Regulatory Assets Under Management (RAUM): What It Is and How to Calculate It

If you're launching or running a fee-only RIA, you'll hear "RAUM" early and often. Regulatory assets under management aren't the same as the AUM you market or bill on. It's a specific SEC definition that drives whether you register with the SEC or the states, what you report on Form ADV, and how examiners evaluate your firm. Here's a clear explanation of RAUM, what's in and out, and how to calculate it correctly.

What is RAUM? The formal definition

RAUM is defined by the SEC in the Form ADV instructions as the value of securities portfolios for which you provide continuous and regular supervisory or management services.

"Regulatory assets under management are the securities portfolios for which you provide continuous and regular supervisory or management services."

Source: SEC, Form ADV General Instructions

Two phrases matter:

• Securities portfolios: Accounts made up of securities. Cash and cash equivalents held as part of those portfolios count. Non-securities (direct real estate, personal property, most fixed annuities) do not.
• Continuous and regular supervisory or management: You monitor, allocate, and make or recommend trades on an ongoing basis pursuant to a client agreement. One-time plans or occasional check-ins don't qualify.

Why RAUM matters

RAUM affects several core compliance obligations:

• Registration level: Advisers with $110 million or more in RAUM must register with the SEC (unless an exemption applies). You may register with the SEC if your assets exceed $100 million. You can remain SEC-registered until you drop below $90 million (buffer to reduce frequent switching). See SEC Rule 203A-1.
• Form ADV reporting: Item 5. F of Part 1A requires total RAUM, split between discretionary and non-discretionary. Part 2A references your AUM figure in Item 4. E.
• Marketing accuracy: If you advertise "AUM," make sure you're precise. RAUM is often smaller than the "assets advised" you might reference for planning or one-time engagements. Mislabeling is a common exam comment.

What counts—and what doesn't

Use this as a practical guide when you determine your regulatory assets under management.

Note on subadvisory/UMAs: Each adviser may include in RAUM the portion of assets for which it provides continuous and regular supervisory or management services. This can result in the same dollars appearing in RAUM at two firms, which is expected under SEC reporting. See the SEC's IARD FAQs and Form ADV instructions (SEC).

Note on private funds: For private funds you advise, treat all of the fund's assets as part of its RAUM, regardless of whether the underlying holdings are "securities", and report on a gross basis per the Form ADV instructions.

How to calculate RAUM step by step

1. Identify qualifying accounts
   

   List all client accounts for which your agreement requires ongoing portfolio management or monitoring. Separate them into discretionary and non-discretionary. Exclude planning-only and episodic advice clients.

2. Confirm "securities portfolio" status
   

   Verify that the account primarily holds securities. Include cash and cash equivalents within those accounts. Exclude direct real estate and other non-securities (except as noted for private funds).

3. Determine valuation date and method
   

   Use the current market value as of a date within 90 days prior to the date you file your Form ADV annual updating amendment. Apply a consistent valuation method year to year. The SEC instructs advisers not to deduct margin or other liabilities—report on a gross basis (SEC, Form ADV Instructions).

4. Aggregate totals
   

   Sum values across qualifying accounts. Report total RAUM, and break out discretionary vs. non-discretionary in Part 1A, Item 5. F.

5. Document your rationale
   

   Keep a worksheet that shows which accounts you included, why they qualify, the valuation date, and the data sources. This saves time during exams.

Common edge cases

Held‑away 401(k)/403(b) accounts

Include plan assets if you have 3(38) discretion. For 3(21) arrangements, include plan assets only if you have ongoing responsibility to recommend investments and, when recommendations are accepted, you are responsible for arranging or effecting the transactions; otherwise, exclude them. If you provide only occasional allocation suggestions without ongoing monitoring, exclude them.

Household accounts and joint ownership

Count assets at the account level, not by household net worth. Avoid double-counting the same dollars across multiple client records.

Model portfolios and UMAs

If you are the model manager but have no ongoing supervisory or management relationship to client accounts, you generally would not include the platform's assets in your RAUM. If you manage sleeves directly or provide continuous management as a subadviser, include the portion you manage.

Private funds and pooled vehicles

For private funds, you advise, include the fund's gross assets as RAUM. Treat all of a private fund's assets as part of its RAUM regardless of the nature of those assets. Do not net out borrowings or investor-level obligations. See Form ADV instructions and, where applicable, Form PF guidance.

Crypto assets

For separately managed accounts, include crypto only if the assets are securities and you provide continuous and regular supervisory or management services. Client self-custodied wallets you do not manage are not RAUM. For private funds you advise, include the fund's crypto holdings in RAUM as part of the fund's gross assets, even if those holdings are not securities.

RAUM vs. AUM vs. AUA: getting the labels right

• RAUM: Regulatory reporting number. Securities portfolios under continuous and regular management (discretionary or non-discretionary, if you also arrange or effect accepted transactions for the latter).
• AUM (marketing/billing): Often used to describe assets you bill on. This can equal RAUM if you bill only on managed portfolios. If you bill subscriptions or projects, marketing AUM may be smaller than RAUM.
• AUA (assets under advisement): Assets you influence but do not manage continuously or do not have responsibility to arrange/effect transactions (e.g., one-time 401(k) allocation guidance). Not RAUM.

Label your website, ADV, and marketing carefully. If you show RAUM, call it "regulatory assets under management." If you show other figures, explain what they represent.

Documentation examiners expect

Keep clean records to support your regulatory assets under management:

• Client agreements that specify ongoing portfolio management or monitoring.
• A list of qualifying accounts with discretionary/non-discretionary tags.
• Valuation reports as of the chosen date within the 90-day window prior to filing, matching your fee or reporting methodology.
• Notes on exclusions (planning-only clients, episodic engagements, non-securities).
• Evidence of ongoing monitoring for non-discretionary RAUM (e.g., review logs, rebalancing records, IPS updates).

Quick FAQ

• Do non-discretionary accounts count? Yes, if you provide continuous and regular supervisory or management services and, when recommendations are accepted, you are responsible for arranging or effecting the transactions.
• Should I include cash? Yes, if it sits in a managed securities portfolio.
• What date do I use? Use a valuation date within 90 days before you file your Form ADV annual updating amendment, which is due within 90 days of the fiscal year-end.
• Do I net out the margin or the loans? No. Report gross assets.
• Can two firms report the same dollars? Yes. A primary adviser and a subadviser can each report the portion they manage or supervise under RAUM.

RAUM is a regulatory term with a precise meaning: securities portfolios you manage or supervise on a continuous and regular basis. Get the definition right, calculate it consistently, document your rationale, and label your marketing carefully. Doing this well keeps your Form ADV clean and your registration level correct.

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Sources and further reading

• SEC: Form ADV and General Instructions
• 17 CFR 275.203A‑1: Investment adviser registration—assets under management thresholds
• NASAA: Investment Adviser Registration Resources