Back

Cash Management Strategies

Contents

Introduction

Model Cash vs. Cash Reserves

Cash in a Rebalance

Make Changes to Cash in Client Accounts

Add Cash Reserves

Add Cash Substitutes

Map a Security to Cash

Add Cash to an Account

Cash Management and Dollar Cost Averaging

Using Saved Searches for Cash Management

Suggested Saved Searches

Use a Saved Search to Rebalance for Cash Needs

 

Introduction

With Advisor Rebalancing, you have many different ways to manage cash within your clients' accounts, as well as different approaches to keeping cash in your clients' accounts. Below are the basic strategies you can use for cash management in your accounts.

Top of Page

Model Cash vs. Cash Reserves

You can maintain cash in client accounts by using cash reserves or adding cash to a model. Here is a comparison of these two methods: 

Best Practice

If you use rebalancing groups, place cash reserves in individual accounts rather than placing cash in client models. Placing cash in models will include cash in asset location preferences and may not allocate the target cash to the desired account. By adding cash reserves to individual accounts, Advisor Rebalancing will always rebalance with each account's cash needs in mind.

Top of Page

Cash in a Rebalance

Cash is treated differently in some rebalance types. Here is a summary of how cash is treated: 

Rebalance Type or Setting How Cash is Treated in the Rebalance
Buy Only to Invest Cash Rebalance During a Rebalance, cash in the account, in excess of cash reserves, is invested in the portfolio to minimize overall deviation.
Full Rebalance During a rebalance, each position is traded back to model target, and cash reserves are respected.
Invest or Raise Cash Only Rebalance Advisor Rebalancing will determine the correct cash rebalance type based on each account’s cash situation. If the account has excess cash—that is, there is a Cash for Trading amount on the Cash Management Settings tab—the account is rebalanced using Buy Only to Invest Cash logic. If the account has cash to raise—that is, there is a Cash to Raise amount on the Cash Management Settings tab—the account is rebalanced using Sell Only to Raise Cash logic. This rebalance type will not sell to raise cash.
Min/Max Rebalance During a rebalance, each position is traded back into its min/max tolerance bands, and cash reserves are respected.
Sell Only to Raise Cash Rebalance

This rebalance is used to raise cash to meet cash reserves by selling overweight securities; sells are recommended to raise the required cash—while minimizing deviation—using the fewest number of trades in a tax efficient manner (for taxable accounts).

Tactical Rebalance This rebalance is used for individual models or submodels, rather than the account as a whole. Cash reserves are respected.
Tax Loss Harvesting & Rebalance A buy and sell rebalance where securities in the account that meet each account's tax loss harvesting thresholds are sold. The proceeds are then reinvested back into the account's model and cash reserves are respected.
Tax Loss Harvesting Rebalance A sell only rebalance where securities in accounts that meet each account's tax loss harvesting thresholds for loss are sold, and cash reserves are respected.

Top of Page

Make Changes to Cash in Client Accounts

Cash management starts at the individual account level. The Cash Management Settings tab on the Account Settings page allows you to add intraday cash, set up cash substitutes at the individual account level, and set cash reserves in the account. You can also see, at a glance, if the account has cash to raise or excess cash to invest.

On this page, you can complete the following actions: 

Top of Page

Add Cash Reserves

Cash reserves in Advisor Rebalancing allow you to set aside specific amounts of cash for any cash needs for the client. Cash reserves can be a one-time cash need—like a vacation or cash to purchase a car—or a recurring cash need for management fees, taxes, or Required Minimum Distributions (RMDs).

For more information on setting cash reserves, see Cash Reserves.

Top of Page

Add Cash Substitutes

Cash substitutes are securities that you want to treat as cash for monitoring and allocation purposes. However, unlike sweep cash, these securities require that a trade is entered at the custodian. An example of a cash substitute is a client who holds money in a money market fund. You can then add that fund as a cash substitute in the client's account so that the value of that fund is treated like cash.

For more information on cash substitutes, see Cash Substitutes.

Top of Page

Map a Security to Cash

In some cases, you may want to map certain securities to cash to ensure that these liquid funds are treated like sweep cash—$$$—in Advisor Rebalancing. It is common to have more than one sweep cash security in your portfolio accounting system (PAS).

If you need to have a trade generated for a cash security, set it up as a cash substitute.

For more information on mapping securities, see Security Mapping.

Top of Page

Add Cash to an Account

The amount of cash available in a client's account is updated with your daily upload. However, in some cases, you may want to deposit and use cash on the same day rather than waiting for the next daily upload to update the cash in the client's account. For these scenarios, you can use the Additional Cash setting to add and use cash on a same-day basis.

important

Proceed with caution when using this feature to avoid inadvertently pushing accounts into margin.

To add intraday cash to an account, follow these steps:

  1. On the Accounts menu, click Account Settings.

  2. Type the account name or account number for the account in which you want to add cash Search accounts box. Click Select.

  3. Click the Cash Management Settings tab.

  4. Type the amount of added cash in Additional Cash.

  5. Click Save.

Top of Page

Cash Management and Dollar Cost Averaging

If you want to implement a dollar cost averaging (DCA) strategy in a client's account, you can use the cash reserves feature to do this. You can create a series of expiring cash reserves without start dates to release cash into the account on the dates you've determined.

Upon expiration, you can use the reserved cash to invest into the market or security of your choice.

Top of Page

Using Saved Searches for Cash Management

Saved searches allow you to find accounts that meet specific criteria for cash needs, like accounts that need to raise cash or accounts with excess cash. Once you've created these saved search, you can monitor them from your dashboard for easy access. You can also use these saved searches to filter pages and take account on the accounts that meet your criteria.

Best Practice

Check your saved searches daily to find accounts with cash needs. You can do this easily by adding saved searches to your dashboard.

For more information, see Saved Searches Dashboard Widget.

Top of Page

Suggested Saved Searches

You can create the following saved searches to monitor your cash needs.

For more information on creating saved searches, see Create, Edit, and Delete Saved Searches.

Top of Page

Use a Saved Search to Rebalance for Cash Needs

After examining your saved searches, you can take action and rebalance the underlying accounts in the saved search. You can use the rebalance to raise cash in accounts that need cash, invest excess cash, or rebalance account or models which need to raise or invest excess cash. In particular, the Invest or Raise Cash rebalance type allows you to address each account's cash needs, whether they need to raise cash or invest excess cash.

To rebalance using a saved search, follow these steps: 

  1. On the Rebalance & Trade menu, click Rebalance.

  2. Select the saved search on which you want to take action in the Saved Search list.

  3. Select one or more account in the list in which you want to perform a rebalance for cash management.

  4. Select Set Rebalance Settings in the More Actions list, and then click Continue.

  5. Select the appropriate cash management rebalance in the Set Rebalance Settings dialog box. For more information on cash in the available settings, see Cash in a Rebalance.

  6. Click Save.

Next, you can review trades and approve trades. For more information, see Learn More About Reviewing Rebalances and Trades.

Top of Page