A client fee option for advisors who select Automatic Billing > Percent of P&L as the basis of their client fees used to offset periods of losses in a volatile market. Advisors cannot charge a profit-based fee as long as a cumulative loss exists. High Water Marking lets an advisor:

  • Specify a look-back period (in quarters or years, based on the period selection in the Percent of P&L fee schedule).
  • High Water Marking keeps track of cumulative losses per billing period within the specified look-back period. A loss in any period will be added to the look-back period’s cumulative losses. A gain in any period will decrease the cumulative loss recorded to date. By default, the look-back period is zero, which means that High Water Marking will NOT be in effect.
  • Prorate for withdrawals. If an advisor chooses to prorate, withdrawals in the current period reduce any cumulative losses that are carried over from previous periods. The losses are reduced in proportion to the percentage of equity that was withdrawn.
  • Note that current period losses are never adjusted by current period withdrawals, gains are not prorated and deposits are not used to prorate losses.
  • Optionally initialize High Water Marking with previous periods’ losses by entering the amount of the losses. These losses may have been incurred for the client in another account or with another broker. Gains are applied to the oldest losses first.

High Water Marking is effective on the day we process the approved client agreement.