At Zignaly, investors don’t pay upfront management fees. Instead, we use a performance-based compensation model called Profit Sharing, where Wealth Managers only earn when YOU earn.
But how exactly is this calculated? And what’s the High Water Mark that everyone keeps mentioning?
Let’s break it down.
What is the High Water Mark?
The High Water Mark (HWM) is the highest peak in your investment balance that has been used to calculate a success fee.
You will only be charged a success fee when your balance goes above this mark, meaning that the Wealth Manager is generating new profits for you.
No fee is charged if your balance goes up but hasn’t passed the last High Water Mark.
🔁 Why use this model?
✅ It ensures Wealth Managers only earn when you do.
✅ It protects you from being charged again for the same profits.
✅ It keeps incentives aligned — your success is their success.
How Does Zignaly’s Profit Sharing Model Work?
Under Zignaly’s model:
Investors deposit funds into a service managed by a Wealth Manager.
The Wealth Manager trades on your behalf.
You keep most of the profit.
A Success Fee (for example, 30%) is charged only on new profits (above the High Water Mark).
Let’s See an Example (Simple Numbers)
Here’s a 4-day scenario to show how this works.
🎯 Assume:
Success Fee (SF): 30%
Starting High Water Mark (HWM): $1,000
📅 | 💼 Investment Balance | 📈 | 💸 Success Fee | 🧮 | 📊 | 📘 Explanation |
1 | $1,000 | +100 | $0 | $1,100 | $1,000 | Profit made, but we wait 3 days to confirm it. No fee yet. |
2 | $1,100 | +10 | $0 | $1,110 | $1,000 | Another profitable day, but still within the 3-day wait. |
3 | $1,110 | +10 | -$30 | $1,090 | $1,090 | Time to charge a success fee. We look at the lowest balance of the past 3 days ($1,100). Confirmed profit = $1,100 - $1,000 = $100 → 30% = $30. |
4 | $1,090 | +5 | -$1.50 | $1,093.50 | $1,093.50 | New confirmed profit: $1,090 → $1,095. That’s a $5 gain. 30% of $5 = $1.50 success fee. Balance grows, but slightly less due to fee. |
Example notes:
On Day 1, the balance was $1,000, but by the accounting time of Day 1 (after the $100 profit), it became $1,100.
So the lowest balance of the past 3 days (Days 1 & 2 in this case) is $1,100.
Explanation per day:
On Day 1, your balance increased from $1,000 → $1,100 (but no fee was charged).
On Day 2, the balance moved to $1,110 (still no fee).
On Day 3, the system sees that the profit has held for 3 days and is now ready to charge a success fee.
Confirmed profit:
Lowest of the past 3 days - HWM= $1,100 (lowest balance of Days 1–3) - $1,000 (HWM)
= $100
Success Fee = 30% × $100 = $30
Why Did My Balance Drop on a Profitable Day?
It’s a common and fair question.
Even if your investment made a profit on that day, your balance can decrease due to the Success Fee being applied based on profits confirmed from previous days.
It’s not a loss — it’s a performance fee for profit already earned above the previous High Water Mark.
Zignaly’s Profit Sharing model is designed to be transparent and performance-driven. You only pay your Wealth Manager when they make you money, and the High Water Mark ensures you’re never overcharged.
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