Financial portfolio risk management

• US 20020147671A1
• Filed: 08/15/2001
• Published: 10/10/2002
• Est. Priority Date: 11/01/1999
• Status: Active Grant

• Current Assignee: Accenture Global Services Limited (Accenture PLC), United India Insurance Company Limited
• Original Assignee: Accenture Global Services Limited (Accenture PLC)
• Inventors: Sloan, Ronald E., Slutsky, Stephen B.
• Granted Patent: US 7,831,494 B2
• Time in Patent Office: Days
• US Class Current: 705/36
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/03 Credit; Loans; Processing thereof
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis
• CPC Class Codes: G06Q 40/08 Insurance

Abstract

The present invention relates to a financial portfolio risk modeling system. The system operates in a collaborative computing environment between the user and the portfolio development system. The portfolio generating system models the user'"'"'s personal investment parameters into a user profile in terms of the user risk tolerance level, user investment style and user bull/bear attitude. The system further calculates Value At Risk (VAR) values for the user. The system filters various securities based on their VAR and Beta values and present two list of filtered securities, with opposing Beta values, matching the user profile. The present invention enables the user to swap securities in and out of his existing portfolio and receive an analysis of the effect of the swap on his portfolio. The model also generates an ideal portfolio based on the user profile. The present invention presents the user with an estimated value of his portfolio, based on a regression formula as well as a possible best and worst scenario based on statistical formulas.

Claims

1. A method for developing a financial portfolio comprising:

determining a user'"'"'s current financial portfolio;

determining a user profile based on personal financial parameters including a risk tolerance level; and

suggesting changes to a user'"'"'s financial portfolio reflecting the user'"'"'s profile.

2. The method of claim 1 wherein the personal financial parameters further include:

a user investment style; and

a user bull/bear market attitude.

3. The method of claim 1 wherein said user risk tolerance level is determined by:

displaying to the user a series of progressively more negative financial scenarios;

analyzing the user'"'"'s response to each negative scenario; and

generating a risk tolerance level based on the user'"'"'s responses.

4. The method of claim 1 wherein said user investment style is determined by:

displaying to the user a series of test scenarios; and

generating said user investment style based on the user responses to these test scenarios.

5. The method of claim 1 wherein said user bull/bear attitude is determined by:

displaying a series of user selected expert opinions;

analyzing the user'"'"'s response to the opinion; and

generating said user bull/bear attitude based on the user responses.

6. The method of claim 1 further comprising:

filtering a list of securities based on the user profile; and

presenting the securities list to the user for possible security swaps, wherein securities can be added to and removed from the portfolio.

7. The method of claim 6 wherein filtering a list of securities comprises:

obtaining a Value At Risk (VAR) and a Beta value for each security;

rejecting certain securities not complying with the user profile based on their VAR values and their Beta values.

8. The method of claim 6 wherein the risk management model calculates a VAR and Beta value for the user'"'"'s portfolio.

9. The method of claim 6 further comprising:

comparing the VAR and Beta value for the user'"'"'s portfolio to the VAR and Beta values of various user selected market indices; and

displaying the result to the user in a graph.

10. The method of claim 1 wherein a compound growth factor is calculated by:

using linear regression and natural logarithm.

11. The method of claim 10, wherein the user portfolio'"'"'s future performance is projected using the compound growth factor.

12. The method of claim 6 further comprising:

allowing the user to select at least one security from a list of filtered securities;

swapping said securities with securities in the user portfolio; and

analyzing and displaying the effect of said swapping on the user'"'"'s portfolio.

13. The method of claim 6 wherein the filtered list of securities are displayed in two columns, one for securities with positive Beta values and one for securities with negative Beta values.

14. The method of claim 1 wherein the financial model developer creates an ideal portfolio based on the user profile.

15. The method of claim 1 wherein the user has access to computer coaching and live coaching based on a service level agreement.

17. The user profile generator of claim 16 wherein the profile is based on a user'"'"'s personal financial parameters further including:

a user investment style; and

a user bull/bear market attitude.

18. The user profile generator of claim 16 further comprising of:

a subsystem for determining the user'"'"'s risk tolerance level by displaying to the user a series of progressively more negative scenarios, analyzing the user responses to each negative scenario, and

generating a risk tolerance level based on the user'"'"'s responses.

19. The user profile generator of claim 16 farther comprising of:

a subsystem for determining the user'"'"'s investment style by displaying to the user a series of test scenarios, and

generating said user investment style based on the user responses to these test scenarios.

20. The user profile generator of claim 16 further including a subsystem for determining the user'"'"'s bull/bear attitude comprising:

displaying a series of user selected expert opinions;

analyzing the user'"'"'s response to the opinion; and

generating said user bull/bear attitude based on the user responses.

