Method and apparatus for enabling individual or smaller investors or others to create and manage a portfolio of securities or other assets or liabilities on a cost effective basis

• US 20040039675A1
• Filed: 07/28/2003
• Published: 02/26/2004
• Est. Priority Date: 03/11/1998
• Status: Active Grant

• Current Assignee: Folio Financial Incorporated (Goldman Sachs Group Incorporated)
• Original Assignee: Steven M.H. Wallman
• Inventors: Wallman, Steven M.H.
• Granted Patent: US 7,685,046 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 40/04 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 40/10 Tax strategies
• CPC Class Codes: G06Q 40/12 Accounting

Abstract

Smaller investors can create and manage on a cost-effective basis a complex portfolio of securities using a mechanism that enables the investor to provide to the system the investor'"'"'s preferences regarding his portfolio, to generate a portfolio, including fractional shares, that reflects the investor'"'"'s preferences. The system then permits aggregation of the orders, and netting of orders, generated by multiple investors at various times during the day for execution. In addition, the structure of the computer-based system of the present invention allows its cost to be based on access to or usage of the system (such as a monthly fee) as opposed to by securities orders entered into the system as per common brokerage. The result is that the investor can create a portfolio of directly owned securities with attributes, such as diversification, similar to a mutual fund. As compared with the problems with existing systems, the computer-based system of the present invention provides complete control for the investor over what securities can be selected, and in what weights and amounts, as well as control over the tax effects of purchases or sales of the securities comprising the portfolio, preventing the investor from being presented with unwanted taxable effects due to discretionary sales transactions of fund managers. In addition, the computer-based system of the present invention provides all the information necessary to monitor and manage tax effects and capability to sell or buy the individual securities in his portfolio to obtain desired tax benefits, all shareholder rights with respect to each security in the portfolio to the investor and full ownership and control over all investment, voting and other decisions regarding such securities. The computer-based system of the present invention also allows for parameters to be set with respect to a portfolio to ensure that it stays within certain diversification or risk limits. Furthermore, the computer-based system of the present invention provides direct control over the charges and expenses that will be incurred, and the possibility of making multiple intra-day investment decisions by the investor, if he wishes. Moreover, the computer-based system of the present invention provides control over all factors in the portfolio and modification of them as the investor sees fit.

Claims

1. A method for managing an investment account for a customer associated with a sponsoring organization comprising the steps of:

interacting with the customer over a computer network to create a portfolio of investments that satisfy a plurality of restrictions on investment activity of the customer while meeting pre-defined investment needs of the customer; and

transmitting a resulting portfolio of desired investments over the computer network for execution.

2. A method for managing a plurality of investment accounts, each of which is associated with a third party user, comprising the steps of:

receiving data from the user regarding the plurality of investment accounts, the data defining an amount and types of investments to be included in each investment account;

aggregating the plurality of investment accounts into a single portfolio of investments for the user; and

analyzing the single portfolio to determine a risk/reward characteristic of the single portfolio.

3. A method for creating a plurality of separate investment accounts while managing the plurality of separate investment accounts as a single investment portfolio, comprising the steps of:

establishing a separate file for each of the plurality of separate investment accounts; and

analyzing the plurality of separate investment accounts as if the plurality of separate investment accounts were a single investment portfolio, the analysis including at least one of;

a risk level analysis, a diversification analysis, a concentration analysis and a sector exposure analysis for the single portfolio.

4. A method for managing an investment account of a plurality of customers associated with a sponsoring organization, comprising the steps of:

establishing a plurality of defined restrictions on the investment activity of the plurality of customers associated with the sponsoring organization;

interacting with a first customer over a computer network to identify a portfolio of investments that satisfy the plurality of defined restrictions while meeting customer defined investment needs of the first customer;

establishing an aggregate portfolio of investments from the first customer and from a plurality of other customers; and

transmitting a plurality of trade requests over a computer network identifying a plurality of investments in the aggregate portfolio.

5. A method for creating a plurality of separate investment accounts while managing the plurality of separate investment accounts as a single portfolio, comprising the steps of:

calculating a risk/reward analysis for each of the plurality of separate investment accounts; and

receiving, for each of the plurality of separate investment accounts, from a customer an indication of the customer'"'"'s preferences regarding said risk/reward analysis.