Cash Management Method - RightCapital Help Center

RightCapital offers you multiple ways of projecting cash assets and other taxable investment assets within a client's Retirement Analysis and Cash Flow projections. Which method you choose will depend on how much control you wish to have over cash balances, how they are accumulated, and how they are spent.

To update this setting for a specific client household, open the plan and navigate to the Gear Icon > Settings > Methodology tab. This setting is labeled "Cash management method":

In RightCapital, the client's cash reserve is included in the overall taxable account bucket, along with their taxable investments. The cash reserve portion of the taxable bucket will grow each year according to your asset return assumption for cash. You can visualize a client's cash reserve as it is projected out into the future within the Retirement > Cash Flows > Accounts tab, by clicking into the Taxable column:

Treat bank account as cash; spend cash before taxable

Treat bank acct as cash; spend cash before taxable is the default cash management method in RightCapital. Using this option will cause bank accounts within the plan to be used as the Cash Reserve portion of a client's taxable bucket. This option will spend the cash reserve first, before tapping into taxable assets in the case of negative net flows.

This setting is a suitable option if a client's bank accounts are expected to remain consistent over time, if you wish to illustrate the draw-down of cash to fund a near-term expense, or if you wish to show cash being spent prior to taxable investments. When using this setting:

Any amount entered as a Bank account in the Profile > Net Worth will be treated as cash.
You can only increase the cash amount over time by adding Bank savings cards. This requires a 'Modified cash flow based' planning method.
When liquidating taxable assets to fund cash flow deficits, the cash reserve will be spent before taxable investment assets.

If a client has a large cash balance in a bank account that they plan to use in the near future (for example, as the down payment for a home), this would be a good setting to use as it will automatically spend down the cash first when that expense occurs within the projections.

Treat bank account as cash; spend cash after taxable

Treat bank acct as cash; spend cash after taxable will cause bank accounts within the plan to be used as the Cash Reserve portion of a client's taxable bucket. This option will liquidate taxable assets first, before tapping into cash reserve in the case of negative net flows.

This setting is a suitable option if a client's bank accounts are expected to remain consistent over time, if you wish to maintain a cash balance throughout the life of the plan, or if you wish to show taxable investments being spent before cash. When using this setting:

Any amount entered as a Bank account in the Profile > Net Worth will be treated as cash.
You can only increase the cash amount over time by adding Bank savings cards. This requires a 'Modified cash flow based' planning method.
When liquidating taxable assets to fund cash flow deficits, the cash reserve will be spent after taxable investment assets.

If a client's taxable investments are never depleted, the cash reserve will never be withdrawn from. If a client has an emergency fund in cash that they wish to maintain throughout the life of the plan, this would be a good setting to use.

Use cash reserve goal to manage cash levels

Use cash reserve goal to manage cash levels will enable a Cash Reserve Goal card within the Profile > Goals section, which you can use to precisely specify the dollar amount kept in the client's cash reserve over time:

This setting is a suitable option if you wish to show clients the benefit of investing some or all of their existing cash balance, if you wish to illustrate the accumulation of cash over time, or if you wish to show different levels of cash at different points in time. When using this setting:

Only amounts specified in cash reserve goal cards will be held in the cash reserve. If the target amount entered is less than the client's current cash balance, the surplus will be moved to their taxable investments.
When liquidating assets to fund negative cash flows, taxable investment assets will be spent before the cash reserve.
In the absence of a cash reserve goal, the projections will automatically invest all bank assets. Be mindful not to forget to add a cash reserve goal when using this option.

For more detailed information on the Cash Reserve Goal card and its impact on the client plan, please feel free to reference the article linked below:

Cash Reserve Goal - Data Entry

Pro Tips & Additional Info

When utilizing either of the 'treat bank account as cash' options, you will have the ability to manually distribute assets from a client's bank accounts to use as income within the plan. This can be done using an Income Distribution card, which is entered in the Profile > Income tab. Within this card, you will see a 'Bank' option at the bottom of the 'From account' dropdown:

If you have a general preference when it comes to the cash management method, you have the ability to set that option as the default for new clients. This can be done within your Advisor Portal, by navigating to the Client Settings > Client Presets tab. Making changes here will not impact any existing client households, only new clients that you create going forward:

To learn more about Client Presets, please feel free to reference the resource linked below:

Client Presets - Knowledge Base