Systems and methods for real-time, dynamic multi-dimensional constraint analysis of portfolios of financial instruments

• US 20060212376A1
• Filed: 03/21/2005
• Published: 09/21/2006
• Est. Priority Date: 03/21/2005
• Status: Abandoned Application

• Current Assignee: Perspective Partners (Manning Partners LLC)
• Original Assignee: Perspective Partners (Manning Partners LLC)
• Inventors: Balakrishnan, Bhaskaran, Waterman, Jeremy M., Vito, Anthony M., Thompson, Bruce M., Snyder, David L.
• Application Number:
  US11/087,057
• Publication Number:
  US 20060212376A1
• Time in Patent Office: Days
• US Class Current: 705/35
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis

Abstract

An automated method of managing or constructing a portfolio comprising at least one financial instrument defining portfolio attributes, the method using a system comprising a processor, a display and an input device. The method comprises defining at least one objective representing a desired state for the portfolio attributes and defining a set of constraints that are defined in relation to a computable, desired state of portfolio attributes in relation to the at least one objective. A constraints analysis module based upon the set of constraints is generated and provided to the processor. The portfolio is evaluated with the processor using the constraints analysis module and the state of the portfolio attributes based upon the evaluation is displayed. At least one option for altering portfolio attributes in order to more effectively meet the at least one objective is simultaneously displayed. The option is displayed with an interactive user input mechanism that allows for selection of an option and automatic evaluation and display of the state of the portfolio attributes due to selection of the option.

Claims

1. An automated method of managing a portfolio comprising at least one financial instrument, and wherein the portfolio is defined by computable portfolio attributes, the method comprising a user using a system comprising a processor and at least one client machine that includes a display and an input device, the method comprising:

defining at least one objective representing a desired state for the portfolio attributes;

defining a set of constraints in relation to a computable, desired state of portfolio attributes in relation to the at least one objective;

providing a constraints analysis module to the processor;

providing the constraints to the constraints analysis module;

evaluating the portfolio with the processor using the constraints analysis module;

displaying the state of the portfolio attributes based upon the evaluation; and

simultaneously displaying at least one alternative financial instrument for altering portfolio attributes in order to more effectively meet the objective, the alternative financial instrument being displayed with an interactive user input mechanism that allows for selection of an alternative financial instrument and automatic evaluation and display of the state of the portfolio attributes due to selection of the alternative financial instrument.

2. A method in accordance with claim 1 wherein the at least one alternative financial instrument is displayed in line with at least one attribute that is impacted.

3. A method in accordance with claim 1 wherein the interactive user input allows for manipulation of the at least one alternative financial instrument and the method further comprises displaying the impact of the manipulation on at least one attribute.

4. A method in accordance with claim 3 wherein the at least one alternative financial instrument is a specific financial instrument and the manipulation represents one of an amount or a percentage of the portfolio to allocate to the specific financial instrument.

5. A method in accordance with claim 1 wherein the interactive user input allows for manipulation of at least one attribute and the method further comprises displaying the impact of the manipulation of the attribute on at least one other attribute.

6. A method in accordance with claim 1 wherein the results of the evaluation are displayed with visual indicators relating to the objective that illustrate a current state for portfolio attributes, a target state for the portfolio attributes based upon the objective and a deviation measure.

7. A method in accordance with claim 6 wherein there are multiple objectives defined and wherein the results of the evaluation are displayed with visual indicators relating to a working objective that illustrate a current state for portfolio attributes, a target state for the portfolio attributes based upon the working objective and a deviation measure, and the results are further displayed with secondary visual indicators that provide at least one of status information and directionality information with regard to attributes relating to a non-working objective.

8. A method in accordance with claim 1 wherein a plurality of alternative financial instruments is displayed.

9. A method in accordance with claim 8 wherein at least one of the alternative financial instruments is indicated as a recommended alternative financial instrument.

