Adjusting System-Wide Client Presets
RightCapital exists for financial planning done just right. RightCapital is perfectly tuned for tailor-made advising. The first step in breaking out of the box and letting your unique approach to advising shine is to customize the global settings applied to new clients you create or import from a 3rd-party CRM integration.
To change settings on a client-by-client basis, read the article on client settings & methodology.
This article identifies how to make changes that affect all new clients.
All values listed on the Client Presets tab will be applied to new clients created in RightCapital. Any changes made will only apply to new clients; existing clients that you have in the system will not be impacted.
Methodology
Planning method
The planning method indicates how RightCapital handles surplus/shortage of cash flow in any given year. To learn more about planning methods and their impact on a client plan, read our article on understanding planning methods, as well as our article on cash flows.
Cash flow in simulation starts
This setting determines the timing of the cash flow projections, whether you use a rolling 12-month projection or illustrate a calendar-year-based projection starting at the beginning of the current year or the next year. See additional details on cash flow timing options.
Withdrawal sequence
Pro-rata
Taxable, tax-deferred, tax-free
Taxable, tax-free, tax-deferred
Taxable, pro-rata
Tax-deferred, taxable, tax-free
Planned distribution method
The default option combines any distributions inputted with the calculated RMD amount for one distribution value (the sum of RMD and other distributions).
Allocation method
New asset allocation models can be created in the Advisor Portal > Models Tab > Portfolios area to be used in all client plans.
The third choice is a default or customized glide path for each client. If a glide path is enabled, the client's investment allocation will slowly migrate to the glide path allocation over the specified number of years. See additional details about glide paths.
Cash management method
The default option will spend down cash bank accounts before tapping into the taxable assets. You can modify the order in which the buckets are tapped by utilizing the second option, 'Treat Bank Account as Cash; Spend After Taxable'.
Lastly, should you want to demonstrate the impact of investing the cash held in a bank account, you can utilize a cash reserve goal.
For further insight into our cash management methods please review this article.
Distribute Investment income from taxable account after retirement
This setting allows users to distribute investment income (interest + dividends) from taxable accounts at designated times within the plan. When enabled, investment income will display in the Cash Flows section under the Income Inflows column. Investment income distribution can begin after the first client retires, every year, or never.
Health Savings Account distributions
This setting determines when the system will start using Health Savings Account (HSA) assets to fund medical expenses. The following options will help you customize automatic HSA distributions in RightCapital:
- Start to fund medical expenses immediately: HSA assets will accumulate until the first medical expense takes place in future cash flows.
- Start to fund medical expenses at first retirement: HSA assets will accumulate until the year the first client / co-client retires. At that point, the HSA will automatically distribute to cover medical expenses.
- Start to fund medical expenses at second retirement: HSA assets will accumulate until both clients retire. At that point, HSA's will automatically distribute to cover medical expenses. If there is only one client (no co-client), you should select either funding expenses immediately, at the client's age, at a calendar year, or at the first retirement since there is no second retirement.
- Start to fund medical expenses at client's or co-client's age: HSA assets will accumulate until the specified client's age. At that point, the HSA will automatically distribute to cover medical expenses.
- Start to fund medical expenses in calendar year: HSA assets will accumulate until a specific calendar year. At that point, the HSA will automatically distribute to cover medical expenses.
Retirement expense timing
This setting indicates when the retirement expense (under the Profile > Goals tab) takes effect. Options include coinciding with the first client to retire or the second client to retire within the plan.
Include bank accounts in Asset Allocation chart
The default setting is to NOT include bank accounts in the asset allocation chart.
Use taxable account to fund IRA and 529 saving when current year cash flow is inadequate
The default setting is that clients will NOT use taxable accounts to fund IRA and 529 savings when the current year's cash flow is inadequate. If there are insufficient cash flows in any year RightCapital will not reflect the contributions in that time period.
If the setting is checked, RightCapital will first fund those contributions from cash flows; if there are insufficient cash flows in any year RightCapital will then look to fund those contributions from the value in taxable accounts. If there is no available money in taxable accounts, RightCapital will not reflect the contributions in that year. This setting will automatically calculate a withdrawal (and taxes) from a taxable investment account to maintain savings goals in non-taxable accounts in years when other income sources are unable to meet the specified savings goal.
Rebalance across account types for current allocation
The default setting is that financial plans will rebalance across account types for current allocation.
