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High Water Marking

Advisors who select Percent of P&L for their client fees can apply High Water Marking to the billing period client fees to offset periods of losses in a volatile market. You set up High Water Marking when you select Percentage of P&L in Automatic Billing. 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 no High Water Marking.

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 The losses are reduced in proportion to the percentage of equity that was withdrawn.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.

If you have assigned Money Managers to direct trading and investment activity for client accounts, then you specify Wealth Manager fees as described above, and have separate fee schedules for Money Managers. Wealth Manager fees are those fees paid to you when you trade for client accounts. Money Manager fees are fees paid to a Money Manager when he or she trades for client accounts, and you set those client fees on the Money Manager Assignment page in Account Management. For more information, see Money Managers.