10. A method in accordance with claim 9 wherein the recommended alternative financial instrument is a required alternative financial instrument.

11. A method in accordance with claim 8 wherein the plurality of alternative financial instruments is displayed in a pull down menu.

12. A method in accordance with claim 11 wherein the plurality of alternative financial instruments is displayed in a series of pull down menus.

13. A method in accordance with claim 12 wherein the plurality of financial instruments displayed are determined at least in part according to advisor licensing status.

14. A method in accordance with claim 1 where the processor is resident on the client machine.

15. A method in accordance with claim 1 wherein the system comprises a central server that includes the processor and the method further comprises storing the state of the portfolio attributes on the central server.

16. A method in accordance with claim 15 further comprising accessing the central server with a second client machine.

17. A method in accordance with claim 15 further comprising flagging portions of the state of the portfolio attributes that deviate from the constraints for compliance review.

18. A method in accordance with claim 17 further comprising notifying a compliance review user when portions of the state of the portfolio attributes have been flagged.

19. A method in accordance with claim 15 further comprising providing access to at least one attribute of the stored portfolio attributes to a second user.

20. A method in accordance with claim 15 further comprising accessing the central server to generate a client report relating to the state of the portfolio attributes and forwarding the report to a client.

21. An automated method of evaluating a portfolio comprising at least one financial instrument and wherein the portfolio is defined by computable portfolio attributes, the method using a system comprising a processor and at least one client machine that includes a display and an input device, and the system uses a constraints analysis module that defines constraints as computable constraint attributes for achieving at least one objective within the portfolio, the method comprising:

displaying information relating to a specific financial instrument that should be one of added to or deleted from the portfolio;

displaying at least one indicator adjacent to the specific financial instrument that indicates status of at least one attribute impacted by the specific financial instrument;

supplying attribute information to the processor through an interactive input mechanism relating to the at least one attribute; and

altering the at least one indicator and the interactive input mechanism in real-time as a result of the supplied attribute information.

22. A method in accordance with claim 21 wherein the attribute information is related to at least one constraint attribute.

23. A method in accordance with claim 21 wherein the attribute information is related at least one portfolio attribute.

24. A method in accordance with claim 23 wherein at least one portfolio attribute is related to a specific allocation of the portfolio to the specific financial instrument.

25. A method in accordance with claim 21 wherein multiple objectives are defined and wherein the indicators comprise visual indicators related to a working objective that illustrate a current state for portfolio attributes, a target state for portfolio attributes based upon the working objective and a deviation measure, and visual indicators related to at least one non-working objective that provide at least one of status information and directionality information with regard to attributes relating to the non-working objective.

26. A system for managing a portfolio comprising at least one financial instrument and wherein the portfolio is defined by computable portfolio attributes, the system comprising:

a processor;

a display in communication with the processor;

an input device in communication with the processor;

a constraints analysis module that includes a set of constraints that are defined in relation to a computable, desired state of portfolio attributes in relation to at least one objective representing a desired state for the portfolio attributes;

at least one indicator viewable on the display that indicates the state of at least one portfolio attribute relative to a constraint attribute; and

an interactive input mechanism viewable on the display that allows for manipulation of a specific financial instrument and related attribute information in order to alter portfolio attributes;

wherein the processor automatically updates the indicator and the interactive input mechanism in response to any manipulation of the specific financial instrument and any manipulation of the attribute information.

27. A system in accordance with claim 26 wherein the interactive input mechanism is adjacent to the indicator on the display.

28. A system in accordance with claim 26 wherein the processor and the constraints analysis module are located on a central server.

29. A system in accordance with claim 26 further comprising a data storage module that stores the portfolio, the processor and the data storage module being located on a central server.

30. A system in accordance with claim 29 wherein the constraints analysis module is located on the central server.

31. A system in accordance with claim 26 wherein the system is HTML based.

32. A system in accordance with claim 26 wherein the system is Java based.

33. A system in accordance with claim 26 wherein the indicator is a directional indicator indicating a direction of needed manipulation of the portfolio attribute.

