Provide the value of Regulatory Assets Under Management (AUM) or Assets Under Advisement (AUA) across specified categories, including Market Asset Value, Value of Largest Account, and Number of Customers for each sub-category.

This question helps the insurance carrier understand the scale and nature of your advisory practice by breaking down the assets you work with. Assets Under Management (AUM), where you have direct control, carry higher risk than Assets Under Advisement (AUA), where you only provide guidance. The total value of assets indicates your firm's size, the value of the largest account highlights concentration risk (i.e., how much your firm depends on a single client), and the number of customers shows the breadth of your client base. This data is critical for an underwriter to properly assess your firm's E&O risk exposure.

This question requires you to categorize all assets you advise into four distinct buckets.

• AUM vs. AUA:
  • AUM (Assets Under Management): Client assets you directly control, typically involving a Limited Power of Attorney (LPOA) to execute trades. This is the value reported on your Form ADV.
  • AUA (Assets Under Advisement): Assets for which you provide advice, monitoring, or referrals but do not have direct control or trading authority.
• The Four Categories:
  1. Discretionary AUM Accounts: Accounts where you have full authority with an LPOA to make investment decisions and execute trades without getting prior approval for each trade.
  2. Non-Discretionary AUM Accounts: Accounts where you provide advice and have an LPOA but must get client consent before executing each trade.
  3. Total Asset Monitoring (AUA): Portfolios you only observe, report on, or make recommendations for, but you have no LPOA to direct trades.
  4. Total Referral to Third-Party Money Managers (AUA): Assets you have referred to an outside manager. You may receive a fee for this, but you do not directly manage the assets.

To answer this, you need to provide a breakdown of your firm's assets for the four categories listed above. For each category, you will provide three data points based on your most recent statements or fiscal year-end reports.

• Market Asset Value: The total dollar value of all assets in that category.
• Value of Largest Account: The dollar value of the single largest client account within that category.
• Number of Customers: The count of separate client relationships in that category.

• Mistake: Confusing AUM and AUA.
  • The key difference is control. If you can execute trades (with or without consent), it's AUM. If you can only advise or monitor, it's AUA. These values should align with your Form ADV reporting.
• Pitfall: Using old or inaccurate data.
  • Use figures from your most recent fiscal year-end or statement date to ensure the underwriter has a current view of your practice. Reasonable estimates are acceptable if exact figures are not immediately available, but they should be based on current records.
• Mistake: Hiding a large concentration risk.
  • It is critical to accurately report the value of your largest account in each category. A high concentration in a single client is a significant risk factor that must be underwritten properly. Hiding it could jeopardize coverage.