Use Str() Function. It takes three arguments(the number, the number total characters to display, and the number of decimal places to display

  Select Str(12345.6789, 12, 3)

displays: ' 12345.679' ( 3 spaces, 5 digits 12345, a decimal point, and three decimal digits (679). - it rounds if it has to truncate, (unless the integer part is too large for the total size, in which case asterisks are displayed instead.)

for a Total of 12 characters, with 3 to the right of decimal point.

You can't use parameters/variables for precision, so you'll need to use dynamic SQL for this. Performance overhead here is relatively close to zero.

DECLARE @NumberOfDecimalPlaces tinyint;

SET @NumberOfDecimalPlaces = 3;

DECLARE @sql nvarchar(max) = N'SELECT FormattedActualValue = 
  CONVERT(DECIMAL(16, $decimal_places$), 13.5457);';

SET @sql = REPLACE(@sql, N'$decimal_places$', COALESCE(@NumberOfDecimalPlaces,2));

EXEC sys.sp_executesql @sql;

After seeing Gianluca's answer I started to play with something else, which may or may not suit your needs (depending on whether you want trailing zeros when @DecimalPlaces > (decimal places in original value):

DECLARE @DecimalPlaces tinyint       = 5,
        @ActualValue   decimal(16,5) = 3.561735;

SELECT LTRIM(STR(ROUND(@ActualValue,@DecimalPlaces),20,@DecimalPlaces));