets like real estate, commodities, or fixed annuities, and less than half is in securities, it generally won't qualify.

Most investment advisory client accounts will meet the 50% threshold without issue. Brokerage accounts and managed portfolios typically clear this bar easily. Private funds require special attention. Advisors must include all assets of a private fund, plus any uncalled capital commitments investors have pledged, when calculating RAUM. Money that's been promised but not yet invested still counts.

Determine Continuous and Regular Management

From your list of securities portfolios, determine which ones you actively manage on a continuous, regular basis. The SEC provides two main paths to qualify.

For discretionary accounts, you need both trading authority and actual ongoing management or supervision. Having discretion on paper isn't enough. If you technically have discretion but never review or adjust the portfolio, it shouldn't count.

For non-discretionary accounts, you can include the assets only if you have an ongoing responsibility to recommend specific investments and you arrange or execute the trades when the client accepts your advice. If you regularly monitor the account, suggest changes, and then implement those changes with client permission, it qualifies. If you merely give advice and the client executes it themselves, or if your advice is occasional, that account doesn't belong in RAUM.

Include All Eligible Accounts Without Exception

The SEC explicitly requires that all accounts meeting the above criteria must be included, regardless of account type or compensation arrangement. This means including family or proprietary accounts where you manage money for relatives. It means including accounts you manage pro bono without charging a fee. It means including accounts for non-U.S. clients.

Even if you aren't paid for managing an account, if you're managing it regularly, it counts toward RAUM. This rule exists to prevent advisors from under-reporting to stay below regulatory thresholds.

Account for Sub-Advisor Relationships

If you use third-party managers or act as a sub-advisor, the rules get more nuanced. You can include assets managed by a third party if you retain discretion to hire, fire, or reallocate assets among managers.

For example, if you use a Turnkey Asset Management Platform or Separately Managed Account provider but maintain authority to switch managers or move client funds between strategies, those assets can be counted. However, if you simply introduced the client to a manager and cannot make changes without client consent beyond that initial referral, those assets cannot be included in your RAUM. The discretion to manage the manager is what matters.

Consider Supporting Factors

Several other factors help determine whether your service qualifies as continuous and regular. Your advisory contract terms matter. If the agreement explicitly states you'll monitor and rebalance the portfolio, that supports including the account. Your fee structure provides evidence too. Charging a fee based on assets under management implies ongoing management, while hourly fees for occasional consultations suggest the opposite.

Even a passive buy-and-hold strategy can count as continuous management if you can demonstrate regular due diligence and monitoring between client meetings. The key is documenting that you're performing ongoing services, not just showing up once a year for a review.

Assets to Include in RAUM

Once you grasp the criteria, you need a clear checklist of what belongs in your RAUM calculation. Here are the categories of assets and accounts that must be counted if they meet the continuous management test.

Discretionary Managed Accounts

All individually managed portfolios where you have trading authority and actively manage the assets belong in RAUM. This includes standard client investment accounts, trusts, IRAs, and any other account type where you hold discretion and provide regular supervision. The combination of authority and ongoing oversight is what qualifies these accounts.

Non-Discretionary Advisory Accounts with Ongoing Service

Accounts where you don't trade freely but maintain an ongoing advisory role with trade implementation upon client consent should be included. Some clients insist on final approval before any trade executes. If you continuously monitor those accounts, call to recommend trades, and then execute when the client approves, those assets count toward RAUM.

Family and Proprietary Assets

Assets belonging to your own family members or to the advisory firm's principals must be included if they're under management. These accounts might not generate revenue, but they still represent managed assets and must be reported. The SEC doesn't distinguish between paying clients and family members when it comes to RAUM.

Uncompensated Accounts

Any account you manage without charging fees should be included if it receives continuous management. You might manage money for a charity or close friends at no cost. The absence of compensation doesn't change the nature of the relationship. RAUM measures management responsibility, not whether you're getting paid for it.

Non-U.S. Client Accounts

If you manage money for clients who aren't U.S. persons, those assets are part of your RAUM. This applies to clients who moved abroad, foreign nationals, or any other non-U.S. client relationship. There's no exemption for accounts held by people outside the United States.

Private Fund Assets

All assets in private funds you manage or advise count toward RAUM. This includes hedge funds, private equity funds, and venture funds. Uncalled capital commitments must be included as well. If investors have pledged $20 million but only $12 million has been called, your RAUM includes the full $20 million.

Also remember to use gross asset value. Do not net out debt. If a private fund has $30 million in assets and $20 million in borrowing, RAUM takes the $30 million gross figure, not the $10 million net.

Third-Party Managed Assets Where You Retain Discretion

Assets placed with external managers can be included only if you retain authority over manager selection. If you have the power to switch managers or reallocate client funds among different strategies, those assets belong in your RAUM. The key is whether you maintain discretionary control over how the assets are deployed, even if someone else handles the day-to-day trading.

Assets Excluded from RAUM

Knowing what to leave out of your RAUM calculation is just as important as knowing what to include. These are the scenarios and asset types that must be excluded, even if you might be tempted to count them.

Non-Managed Assets in Client Portfolios

Any assets in client accounts that you don't actually manage or supervise continuously must be carved out. Your portfolio accounting software might show all client holdings, but some of those assets could be held away or outside your management scope. A common mistake is simply summing everything in all client accounts without distinguishing between what you actively manage and what you don't.

Brokerage Assets Without an Advisory Agreement

For hybrid advisors with clients who hold commission-based brokerage accounts, those assets don't count toward RAUM. If there's no advisory contract and no discretion, it's not RAUM. Mutual funds or annuities in a brokerage account where you only receive a trail commission should be left out.

In practice, a hybrid advisor might have a $50 million book with $20 million in commission business and $30 million in fee-based accounts. Only the $30 million under advisory management belongs in RAUM.

Accounts Where You Cannot Execute Trades

Any account for which you provide advice but have no ability to implement or direct trades must be excluded. This covers several common situations.

Workplace retirement plans like 401(k) accounts that you review and make suggestions on don't count if you can't trade on the client's behalf. Unless you've been granted access through a platform that allows advisor trading and you actually monitor the account regularly, assume outside 401(k) assets are not RAUM.

Consulting or institutional advisory roles fall into this category too. If you act as a consultant to a pension or investment committee without discretion to trade, those assets aren't RAUM. Advice alone doesn't qualify when someone else is actually managing the funds.

Assets Receiving Only Impersonal or One-Time Advice

Assets on which you provide only one-time or occasional advice should be excluded. Writing a financial plan that covers a client's accounts, or engaging in hourly consulting without an ongoing management relationship, means those assets aren't RAUM.

If you charge hourly or a flat planning fee and only meet periodically, you typically cannot count those assets. The SEC notes that just having quarterly or annual meetings isn't continuous unless you're doing work in between.

Non-Security Assets

By definition, RAUM involves securities portfolios. Assets that aren't securities and don't belong to a securities portfolio don't count. Fixed annuities and fixed-index annuities are not securities, so if a client's account consists solely of those products, the value doesn't go toward RAUM. Commodities and direct real estate holdings would also be excluded unless they're held in a securitized form.

Third-Party Managed Accounts Without Discretion

If you cannot change or direct a third-party manager, you cannot include those assets. You might have recommended a separate account manager and receive a fee for the referral. But if you don't have authority to reallocate away from that manager or adjust their strategy, those assets are off-limits for RAUM.

Assets Only Monitored Intermittently

Even discretionary accounts become questionable if your involvement is extremely limited. A purely buy-and-hold account where you never log in or review outside of an annual meeting could be problematic to count. You should be able to demonstrate some regular monitoring or due diligence throughout the year to justify it as continuous service. When in doubt, err on the side of exclusion.

Regulatory Thresholds and Compliance Implications

RAUM isn't just a number for your records. It determines which regulator oversees your practice, what filings you must submit, and what exemptions you might qualify for.

The $100 million mark is the primary dividing line between state and federal oversight. Advisors with under $100 million in RAUM generally register with state authorities, while those above $100 million can register with the SEC. Once you cross $110 million, SEC registration becomes mandatory within 90 days. The rules include a buffer zone to prevent constant toggling between regulators. If your RAUM falls below $90 million, you have 180 days to transition back to state registration. This cushion accounts for normal market fluctuations without forcing advisors to switch regulators every time their assets dip slightly.

Very small advisors might be exempt from SEC registration entirely. If an advisor has less than $25 million in RAUM and operates in a state that provides an exemption, they might not need SEC registration at all. They'd fall under state jurisdiction and potentially qualify for state-level exemptions depending on local regulations.

For private fund advisers, the $150 million threshold carries significant weight. Those who solely manage private funds and maintain under $150 million in RAUM can often file as Exempt Reporting Advisers, or ERAs. This status allows them to avoid full registration while still filing abbreviated reports. Cross that $150 million mark and you must register with the SEC as a full RIA.

All registered and exempt advisors must report RAUM annually on Form ADV. Even Exempt Reporting Advisers file Part 1A, disclosing their RAUM to ensure regulatory oversight and public transparency. Higher RAUM levels trigger additional filing obligations too. Form PF is required for advisors managing $150 million or more in private fund RAUM, and large hedge fund advisors face quarterly filing requirements on top of that.

The bottom line is that hitting certain RAUM levels increases your compliance burden on an ongoing basis. More filings, different regulators, and potentially higher scrutiny become part of your operating reality. Smart advisors monitor their RAUM and plan compliance processes as they grow. If you're approaching $100 million, start preparing for SEC registration steps before you cross the line. Anticipating these transitions makes them manageable rather than disruptive.

Common Mistakes in RAUM Reporting and How to Avoid Them

Even experienced advisors stumble when calculating RAUM. Here are the frequent errors that trip people up and how to steer clear of them.

Over-counting Assets

Many advisors mistakenly inflate their RAUM by including assets that aren't truly under management. This often happens when someone pulls a total from portfolio software that doesn't distinguish between managed and unmanaged assets. The fix is straightforward. Always separate out any holdings where you lack authority or an ongoing advisory role. If you're not providing continuous oversight, those assets don't belong in the count.

Including Commission-Based Holdings

Hybrid advisors frequently make the mistake of adding brokerage account assets to their RAUM. If there's no advisory agreement or discretion, those assets should be excluded. Some advisors assume that because they advise a client in some capacity, everything counts. It doesn't. An advisor with $50 million in total client assets where $20 million sits in commission accounts should only report the $30 million under fee-based advisory management.

Counting Non-Securities

Another common error involves including non-security assets like fixed annuities. If an account is primarily non-securities, it might fail the 50% test and shouldn't count. An advisor might erroneously include the cash value of a client's fixed-index annuity contract in their AUM figure. Since that annuity isn't a security product, it doesn't belong in RAUM.

Misinterpreting Continuous and Regular

Some advisors assume that regular client contact equals continuous management. It doesn't. Frequency of communication isn't the standard. Counting assets from clients you only advise periodically, like quarterly check-ins without any management activity between meetings, is a mistake. To justify including those assets, you need to demonstrate actual portfolio monitoring or rebalancing activities throughout the year. If that's not happening, err on the side of leaving the account out.

Forgetting Documentation

Failing to document how you arrived at your RAUM figure is a compliance mistake that catches many advisors off guard. The SEC expects you to keep records supporting your numbers, especially if you report AUA alongside AUM. If you can't show which accounts added up to your RAUM or explain how you calculated any alternate figures, you're exposed during an examination. Maintain clear documentation and follow the Form ADV instructions precisely.

Not Updating RAUM Annually

RAUM isn't a set-and-forget figure. Market changes and client additions or losses mean your number will shift over time. Mistakes happen when firms fail to recalculate each year at the Form ADV filing date. Make sure you're updating your RAUM using year-end numbers to stay accurate and compliant.

Best Practices for Accurate RAUM Calculation

After knowing what mistakes to avoid, the next step is building habits that keep your RAUM calculation accurate and defensible. Here's how to approach it proactively.

Follow SEC Guidelines to the Letter

Always consult the Form ADV instructions when calculating RAUM. The SEC instructions, along with related FAQs and releases, spell out exactly what to include. Use them as a checklist annually rather than relying on memory or past practice. The rules can be nuanced, and a quick review ensures you haven't missed any updates or overlooked a detail.

Use Portfolio Accounting Software with Tags

Leverage your technology to tag which accounts are discretionary, which are advisory-only, and which fall outside your management scope. Many compliance software platforms and CRM systems for advisors can flag which accounts qualify for RAUM inclusion. The key is maintaining accurate classifications in the system so that summing up RAUM-eligible assets becomes a straightforward report rather than a manual exercise.

Maintain Written Documentation

Keep a spreadsheet or report each year that lists all accounts included in RAUM and those excluded, along with reasons for each decision. If regulators ask, you'll be able to substantiate your figure without scrambling. Also document any methodology for valuing illiquid assets at fair value. For private fund assets, keep records of how you valued each holding or commitment. This paper trail protects you during examinations.