21. The financial risk management system of claim 16 further comprising:

a filtering engine used to filter a list of securities based on the user profile, coupled to the coaching engine presenting the filtered securities to the user for swapping.

22. The filtering engine of claim 21 further comprising:

logic for calculating a Value At Risk value and a Beta value for the user'"'"'s portfolio; and

logic for rejecting certain securities based on their VAR and Beta values and based on the user profile.

23. The system of claim 21 wherein the VAR and Beta values of the user'"'"'s portfolio are compared graphically to the VAR and Beta values of user selected market indices.

24. The system of claim 16 further comprising:

a subsystem for estimating a compound growth factor by using linear regression time period natural logarithm.

25. The system of claim 24 wherein the future performance of the user portfolio is projected based on the compound growth factor.

26. The system of claim 21 further comprising:

a modeling subsystem allowing the user to select at least one security from a list of filtered securities;

swapping the selected filtered security with a portfolio security; and

analyzing effect of the swap on the user portfolio.

27. The system of claim 21 wherein the filtered securities are displayed in two columns, one for securities with a positive Beta values and one for securities with negative Beta values.

28. The system of claim 16 wherein the portfolio generator creates an ideal portfolio based on the user profile.

29. The system of claim 16 wherein the user'"'"'s access to the computer coaching engine and to the live financial advisor system is based on a service level agreement.

16. A financial risk management system comprising:

a portfolio generator used to model a user'"'"'s financial portfolio;

a user profile generator for generating a user profile based on user personal financial parameters wherein the user profile includes at least a risk tolerance level;

a computer coaching server coupled to a wide area network; and

a live financial advisor server coupled to a wide area network;

wherein said computer coaching server and said live financial advisor may be used for recommending changes to the user financial portfolio based on the user profile.

30. A computer program embodied on a computer readable medium for providing personalized financial counseling in a collaborative computing environment, wherein the computer program comprises:

code segment for determining a user'"'"'s financial portfolio;

code segment for determining a user profile based on personal financial parameters including at least a risk tolerance level; and

code segment for suggesting changes to a user'"'"'s financial portfolio reflecting the user'"'"'s profile.

31. The computer program embodied on a computer readable medium of claim 30 further comprising code to calculate user'"'"'s personal financial parameters wherein the personal financial parameters include:

a user investment style; and

a user bull/bear attitude.

32. The computer program embodied on a computer readable medium of claim 30 further comprising code for determining said user risk tolerance level by:

displaying to the user a series of progressively more negative financial scenarios;

analyzing the user'"'"'s response to each negative scenario; and

generating a risk tolerance level based on the user'"'"'s responses.

33. The computer program embodied on a computer readable medium of claim 30 further comprising code for determining said user investment style by:

displaying to the user a series of test scenarios; and

generating said user investment style based on the user responses to these test scenarios.

34. The computer program embodied on a computer readable medium of claim 30 further comprising code for determining said user bull/bear attitude by:

displaying a series of user selected expert opinions;

analyzing the user'"'"'s response to the opinion; and

generating said user bull/bear attitude based on the user responses.

35. The computer program embodied on a computer readable medium of claim 30 further comprising:

code for filtering a list of securities based on the user profile; and

code for presenting the securities list to the user for possible security swaps.

36. The computer program embodied on a computer readable medium of claim 35 wherein filtering securities further comprises:

code for obtaining a Value At Risk (VAR) and a Beta value for each security; and

code for rejecting certain securities not complying with the user profile based on their VAR values and their Beta values.

37. The computer program embodied on a computer readable medium of claim 35 further comprising:

code for calculating the a VAR value and a Beta value for the user'"'"'s portfolio.

38. The computer program embodied on a computer readable medium of claim 37 further comprising:

code for comparing the VAR and Beta value for the user'"'"'s portfolio to the VAR and Beta values of various user selected market indices; and

code for displaying the result to the user in a graph.

39. The computer program embodied on a computer readable medium of claim 35 further comprising:

code for allowing the user to select at least one security from a list of filtered securities;

code for swapping said securities with securities in the user portfolio; and

code for analyzing and displaying the effect of said swapping on the user'"'"'s portfolio.

40. The computer program embodied on a computer readable medium of claim 35 farther comprising:

code to display the filtered securities in two columns, one for securities with positive Beta values and one for securities with negative Beta values.

41. The computer program embodied on a computer readable medium of claim 30 further comprising:

code for the financial portfolio model to create an ideal user portfolio based on the user profile.

42. The computer program embodied on a computer readable medium of claim 30 further comprising:

code to control access of a user to computer coaching and live coaching based on a service level agreement.