34. An automated method of constructing a portfolio comprising at least one financial instrument, the method comprising:

determining a set of computable constraints for constructing the portfolio, the constraints being defined by analytic characteristics or attributes of the portfolio and its financial instruments;

providing a constraints analysis module to a processor;

providing the set of computable constraints to the constraints analysis module;

evaluating the portfolio with the processor using the constraints analysis module to thereby determine if the portfolio and its financial instruments satisfies or violates any of the constraints;

displaying information to a user regarding the results of the evaluation of the portfolio;

simultaneously displaying alternative financial instruments for altering the portfolio that address violations of the set of constraints within the information; and

selecting an alternative financial instrument to alter the portfolio;

wherein, upon selecting an alternative financial instrument for altering the portfolio, the portfolio is further evaluated by the processor using the constraints analysis module to thereby determine if the portfolio and its financial instruments satisfies or violates any of the constraints, and wherein information and alternative financial instruments for altering the portfolio, if needed, are simultaneously displayed regarding the results of the further evaluation of the portfolio.

35. An automated method in accordance with claim 34 wherein the set of constraints is provided to the processor on a portable computer readable medium.

36. An automated method in accordance with claim 34 wherein the set of constraints is provided to the processor such that it is resident on the processor in memory.

37. An automated method in accordance with claim 34 wherein the information is displayed with visual indicators to indicate whether or not a constraint has been met.

38. An automated method in accordance with claim 37 wherein the indicators use color coding to indicate the degree to which a constraint has been met.

39. An automated method in accordance with claim 38 wherein the indicators comprise a green indicator for compliance with a constraint and a red indicator for noncompliance with a constraint.

40. An automated method in accordance with claim 34 wherein the set of computable constraints are based upon multiple objectives.

41. An automated method in accordance with claim 40 wherein each objective comprises one of a group comprising asset allocation, instrument diversification, equity sector diversification, fund manager role in fund investment, mutual fund holdings overlap, management fees for mutual funds or other managed products, portfolio risk objectives, capital accumulation or growth and income distribution objectives.

42. An automated method in accordance with claim 40 wherein there is an interactive user input mechanism for selecting any one of the objectives to be a current working objective.

43. An automated method in accordance with claim 42 wherein the interface mechanism is a drop-down menu.

44. An automated method in accordance with claim 41 wherein one of the objectives comprises asset allocation and a target asset allocation is defined for the objective that is configured based upon at least one of client risk tolerance, client time horizon and client tax sensitivity status.

45. An automated method of constructing a target portfolio comprising at least one financial instrument, the method comprising:

providing an initial portfolio comprising at least one financial instrument;

determining a set of computable constraints for constructing the target portfolio, the constraints being defined by analytic characteristics or attributes of the target portfolio and its financial instruments;

providing a constraints analysis module to a processor;

providing the set of constraints to the constraints analysis module;

evaluating the initial portfolio with the processor using the constraints analysis module to thereby determine if the initial portfolio and its financial instruments satisfies or violates any of the constraints;

displaying information to a user based upon the results of the evaluation of the initial portfolio;

simultaneously displaying alternative financial instruments for altering the initial portfolio that address violations of the set of constraints within the information;

selecting an alternative financial instrument to alter the initial portfolio, wherein upon selecting an alternative financial instrument for altering the initial portfolio, the resulting portfolio is automatically further evaluated by the processor using the constraints analysis module to thereby determine if the resulting portfolio and its financial instruments satisfies or violates any of the constraints, and wherein information and alternative financial instruments for altering the portfolio, if needed, are automatically simultaneously displayed based upon the results of the further evaluation of the portfolio;

completing the target portfolio once the user is satisfied that the constraints have been satisfactorily met, and

storing the target portfolio and constraints attributes.