Item 5 – Fees and Compensation
Fees for investment management and wealth advisory services are unique to each client and
documented in the advisory agreement along with other related investment expenses,
transaction and custodial fees. We believe that our fees should not be one-size-fits-all, but
instead should reflect the complexity of your circumstances, the composition of your assets,
and the services that are most important to you. Our compensation is structured to reflect the
depth of service and value provided to you.
Except in limited circumstances described below, we charge a custom advisory fee, structured
as a fixed annual amount. One quarter of the fixed fee is charged quarterly in advance. We do
not have a “standard” fee schedule; the custom fee varies from client to client and is based on
two components: wealth advisory and investment management. Our process is to review client
needs, investment asset size and composition, and the complexity of work required, and to
align our assessment with the client’s own reported needs and values. We then prepare a
proposal describing the custom advisory fee and related services in advance of the agreement.
We provide both basic and premium investment management services. Our basic service is
liquid asset management, including discretionary investment selection, allocation, and
rebalancing. We consider this largely a commodity and price our services for this element
accordingly, based on the following schedule: 45 basis points of the approximate total of assets
Highland Private Wealth Management – ADV Part 2A
March 14, 2022
managed up to $10 million; 25 basis points on all assets above $10 million. Clients typically
receive at least our basic investment management services.
Premium investment management services include services such as providing opinions
concerning illiquid investments, managing and diversifying concentrated holdings, and custom
reporting. The fee for these services is customized and incorporated into our fee separately.
We specify the approximate amount of assets subject to our basic investment management
fees at the time clients enter into an agreement with us, as well as provide a detailed
description of other investment management and wealth advisory services. We then identify
the total fixed custom fee to be assessed annually and billed quarterly. We typically revisit all
services and related fees annually. We will notify clients in writing at least 30 days prior to any
fee change taking effect. Our notice will include the revised liquid assets value (based on our
determination of approximate value as recorded by qualified custodians), any changes in
premium investment management or wealth advisory services, and the revised annual fee. The
date of any such notice will establish a new 12-month fixed fee term.
Our fees are generally not negotiable, though clients may have different needs and values ,
which will cause the stated fee to increase or decrease accordingly. We also reserve the right to
grant market-based adjustments and discounts, where warranted, by applying a negotiated
discount to the total flat fee, rather than altering our fee calculation methodology. Subject to
the exception below, our minimum annual fee is $40,000.
We provide a separate service offering to parents and children of existing clients who would
not otherwise meet our typical minimums or require the full suite of services we offer. Where
we believe it provides a good fit, we make a simplified menu of wealth advisory services
available for an annual fee of $4,000, coupled with an annual investment management fee of
.45%, both charged quarterly in advance. For this offering, unlike our typical basic or premium
investment management service, the asset management fee is calculated quarterly, based on
the market value as of the end of the prior quarter. Accordingly, the actual fee charged will vary
each quarter and will include $1,000 of the annual fee ($4,000/4), plus the applicable quarterly
investment management fee (quarterly AUM *.001125 or .0045/4). We generally waive the
investment management fee for any quarter where the client’s liquid assets under our
management were less than $100,000.
We believe Highland’s fee structure is designed to minimize conflicts of interest and to enhance
transparency. We also recognize that fees based solely on a percentage of assets are common
in the industry and that it’s possible a given client could receive similar services for more or less
on an asset basis than we are charging on either a fixed, custom annual fee basis, or on a
combined fixed fee plus asset-based fee basis.
Highland Private Wealth Management – ADV Part 2A
March 14, 2022
We are mindful of our fiduciary status and the importance of putting client interests ahead of
our own. We have developed our approach with that understanding and have identified a
possible conflict of interest inherent in a custom advisory arrangement, which we describe to
ensure full and fair disclosure. Our own role as advisor means we have greater expertise in
financial matters generally and are in a position to potentially encourage clients to agree to
more services than they might need or want. We believe that our actual practice and the
collaborative nature in which we identify those services clients value, mitigates any conflicts
that might arise.
We bill our fees quarterly, in advance. At inception, fees for partial periods will be prorated
from the date of the agreement through the end of the calendar quarter. For agreements that
are terminated during the quarter, we will refund the unearned portion of that quarter’s
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