Eligible Haven 7 sleeves pay us only after reaching a new high
The Valla Accord applies only to eligible portfolios designed by Valla for clients meeting the SEC qualified-client standard. Other assets and clients follow the applicable conventional fee terms; see ‘What you should know’ below.
Nothing is ever set aside or held back: every dollar stays invested until a fee is collected. Illustrative and educational; the examples below show no rates of return and are not predictions. Please read the important information at the end.
A question worth asking
What happened to your fee in 2022?
In 2022 the U.S. stock market fell about 18% and the bond market fell too — one of the worst years for a “balanced” portfolio in decades. Most households lost money. Most advisors were paid in full.
That isn’t dishonest. It’s just how the standard fee works: a percentage of what you have, charged every quarter, up year or down. The advisor is paid for holding the money, not for growing it.
We think the fee should feel fair in the years that test you — not just the years that reward you. So for clients who qualify, ours waits.
How it works
The high-water mark.
Think of a tide line on a harbor wall. The eligible Valla-designed portfolio value reaches a high and that becomes the mark. We collect the Accord fee only in a period that ends above it. In between, nothing is collected or set aside from those portfolios. While you remain a client, the fee comes due only when the eligible portfolios are back above the line and only from the ground above it. If you end the relationship first, the uncollected amount is waived. Other assets follow the advisory agreement's applicable fee terms.
The rules, in plain English
Eight sentences.
The rate is one percent on eligible portfolios designed by Valla.
The Accord does not apply to other portfolio assets or services. Their applicable fees are stated separately in the advisory agreement.
It is collected only in a period that ends above your prior high.
A flat period or a down period: nothing leaves your account. Nothing is set aside either — there is no escrow. Every dollar stays invested and keeps working.
The fees you owe come due when you reach a new high — from the ground above it.
When you cross the old mark, this period’s fee and the ones from the periods in between are collected together, only out of the gain above the mark. Each of those earlier fees is calculated on that year’s own, lower value — one percent of what the account was worth then, not now. Paying them can never take you back below your high; anything left waits for the next high.
Fees leave at highs, never at lows.
Deducting a fee when your account is down means selling investments at low prices to pay it — a negative dollar-cost average that locks in the damage. Ours only ever leaves when you are at a new high. That is exactly when you would choose to pay it.
The high is measured after fees.
You don’t pay again on ground the last fee already took.
Money you add or take out doesn’t count as gain or loss.
A deposit for the lake house or a withdrawal for the kitchen adjusts the mark; it doesn’t trigger or dodge a fee.
Custodial and options costs are separate, every period.
Schwab or Fidelity charge for trades and options regardless of whether we are paid. We don’t receive any of it.
We are working in the periods we aren’t collecting.
Rolls, wait notices, quarterly retrospectives, the phone call when life changes — all of it continues. That’s the point.
A story instead of a formula
Four years with Anne.
Anne is 52. She sold the business she and her late husband built, and she wants one plan she can read and one person she can call. She qualifies for the performance fee and holds eligible portfolios designed by Valla. Here is how the Accord behaves on those portfolios across four very different years—with no numbers, because the rule is the point.
An illustrative example — not a client, no returns shown
Year one
The market is kind. Anne’s account ends the year above where it started — a new high.
Fee collected.
One percent — and this becomes her high-water mark.
Year two
A rough year. The account ends below the high it set in year one.
Nothing collected.
Nothing leaves the account and nothing is held back; every dollar stays invested. The year’s fee is noted at one percent of this year’s lower value. We roll the buckets, run the retrospectives, re-date her kitchen. Same work.
Year three
Recovery. The account climbs back — but ends just short of the year-one high.
Nothing collected.
Recovering ground you already paid on isn’t new money. This year’s fee is noted at one percent of this year’s value, and everything stays invested.
Year four
The account finally moves past the old mark and sets a new one.
Fee collected.
This year’s fee plus years two and three — each calculated on that year’s own lower value — taken only from the ground above the old high, never enough to drop her below it. Anything left waits for the next high.
In two of four years, nothing left Anne’s account for advice — and nothing was held out of the market either. When the fees did leave, it was at a new high, from money she had actually made, with the down years’ fees figured on the down years’ values. The rate isn’t different. The timing is.
