Setting Up High Water Marking

Advisors who select Percent of P&L as the basis of their client fees can apply High Water Marking to the billing period client fees to offset periods of losses in a volatile market. Advisors cannot charge a profit-based fee as long as a cumulative loss exists. You set up High Water Marking on the Client Fees > Configure page when you select Percentage of P&L as the client fee method.

Fund Investment Managers with Separately Managed Accounts (SMAs) can also apply High Water Marking to fees for their SMA accounts.

To set up High Water Marking

From the dashboard, click Fees > Configure Client Fees .

The Configure Fees page opens. Select one or more client accounts by clicking the check box next to each one, then click Continue.

If you have a large number of client accounts, you can sort the list by any column heading, including Account Number, Account Alias, Account Name, Date Opened and Template. Simply click the arrows next to a column heading to sort the list by that heading.

Click the configure (gear) icon to make changes to your selected client(s) account.

Select the Percentage of P&L check box. The Percentage of P&L options appear.

Use the drop down menu for either Annual P&L or Quarterly P&L, then enter a percentage in the field provided.

You can set up High Water Marking for both annual and quarterly P&L if you are using both as the basis of your billing of client fees.

The High Water Mark Setup toggle button appears.

Select Yes to "Configure High Water Mark?" The High Water Mark setup fields appear.

You set up High Water Marking separately for annual- and quarterly-based P&L fees.

Enter the following information:

Quarters/Years - Specify the number of look-back periods (in quarters or years, based on the period selection in the Percent of P&L fee schedule).
If you are setting up High Water Marking for annual P&L, you can leave the Years field blank for perpetual look-back.

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.
Prorate - Select Yes to prorate or No if you do not want to prorate. If you choose choose 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.

Current period losses are never adjusted by current period withdrawals, gains are not prorated and deposits are not used to prorate losses.

Previous Losses - Initialize High Water Marking with previous periods' losses by entering the amount of the losses for one period. Click the Add link to add losses from additional previous periods.

Click Continue. Your High Water Marking setup will be effective on the day we process the approved client agreement.

Your modified client account fee schedule is displayed. While pending you have the option to cancel the fee change or print the form to directly mail to the client.