What Is RAUM?

Regulatory Assets Under Management (RAUM) is a standardized metric used primarily by the U.S. Securities and Exchange Commission (SEC) and state securities regulators to measure the total market value of assets that an investment adviser manages and reports for regulatory purposes. Unlike general AUM (Assets Under Management), which can be defined differently by firms for marketing or internal tracking, RAUM must be calculated according to specific regulatory criteria set forth in Form ADV, the registration document used by investment advisers.

The figure represents a snapshot of an adviser’s investment discretion at a given time and is critical for determining registration requirements, oversight, and compliance obligations. RAUM is not a mere operational or marketing term—it carries legal implications and is a central component of regulatory filings and audits.

How RAUM Is Calculated

The calculation of RAUM follows a defined regulatory framework. Advisers must use the instructions provided in Form ADV, particularly Section 5 of Part 1A, to determine which accounts and assets should be included. The definition includes both discretionary and, in some cases, non-discretionary assets, provided the adviser provides continuous and regular supervisory or management services.

RAUM includes:

• Securities portfolios over which the adviser has discretionary authority and provides ongoing supervisory or management services.
• Client accounts even if the adviser does not have discretionary authority, as long as the adviser has ongoing responsibility to select or recommend securities and monitor performance.
• Proprietary accounts, family accounts, and accounts managed without receiving compensation, if those accounts are managed with the same process and oversight as client accounts.

RAUM does not include:

• Assets managed on a one-time or purely consultative basis.
• Non-securities assets like real estate or certain collectibles unless packaged as securities (e.g., within a fund).
• Assets for which the adviser does not have ongoing management responsibilities.

The calculation must reflect the fair market value of the assets as of the date of the adviser’s most recent fiscal year-end, unless otherwise stated.

RAUM vs. AUM: Understanding the Difference

While they often sound interchangeable, RAUM and general AUM serve different purposes and may yield different figures. AUM is often a firm-defined term that may include a broader range of assets such as real estate holdings, cash accounts, or client assets managed on a non-continuous basis. AUM might also include assets for which the firm does not provide active management or monitoring but plays some advisory role.

In contrast, RAUM is narrowly defined and based on criteria intended to give regulators a consistent and comparable benchmark across firms. This distinction is important when reviewing Form ADV disclosures or comparing advisory firms, especially if one is using a self-defined AUM figure in marketing materials and another is citing its RAUM.

Why RAUM Matters

RAUM plays a pivotal role in the regulatory landscape for investment advisers. It is used to determine:

• Registration Requirements: Whether an adviser must register with the SEC or a state regulator often depends on its RAUM. Generally, advisers with RAUM of $110 million or more are eligible to register with the SEC, while those below that threshold must register with state regulators, unless an exemption applies.
• Compliance Obligations: Higher RAUM levels may trigger additional compliance responsibilities, such as custody rules, financial reporting requirements, and annual compliance reviews.
• Regulatory Audits: When regulators conduct examinations, they often use RAUM to assess the scope and complexity of the adviser’s operations and to plan the audit accordingly.
• Investor Due Diligence: RAUM can also serve as a useful data point for clients or institutional investors when evaluating the scale and capabilities of an advisory firm.

RAUM figures are public and must be updated annually in Form ADV filings, which are accessible via the SEC’s Investment Adviser Public Disclosure (IAPD) system or through state equivalents.

Form ADV and Public Disclosure

Form ADV is the key regulatory filing document for investment advisers and contains several parts. RAUM is reported in Part 1A, Section 5.F, and is updated at least annually. Firms must ensure accuracy in this section, as discrepancies can lead to scrutiny or penalties.

Because Form ADV is publicly available, investors and regulators alike rely on RAUM to compare firms, assess potential risks, and verify claims made in marketing materials. Misrepresenting RAUM—whether intentionally or through careless reporting—can result in regulatory action.

The Bottom Line

Regulatory Assets Under Management (RAUM) is a standardized, regulator-defined measure of the assets an investment adviser manages on a continuous and regular basis. It serves not only as a benchmark for registration and compliance requirements but also as a signal of an adviser’s scale and supervisory responsibilities. Unlike general AUM figures that may vary across firms, RAUM is calculated based on consistent criteria mandated by regulators and disclosed in Form ADV. Understanding RAUM helps investors, regulators, and advisers maintain transparency and consistency in the financial advisory industry.