Why we do it this way
Because it aligns us.
A fee that gets paid no matter what quietly changes what a firm optimizes for: gathering assets, not growing them. Ours only gets collected when your account is worth more than it has ever been. That is the one outcome you actually want.
It also keeps us honest in the retrospective. We can’t blame the market for a flat year and still send an invoice. We can only send it once you’re back above your high — and only for the part above it.
“We’d rather earn it than collect it. ”
The honest part
What you should know.
It creates an incentive.
A fee tied to new highs gives any adviser a reason to take more risk. The SEC requires us to tell you that, and it’s true. We manage it by running the same Haven buckets for every client, fee type or not, and by having our compliance officer review every fee calculation before it is charged.
This isn’t a discount. It’s timing.
While you remain a client, the years we don’t collect are deferred rather than forgiven: they are calculated on those years’ lower values and may be collected later from the gain above your high. Nothing is escrowed in the meantime — every dollar keeps working. If you end the relationship, the accrued but uncollected amount is waived.
Not everyone qualifies — and that’s fine.
The SEC sets a standard for who may be charged a performance fee: currently $1.4 million invested with the firm or a net worth above $2.7 million, not counting your home. That rule is the regulator’s, not ours. If you don’t meet it, we still work together — the fee is simply the conventional one percent, collected every quarter, because that’s what the rules allow. Everything else about Valla — the buckets, the plan, the quarterly retrospective, the people — is identical.
Other costs continue.
Custodial, trading and options costs are charged by Schwab or Fidelity in every period.
Questions Anne asked
Fair questions. Straight answers.
Does the Accord apply to everything Valla manages?+
No. It applies only to eligible portfolios designed by Valla for clients meeting the qualified-client standard. Other portfolio assets and services follow the applicable fee terms in the advisory agreement and Form ADV.
Is this a hedge-fund fee?+
No. Hedge funds typically charge a management fee plus a share of profits. Ours is one fee, one percent, the industry rate — simply not collected until you’ve made new money, and never held out of the market in the meantime.
Can it ever cost me more than a normal fee?+
Over time, no — one percent a year is the ceiling, and the down years’ fees are figured on the down years’ smaller values. In a recovery year the fees owed come due together, so that year’s collection can be larger than one percent of that year. But it is only ever taken from the gain above your old high, never enough to drop you below it, and anything left waits for the next high.
So where do the fees go in the years you don’t collect?+
Nowhere. They aren’t set aside, escrowed or held out of the market. Every dollar stays invested in your buckets. We simply keep a record of what’s owed, and collect it when you reach a new high.
Why is it better for the fee to come out at a high?+
Because paying a fee when your account is down means selling investments at low prices to cover it — a negative dollar-cost average that locks in the loss. Paying it at a new high means it comes from money you have actually made, at prices you would be happy to sell at. That’s the way round you’d choose if anyone asked you.
I’m taking money out for the kitchen next year. Does that trigger anything?+
No. Withdrawals adjust the high-water mark so they aren’t counted as a loss; deposits aren’t counted as a gain. Only what your investments actually do moves the mark.
Who checks the math?+
The fee is calculated at the end of each period, reviewed by Invictus’s chief compliance officer, and shown to you with the calculation before it is deducted.
What if I don’t qualify?+
We still work together. SEC rules only permit a performance-based fee for clients above a set threshold, so below it the fee is the conventional one percent, collected each quarter whether the year is up or down. Nothing else changes — same buckets, same plan, same retrospective, same people. And if your situation crosses the threshold later, we can move you to the performance fee at your next agreement anniversary.
Are you really working in the years you’re not collecting?+
Yes. The rolls, the wait notices, the retrospectives and the calls don’t pause. We built it that way on purpose.
What happens to the fees owed if I leave?+
They are forgiven. If you end the advisory relationship, any accrued but uncollected Valla advisory fees are waived. We do not turn a waiting fee into an exit fee or a financial reason to stay.
Valla
We are paid when you win.
One percent on eligible portfolios designed by Valla—collected only when those portfolios are above their high-water mark, only from the ground above that mark, and never while those portfolios are below it. Other assets follow the fee terms in your advisory agreement.
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