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Cash Substitutes
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Cash substitutes are position-traded securities that Advisor Rebalancing treats as cash for monitoring and allocation purposes. However, unlike cash, these cash substitutes will actually create a trade when sold.
A new client currently holds $10,000 in a position-traded money market fund, in addition to holding sweep cash, and you want to treat the money market fund like cash, not like a security. To do this, you create a cash substitute in the client's account. Advisor Rebalancing then treats the client's holdings in the money market fund as cash.
During a rebalance, Advisor Rebalancing will treat a cash substitute as cash. If a client needs to raise cash to meet a reserve, Advisor Rebalancing will recommend sells in order to increase cash needs. If a client has cash to invest, Advisor Rebalancing will recommend buys, using rank to determine which cash substitutes to use.
During a rebalance, sweep cash is used before generating trades to sell cash substitutes.
In addition, Advisor Rebalancing uses these rules when using cash substitutes:
Models: Cash substitutes cannot be included in models
Unmanaged assets: Cash substitutes cannot be treated as unmanaged assets.
Directed trades: Cash substitutes cannot be used for directed trades.
Other security substitutes: Cash substitutes created at the global level cannot be security substitutes for any other security.
You can create a cash substitute in individual accounts or at the global level, across all accounts.
Cash substitutes at the account level will override any global cash substitutes.
To set up cash substitutes at the account level, follow these steps:
On the Accounts menu, click Account Settings.
Type the account name or account number for the account in which you want to create a cash substitute in the Search accounts box. Click Select.
Click the Cash Management Settings tab.
Click Add under Cash Substitutes. This creates a blank row.
Type the ticker of the security you want to designate as a cash substitute in Security. When you see the security in the list, click it.
Type your rank for the cash substitute in Rank.
If Advisor Rebalancing needs to generate cash during a rebalance, the cash substitute securities will be sold in order of rank, with 0 being the highest sell priority. The $$$ ticker must be ranked 0.
Click Add to add additional cash substitutes, if desired. You can add as many as you'd like.
Click Save.
To set up cash substitutes that apply to any account at your firm, follow these steps:
On the Securities menu, click Substitutes.
Type $$$ in Search securities and then click View Details.
Click + Add Security.
Type the ticker of the security you want to designate as a cash substitute in Search securities. When you see the security in the list, click it.
Type your rank for the cash substitute in Rank.
If Advisor Rebalancing needs to generate cash during a rebalance, the cash substitute securities will be sold in order of rank, with 0 being the highest sell priority. The $$$ ticker must be ranked 0.
Click + Add Security to add additional cash substitutes, if desired. You can add as many as you'd like.
Click Save.
Cash substitutes follow some settings and restrictions while ignoring others. The following is a summary of how cash substitutes interact with settings and restrictions:
Advisor Rebalancing adheres to the following settings when using cash substitutes:
Global security restrictions.
Advisor Rebalancing ignores the following settings when using cash substitutes:
Account-level minimum holding sizes.
Account-level maximum gain amounts.
Account-level minimum trade sizes.
Allow Violation of the Wash Sale Rule setting at the account level.
The following definitions may help you differentiate various cash reserves columns and fields you see in Advisor Rebalancing:
