Method and data processing system for managing a mutual fund brokerage

• US 6,470,325 B1
• Filed: 06/18/1999
• Issued: 10/22/2002
• Est. Priority Date: 06/18/1999
• Status: Expired due to Fees

• Current Assignee: Adrian S. Leemhuis
• Original Assignee: Adrian S. Leemhuis
• Inventors: Leemhuis, Adrian S.
• Primary Examiner(s): Millin, Vincent
• Assistant Examiner(s): Felten, Daniel S
• Application Number:
  US09/336,225
• Time in Patent Office: 1,222 Days
• Field of Search: 705/36, 705/35, 705/42
• US Class Current: 705/36.00R
• CPC Class Codes: G06Q 20/108 Remote banking, e.g. home banking
• 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

The invention provides a method of managing a mutual fund brokerage wherein subscribers, intending to purchase mutual fund portions in at least one mutual fund, enter into a service contract with the mutual fund brokerage. Each subscriber pays to the brokerage a subscription charge and the brokerage maintains a separate portfolio of mutual fund portions for each subscriber and a separate subscriber account balance including payments of subscription charges received from each subscriber. The brokerage executes a number of mutual fund portion purchase/sell transactions on behalf of a trading subscriber with a target mutual fund selected by the trading subscriber. The improvement relates to not charging front-end or back-end loaded commissions, together with the rebating of trailer fees from no-load funds where all service fees received by the brokerage from each paying mutual fund are apportioned pro rata for each portion of said paying mutual fund in each subscribers portfolio. The purchaser can also participate in deciding the manner in which savings in brokerage fees can be handled to their maximum benefit and/or convenience. In this way, the subscriber pays a predictable charge to the brokerage and receives a higher return on investment than under conventional methods where significant amounts of service fees are retained by the brokerage. In the past, where brokerage operations depended on personal service and advice to purchasers, high brokerage fees and commissions could be justified somewhat. However, many current mutual fund purchasers research mutual fund performance over the internet themselves and merely place orders by computer with discount brokerages. The service fees paid to brokerages result in a significant reduction in the purchaser'"'"'s return from a mutual fund. investment which is unwarranted in many circumstances.

Claims

1. A method of managing a mutual fund brokerage wherein subscribers, intending to purchase mutual fund portions in at least one mutual fund, enter into a service contract with the mutual fund brokerage for a predetermined duration wherein:

each subscriber pays to the brokerage a fixed predetermined subscription charge;

the brokerage maintains a separate portfolio of mutual fund portions for each subscriber and a separate subscriber'"'"'s account balance including payments of the subscription charges received from each subscriber;

the brokerage executes a number of mutual fund portion purchase/sell transactions on behalf of a trading subscriber with a target mutual fund selected by the trading subscriber; and

one hundred percent of all service fees that are received by the brokerage in respect of each individual subscriber'"'"'s mutual fund portions from each paying mutual fund are deposited in full in each said individual subscriber'"'"'s account balance apportioned pro rata for each portion of said paying mutual fund in each said individual subscriber'"'"'s portfolio.

2. A method of managing a mutual fund brokerage according to claim 1 wherein the subscription charge is selected from the group consisting of:

a lump sum amount;

a variable amount dependant on the number of mutual fund portion purchase/sell transactions executed for a subscriber; and

a lump sum minimum plus a variable amount dependent on the number of mutual fund portion purchase/sell transactions executed for a subscriber over a threshold number of transactions.

3. A method of managing a mutual fund brokerage according to claim 1 wherein the duration of the service contract is selected from the group consisting of:

a fixed duration;

an unlimited period of time subject to termination by the subscriber and the brokerage; and

an initial fixed period followed by an unlimited period of time subject to termination by the subscriber and the brokerage.

4. A method of managing a mutual fund brokerage according to claim 1 wherein the subscriber communicates with the brokerage via internet access with a web site provided by the brokerage.

5. A method of managing a mutual fund brokerage according to claim 4 wherein the service contract provides that the brokerage act as an internet service provider to each subscriber.

6. A method of managing a mutual fund brokerage according to claim 5 wherein the service contract provides unlimited internet access to each subscriber.

7. A method of managing a mutual fund brokerage according to claim 1 wherein the service fees are selected from the group consisting of:

sales commissions paid on initial sale of a paying mutual fund portion;

deferred sales commissions paid after-expiry of a time period following initial sale of a paying mutual fund portion; and

trailer fees paid periodically based on a proportion of the MER of the paying mutual fund.

8. A data processing system for managing a mutual fund brokerage wherein subscribers, intending to purchase mutual fund portions in at least one mutual fund, enter into a service contract with the mutual fund brokerage to maintain a portion portfolio, the data processing system including:

computer processing means for processing data;

electronic storage means for storing and retrieving portfolio and subscriber account data on a storage medium for each subscriber,

said portfolio data including;

the number of portions owned in a mutual fund;

the current portion price of each portion owned; and

the aggregate total value of portions in the portfolio,

said account data including;

an account balance;

the duration of the service agreement; and

subscriber identification data;

initialisation means for initialising portfolio and account data on said storage medium;

subscriber communication means for electronically communicating subscriber trading transaction instructions to the computer processing means, and for displaying portfolio and account data to the subscriber;

brokerage communication means for electronically communicating mutual fund trading transaction data between the computer processing means and a mutual fund computer;

trade calculation means for calculating, modifying and storing adjusted portfolio data as a result of said trading transaction instructions and transaction data; and

service fee rebate calculation means for calculating, modifying and storing adjusted account data wherein one hundred percent of all service fees that are received by the brokerage in respect of each individual subscriber'"'"'s mutual fund portions from each paying mutual fund are deposited in full in each said individual subscriber'"'"'s account balance apportioned pro rata for each portion of said paying mutual fund in each said individual subscriber'"'"'s portfolio.

9. A data processing system for managing a mutual fund brokerage according to claim 8 including:

subscription fee withdrawal means for withdrawing a subscription fee from each subscriber'"'"'s account balance at a selected time.

10. A data processing system for managing a mutual fund brokerage according to claim 8 including:

reinvestment means for withdrawing a reinvestment amount from a subscriber'"'"'s account balance at a selected time, for executing a mutual fund portion purchase reinvestment transaction with said reinvestment amount, and for calculating, modifying and storing adjusted portfolio data as a result of said reinvestment transaction.