The start date of your cash flow projections can be an important variable for clients who are focused on the short term, and RightCapital offers three different options to choose from. You can set the cash flows to start at the beginning of the current calendar year, at the beginning of the next calendar year, or at the beginning of the next calendar month.
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 flow in simulation starts":
Jan 1st of this year is the default cash flow start date in RightCapital. With this option selected, the cash flow projections will begin on January 1st of the current calendar year. Currently, this would be 2024. Each cash flow year will reflect January 1st through December 31st of the year listed:
This setting can be helpful for showing clients what they can expect their current year cash flows to look like near the beginning of the calendar year. It can also be useful for illustrating current year tax projections. The full amount of all cash flow items (income, savings, expenses, goals, etc.) will be reflected in the cash flows for each year, including the current year.
As the year goes on, do be aware that year one of the cash flows will still begin on January 1st of the current year as long as this setting is selected. This is something to be particularly mindful of if a client's investments are linked within the Net Worth section of the Profile, and are feeding in current balances on a regular basis. The values in the Net Worth will be seen as the starting balances for cash flow year one, even if those balances have changed since the beginning of the year in reality.
Why does this matter?
Year one of the cash flows will experience a full year's worth of investment growth (portfolio return) within the cash flow projections. If the client's current account balances already account for some growth that has occurred during the year, that growth will be double-counted within the projections.
Additionally, if a client's current account balances reflect large changes that are also modeled within year one of the plan, those items will also be double counted. When using this option, be mindful to remove large cash inflows and outflows from the projections once they occur in reality.
Jan 1st of next year will start the cash flow projections on January 1st of the following calendar year. Currently, this would be 2025. Each cash flow year will reflect January 1st through December 31st of the year listed:
This setting can be helpful for showing clients what they can expect next year's cash flows to look like near the end of the calendar year. Cash flow items (income, savings, expenses, goals, etc.) that are set to occur in 2024 or earlier will not be reflected within the cash flow projections.
Please be aware that with this option selected, account balances in the Net Worth section of the Profile will be seen as the starting balances for cash flow year one. If a client's investments are linked and are feeding in current balances, there may be some near-term savings and investment growth that will not be reflected within the projections.
Note on Debt and Student Loan Modules
The Debt and Student Loan sections reflect monthly projections starting with the upcoming calendar month, irrespective of the cash flow timing option selected. If you use a calendar year projection option, and elect to illustrate a Debt strategy or Student Loan strategy in the action items of the Retirement Analysis, the timing shown in the cash flows may differ from what is shown on the Debt or Student Loan screens, because the projection is starting at a different time.
For example, you may see Student Loan forgiveness in 2030 on the Student Loan Details screen, but it may be reflected in 2029 in the cash flows if your cash flow projections start on Jan 1st of this year.
Current month (rolling 12 months) will use the 1st of the upcoming month as the cash flow start date. Within the Cash Flows, you will see everything projected out for annual periods, labeled using the year at the end of the period, and the client's age at that time.
Rolling 12 Month Examples:
For example, on August 15, 2024, the start date of the cash flows would be September 1st, 2024. The first row of the cash flow projection will reflect September 1, 2024 - August 31, 2025, labeled as year 2025, with the client' age as of August 31, 2025:
One more example: on February 2nd, 2025, the start date of the cash flows would be March 1st, 2025. The first row of the cash flow projection will reflect March 1, 2025 - February 28, 2026, labeled as year 2026, with the client's age as of February 28, 2026:
This option comes the closest to aligning a client's current balance sheet with their cash flow projections, and can be helpful for mitigating some of the pitfalls described above when using calendar year projections. Do be aware that when using this option, some cash flow items may be offset within the cash flows depending on the time of year that they occur. For example, if a client's social security begins on July 1st, 2025, and your cash flow start date is April 1st, 2025, social security benefits will begin in the cash flow year labeled 2026 (April 1, 2025 - March 31, 2026).
Cash flow items (income, savings, expenses, goals, etc) will be shown in the annual period that corresponds to the start and end years/ages that are entered. So an item that starts and ends in 2025 will be reflected in 2025. An item that starts and ends at the client's age 60 will be reflected in the 12 month rolling period in which the client turns 60.
You can switch between cash flow start dates freely in the Gear Icon > Settings > Methodology tab for a client, without losing any data entered into the client plan. This can be useful for visualizing the differences that cash flow start dates will have on a client's projections.
Some successful advisors will use Jan 1st of this year in the first six months of a calendar year, and then switch to Jan 1st of next year for the last six months of the year. This helps keep a client's near-term projections as accurate as possible, while also maintaining the visual clarity that accompanies full calendar year projections.
If you have a general preference when it comes to the cash flow start date, 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:
