What Does “Assets under Administration” Mean? (with pictures)

“Assets under management” is a financial term that describes a situation where a bank or other third party holds and accounts for the funds of a specific investor.

“Assets under management” is a financial term that describes a situation where a bank or other third party holds and accounts for the funds of a specific investor. All the money that is “under management” is still under the investor’s control. The administrator usually acts as a security measure. Managers double-check investment records and currency exchange books to make sure the account amount reported is accurate, and also keep money safe and separate from other holdings. This type of arrangement is most common with large investment portfolios, typically hedge funds and mutual funds.

Asset administrators ensure that the account’s reported value is accurate.

An asset manager is essentially a custodian of the fund. Most often, banks and public financial institutions perform these services. A fiduciary company or a private investment firm could do the same, but this is rarer, largely because of the protection aspects of the task. By placing assets under management with external banks, fund operators can prove to their investors that money is being honestly accounted for and held. Most banks are regulated by government agencies, which gives them a more impartial and neutral approach to accounting.

The main task of a bank that keeps assets under management is to keep accurate books. When funds are reported traded or exchanged, the administrator must verify the accuracy of the transaction. Administrators also often manage tax records and reports.

One of the characteristic features of assets under management is that the asset owner remains the beneficial owner of all money in the managed account. Even though money can be held and verified by a bank, the original manager – the person or entity that established the management relationship in the first place – still generally has full autonomy over how assets are shuffled, spent or traded. The bank’s only role is to maintain an accurate record and to report that record to shareholders, investors or other interested parties in a timely and accurate manner.

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In this way, assets under management are very different from assets under management. Managed funds are usually structured so that the manager is not only the custodian of the account, but also the active manager of the account. This typically means that the parent institution can make investment decisions on behalf of the owner, which often includes the power to dictate how funds can or will be distributed or converted. This is sometimes expressed as unilateral control, but it can also come across as a veto power or a verification mechanism.

Banks typically publish the total value of all assets they hold in administrative capacity. The higher the number, the more prestigious the institution is generally considered and the more likely it is to attract other wealthy investors. Administrators often charge a fee for their services that amounts to a certain percentage of the total fund value, which also makes the relationship profitable.

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