This setting will automatically calculate a shift in assets from their current values to such values that will align with the current investment allocation breakdown.
If checked, RightCapital will use the rate of return associated with the overall current allocation for each investment type (e.g. taxable account, IRA, etc.) when calculating the projections using the client's current allocation.
Take annuity RMD from IRA account first
The default setting is that financial plans will NOT take annuity RMD from the IRA account first.
This setting, if checked, allows you to delay taking withdrawals from qualified annuities with a lifetime income guarantee ( set up with a distribution type of 'Lifetime Income') by satisfying the annuity's Required Minimum Distributions (RMD) from the client's traditional IRA accounts or other qualified annuities. This allows clients to delay withdrawals on the lifetime income annuity in order to provide a higher guaranteed income amount in future cash flows.
If the setting is unchecked, we will calculate the RMD for lifetime income annuities each year starting in the year the client turns 73 and will distribute the greater of the RMD or the client's lifetime income amount in that year.
Only use this setting if your client has sufficient funds in their IRA or other qualified annuities to cover the additional RMDs. If there are insufficient funds in their IRA or qualified annuity to cover the additional RMDs, the client's RMDs will be understated as we will not take the balance from the annuity.
Whether the setting is checked or not, once lifetime income withdrawals begin, those withdrawals will count towards the total RMD required across your clients' IRA and qualified annuity accounts. If the lifetime income amount exceeds the RMD calculated for the lifetime annuity, we will reduce the RMD from the client's traditional IRA by the excess amount.
Allow display of scenario-specific cash flows
As a default, scenario-specific cash flows will not be displayed in the financial plan.
Advisors will be able to illustrate specific return scenarios in the cash flow tables. The cash flows automatically display a static/baseline investment return each year. When this setting is turned on, all new users can view the impact of varying return scenarios in the cash flow projections by adjusting the "baseline" dropdown menu. Customized return sequences can be added by the advisor in the Advisor Portal > Models > Scenarios tab.
Spend unsaved RMD/distributions (Modified Cash Flow only)
The default setting is that clients will not spend unsaved RMD/distributions.
If you wish to have RMDs, and any manual distributions, automatically spent rather than saved, check the 'Spend unsaved RMD's box in the client settings. When checked this setting will automatically spend excess income from Required Minimum Distributions that are not used for expenses or goals in a specific year. Spent RMD's can be seen in the Retirement > Cash Flows > Summary > "Spend unsaved cash flows" column.
Include Taxable Saving in the Planned Saving column (Modified Cash Flow only)
Use 529 accounts to fund Pre-College Education goals
Plan parameters
Planning horizon
This controls the default planning horizon (age at which we assume the client(s) pass away for both the client and co-client.
Residence state
Retirement age
The default is age 67. This setting indicates the retirement age that all new clients should start with.
Annual retirement health cost estimate
The default is the National average. This setting indicates which type of health cost estimate all new clients should start with.
Annual retirement LTC duration
The default setting is the Last 2 years of plan. This setting indicates how many years of LTC cost all new clients should start with.
Annual retirement LTC cost estimate
The default setting is In-home care - national avg. The setting indicates the LTC cost estimate that all new clients start with.
Spending strategy
Indicate the retirement spending strategy that will be used to project retirement expense goals within each new financial plan.
Target allocation
Average AUM fees
Indicate the average AUM fee that will reduce all non-annuity invested asset returns within each new financial plan.
Historical Net Worth Period
This controls the default time period for the Historical Net Worth chart on the Dashboard > Balance Sheet screen.
Other settings
Client action item permission
This setting controls how clients interact with the action items on sections like the Retirement Analysis screen. Learn more about the client experience here.
Client profile item permission
This setting controls how clients interact with the profile items. There are two options, "Client can update profile information" and "Client cannot change their profile information, information will be read only".
Discount rate used for Social Security Optimization
This setting allows you to apply a discount rate that will impact the optimal Social Security strategy. Users can select a specific discount rate or use the general inflation rate. If a discount rate is chosen, that rate will be used to discount all future Social Security benefits for each strategy back to the current year. The goal of this setting is to allow advisors to simulate taking income earlier and investing it as part of the optimal Social Security Analysis. For additional information on using the Social Security Optimizer please click here.
To set individual settings on a per-client basis, review information on the planning method and other plan settings here.