Have you ever wondered what financial firms mean when they boast about managing billions—or even trillions—of dollars in assets? Are they actually investing those funds or simply holding them on behalf of clients? This is where AUA or Assets Under Administration comes in.
Globally, the scale of assets under custody and administration is staggering. As of 2023, top custodian banks like BNY Mellon reported over $46.6 trillion in AUA. This clearly indicates how massive and essential this segment of financial services has become.
Assets Under Administration (AUA) is a way to measure how much money a financial company holds and supports clients—without actually managing how that money is invested. This includes things like record keeping, account maintenance, and reporting. Custodians, fintech platforms, and third-party service providers commonly use it.
Even though these firms don’t make investment decisions—whether for long-term investments like retirement or short-term investments like savings or trading—they still play a significant role in helping investors and advisors manage assets securely and efficiently.
In this guide, we’ll explain what Assets Under Administration (AUA) really means, how it works in financial services, who it’s best suited for, and its main benefits and limitations.
What Is AUA?
Assets Under Administration (AUA) refers to the total value of client assets that a financial institution holds, services, and reports on—but does not actively manage. These assets can include cash, stocks, bonds, retirement accounts, or other investments under the client’s or advisor’s control.
Firms offering AUA services—such as custodians, fintech platforms, and back-office providers—handle tasks such as record keeping, trade execution, compliance reporting, and account administration.
For example, financial advisors use a third-party custodian like Fidelity Institutional to hold and report on their client’s investment accounts. The advisor manages the investment strategy, choosing stocks, bonds, or funds to buy or sell. However, Fidelity handles the administrative side—such as holding the assets, generating monthly statements, executing trades, and ensuring compliance.
In this case, the total value of all client assets held and serviced by Fidelity (but not directly managed by them) counts as Assets Under Administration (AUA). Fidelity is responsible for safeguarding and supporting the assets, not making investment decisions—the advisor’s role.
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Key Characteristics of AUA
Assets Under Administration (AUA) has a few defining features that make it different from terms like AUM (Assets Under Management). The main idea is simple: It is about holding and supporting assets, not managing them. Here’s what that means for firms and clients.
AUA Doesn’t Make Investment Decisions
When a firm reports AUA, it means they’re holding your money or investments—but they’re not deciding what to do with it. They don’t choose which stocks to buy or when to move your money. That’s up to you or your financial advisor. Its provider’s role is to keep the account running smoothly in the background.
AUA Handles the Admin Work
Firms that offer it focus on the behind-the-scenes tasks: setting up accounts, processing trades, preparing tax forms, and ensuring everything is recorded correctly. They keep things organized and compliant but stay out of the investment decisions. They are the support team that makes your financial tools work correctly.
It’s Mostly Used by Custodians and Financial Platforms
You’ll usually see it reported by companies like custodian banks, fintech platforms, or retirement account providers. These firms offer digital tools and secure systems that help advisors and clients manage their investments—but they don’t give advice or manage portfolios directly.
It Shows How Much They Handle, Not How Well They Invest
AUA isn’t about performance or returns. It’s about scale—how much money the firm is trusted to hold and service. Just because a firm reports a high AUA doesn’t mean they’re good at growing wealth. This means that many people trust them to handle the operations and logistics of financial accounts.
It Covers All Kinds of Assets
AUA can include retirement plans, brokerage accounts, savings, cash, and even alternative investments like private equity—as long as the firm is only servicing, not managing, them. This makes it a flexible model for various financial services and client needs.
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How AUA Works in Financial Services
Assets Under Administration (AUA) are all about holding and servicing financial assets without managing them directly. Moreover, they play a behind-the-scenes role, helping financial professionals and platforms keep accounts organized, secure, and running smoothly.
The Firm Holds the Assets But Doesn’t Control Them
When a firm offers AUA, it holds your investments—like stocks, retirement accounts, or cash—on its platform. But it doesn’t decide how your money is invested. You or your financial advisor still make those decisions. The firm provides the space and tools to keep everything safe and accessible.
They Take Care of the Admin Work
AUA providers handle the day-to-day tasks that keep your accounts in order. This might include setting up accounts, processing transactions, sending statements, handling tax documents, and ensuring everything meets legal and regulatory standards. You’re still in control—they just help keep everything organized.