Consult Compliance Experts

When situations get tricky, seek advice. The stakes are high if you misreport, and some scenarios genuinely require expert judgment. Whether certain retainer clients count, how to value private placements, or how to handle unusual account structures are all questions worth running by a compliance consultant or attorney. Acting in good faith and seeking expert guidance can prevent costly errors.

Apply Consistent and Good Faith Valuation

For assets that aren't straightforward to value, like real estate in a fund or startup equity, use a reasonable and consistent method each year. The SEC doesn't mandate one specific valuation approach for RAUM, but it expects consistency and honesty. Remember that RAUM must be calculated on a gross basis without subtracting debts, and at fair market value as of the calculation date.

Conduct Regular Internal Reviews

Don't wait until Form ADV filing season to look at your RAUM. Periodic internal audits of the calculation help you catch issues early. A mid-year simulation of your RAUM lets you know if you're on track or approaching a regulatory threshold that requires preparation. This habit turns RAUM from a last-minute scramble into a routine part of firm management.

Leveraging Technology and AI for RAUM and Compliance

Modern technology can take much of the burden out of managing RAUM calculations and related compliance tasks. Advisors who embrace these tools spend less time on administrative work and reduce the risk of errors.

Portfolio management software can automatically generate RAUM reports by pulling data from custodians and applying the classification tags you've set up. Instead of manually reviewing each account, you get a calculated figure based on rules you've defined. Some platforms even alert you when you're approaching regulatory thresholds, giving you time to prepare for transitions rather than reacting after the fact.

AI assistants for financial advisors are adding another layer of support. Jump AI, for instance, is built specifically for advisory practices and includes compliance-friendly features that help with documentation. It automatically transcribes and logs client meetings, updates CRM notes, and ensures those records meet compliance standards. While it's not a dedicated RAUM calculator, this kind of tool helps verify which accounts are under continuous management by creating a clear trail of your ongoing advisory activities. If you ever need to demonstrate that you're providing regular supervision of a client's portfolio, having detailed records of your interactions makes that case much easier.

Compliance monitoring has gotten smarter too. The best AI tools for financial advisors can flag potential issues in marketing content, including accidental misstatements about AUM. Jump AI has compliance considerations built into its design, helping advisors keep records and communications clean without adding extra review steps. This means you can focus on serving clients while the technology watches for problems in the background.

The efficiency gains extend to annual updates as well. Centralized data systems let client account information flow directly into Form ADV preparation tools. Rather than pulling numbers from multiple sources and reconciling them by hand, advisors can rely on integrated workflows that keep everything in sync. AI-driven systems might even alert you when a new account is added that hasn't been classified for RAUM purposes, or when your total is creeping toward a threshold that requires action.

In practice, leveraging advisor tech like Jump AI can ease the compliance burden considerably. Automatic logging of client portfolio discussions and decisions creates the kind of documentation that supports your RAUM methodology. These records can help demonstrate your continuous and regular management activities if questions arise during an audit. By integrating AI into your practice, you ensure nothing falls through the cracks while focusing on growing AUM and RAUM responsibly.

Putting RAUM Into Practice

Regulatory Assets Under Management is a foundational metric for any advisory practice. It determines your regulatory status, shapes your filing obligations, and serves as a measure of credibility with clients and prospects. Getting it right isn't optional. It's essential to operating a compliant and trustworthy firm.

The key principles are straightforward. Only count assets under continuous, regular management. Exclude those you advise on intermittently or without trading authority. Follow the SEC's definitions precisely and document your methodology. If you can't actively manage or trade an asset, it probably doesn't belong in your RAUM figure. Keep RAUM and AUA distinct, using each metric in the appropriate context.

Staying on top of RAUM doesn't have to be a burden. With the right systems in place, you can track your figures accurately, anticipate regulatory thresholds, and maintain the documentation that protects you during examinations. The advisors who handle this well are the ones who build compliance into their daily workflows rather than treating it as an annual scramble.

Jump AI helps advisors do exactly that. By automatically logging client interactions, maintaining compliant records, and keeping your documentation organized, Jump takes the friction out of compliance so you can focus on what matters most. Your clients deserve your full attention, and your practice deserves tools built specifically for the way advisors work. If you're ready to see how Jump can simplify your compliance workflow and free up more time for client relationships, schedule a demo today.