They Don’t Manage Investments
The key thing to remember is that AUA firms do not offer investment advice or make changes to your portfolio. Their job is purely administrative. Whether saving for retirement or working on short-term goals, it’s up to you (or your advisor) to make the investment decisions. The AUA provider just makes sure everything works smoothly behind the scenes.
They Track and Report the Total Value
Firms regularly calculate how much money they hold and service—their AUA. It includes all the accounts they support, even though they don’t manage the investments. These numbers help them show how much responsibility they carry and how many clients they serve.
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Benefits of AUA for Firms and Advisors
Even though AUA doesn’t involve making investment decisions, it offers significant advantages to firms and advisors who focus on support, security, and scale.
You Can Grow Without Taking on Investment Risk
Firms offering AUA can support many advisors and clients without giving financial advice or managing portfolios. This means they can grow their business and serve more people—without taking on the extra risks of investment management.
Revenue is Steady and Predictable
Instead of earning money from market performance, AUA firms charge for services like account support, custody, or compliance tools. These fees don’t change with the market, making income more stable.
AUA Has Less Regulatory Burden
Because AUA firms don’t manage investments, they aren’t held to the same strict rules as registered investment advisors (RIAs). This makes compliance more manageable and reduces legal risk, which is especially helpful for tech companies or back-office providers.
Great for Advisors Who Want Control
Independent financial advisors often want to keep control of how they manage client money but don’t want to deal with all the paperwork and technical stuff. AUA platforms give them the tools and support they need without getting in the way.
Helps Firms Build Trust
Firms with high AUA are often seen as reliable and capable. A strong AUA figure shows that clients and advisors trust the firm to handle a large volume of assets safely—even if it’s not managing a single dollar directly.
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Drawbacks and Limitations of AUA
AUA isn’t perfect for everyone. While it offers flexibility and scale, it also has some trade-offs that firms should consider.
No Say in Investment Outcomes
Because AUA providers don’t manage investments, they also can’t take credit for good returns or help improve portfolio performance. This limits their ability to stand out based on results, especially compared to firms that offer complete investment management.
AUA Has Lower Revenue per Client
AUA firms usually charge flat fees, which can mean smaller profits per account than firms earning a percentage of managed assets. They often need to serve many clients or add extra services to stay profitable.
Can Still Get Blamed for Bad Results
Clients might still blame the platform even if an advisor—not the AUA provider—makes a bad investment call. Since AUA firms often interact with clients directly, they may face reputation risks for things they didn’t control.
Harder to Stand Out
Many AUA firms offer similar admin tools and services, making competing harder. Without investment performance as a selling point, firms must stand out with better technology, pricing, or service quality.
No Benefit From Market Growth
Unlike AUM firms, AUA providers don’t earn more when clients’ portfolios grow. That means they miss out on the upside of rising markets unless they add new clients or offer other services to increase revenue.
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Who Is AUA For?
AUA isn’t right for every firm, but it works really well for certain types of businesses and financial professionals.
Custodian Banks and Clearing Firms
These are the big companies that hold and move money behind the scenes. They don’t manage investments but are trusted to keep everything secure and accurate. AUA is the primary way they measure how much they handle.
Fintech and Wealth Tech Platforms
Modern financial platforms often use AUA to provide tools for digital investing, reporting, or retirement planning. They offer the tech and infrastructure that support financial advisors and investors without giving advice themselves.
Third-Party Administrators (TPAs)
TPAs help manage things like 401(k) plans or pensions. They don’t make decisions for participants but are responsible for keeping track of everything and ensuring the plans stay compliant. AUA is a natural fit here.
Independent Advisors and RIAs
Many advisors want to manage their investment decisions while outsourcing the admin work. AUA platforms help them streamline their workflow to spend more time with clients and less time on paperwork.
Institutions and Broker-Dealer Networks
Larger organizations with many advisors or clients use AUA systems to centralize operations and handle assets at scale. They benefit from having a trusted AUA provider manage the technical and regulatory aspects.
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Conclusion
Assets Under Administration (AUA) may not involve managing investments directly, but it’s still a key part of how the financial world runs. It helps platforms, custodians, and service providers support advisors, handle accounts efficiently, and grow their operations—without having to manage someone’s money.
Whether you’re an investor trying to better understand where your money sits or a company building financial services, knowing what AUA is—and how it’s different from AUM—matters.
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