System and method for referral fee processing in accounts managed by financial advisors

• US 7,483,847 B1
• Filed: 04/12/2002
• Issued: 01/27/2009
• Est. Priority Date: 04/12/2002
• Status: Active Grant

• Current Assignee: Charles Schwab & Company Incorporated (Charles Schwab Corporation)
• Original Assignee: Charles Schwab & Company Incorporated (Charles Schwab Corporation)
• Inventors: Welling, Charles D., Hirsch, Steven, McWhinney, Deborah D., Graves, Gerald, Rymer, Joshua, Salesky, Andrew
• Primary Examiner(s): Patel; Jagdish N
• Assistant Examiner(s): CHANDLER, SARA M
• Application Number:
  US10/121,195
• Time in Patent Office: 2,482 Days
• Field of Search: 705/35
• 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

A method and apparatus which provides for a referral program where a financial institution, such as a broker dealer, can refer customers to an independent financial advisor, under an on-going referral fee sharing agreement. The on-going referral fee sharing agreement provides that the financial advisor will pay the referring financial institution an on-going referral fee based on the asset management fee that the advisor charges. These referral fees are processed automatically and the transfers are done electronically, allowing the referral program to be implemented efficiently and effectively.

Claims

1. A computer system for a referral program where a financial institution refers investors to a financial advisor that provides asset management services under an-ongoing referral fee sharing agreement, comprising:

one or more communications ports for access to the computer system by the financial advisor;

a database system configured to store

(a) data about the on-going referral fee sharing agreement including a referral fee structure, and

(b) financial account data, including client of advisor data that identifies whether an investor account associated with an investor and custodied with the financial institution is a client of advisor account comprising a referred financial account which is managed by the financial advisor and which is subject to the on-going referral fee sharing agreement, is above a minimum threshold required by the on-going referral fee sharing agreement, and identifies a plurality of assets held in the referred financial account; and

a processor system configured to process data, wherein the processor system is programmed to

store data about the on-going referral fee sharing agreement including the referral fee structure in the database system, wherein the financial institution and the financial advisor are parties to the on-going referral fee sharing agreement, and the financial institution refers investors to the financial advisor and a referral fee is periodically paid to the financial institution,

refer the investor to the financial advisor according to the on-going referral fee sharing agreement, wherein the financial institution, the financial advisor and the investor meet criteria established for the on-going referral fee sharing agreement and wherein the investor retains the service of the financial advisor to manage the investor account,

receive the client of advisor data, wherein the client of advisor data is entered through the one or more communications ports,

store said client of advisor data in the database system when the investor retains the service of the financial advisor to manage the client of advisor account, wherein the client of advisor data indicates that the investor account is a client of advisor account comprising a referred financial account which is managed by the financial advisor and which is subject to the on-going referral fee sharing agreement, is above a minimum threshold required by the on-going referral fee sharing agreement, and identifies a plurality of assets held in the referred financial account,

periodically analyze the client of advisor data stored in the database system,

periodically determine a total asset value of the plurality of assets held in the client of advisor account identified by the client of advisor data;

analyze the data about the on-going referral fee sharing agreement including the referral fee structure,

periodically determine a referral fee based on the periodic determination of the total asset value and the analysis of the data about the on-going referral fee sharing agreement including the referral fee structure, and

provide on-going periodic automated electronic transfers of the referral fee to the financial institution from the client of advisor account.

2. The computer system of claim 1 wherein the processor is further programmed identify a plurality of referred financial accounts managed by the financial advisor and to periodically determine a referral fee for each of the plurality of referred financial accounts managed by the financial advisor, and to determine an aggregate referral fee for the plurality of referred financial accounts managed by the financial advisor, wherein the aggregate referral fee is equal to the sum of the referral fees for each of the plurality of referred financial accounts managed by the financial advisor.

3. The computer system of claim 2, wherein the processor is further programmed to compare the aggregate referral fee with a specified minimum amount, and determine when the aggregate referral fee is exceeded by the specified minimum amount.

4. The computer system of claim 1 wherein the periodic determination of the referral fee comprises a determination on a quarterly basis.

5. The computer system of claim 3 wherein the processor system is further programmed to determine if an investor has entered into an electronic funds transfer agreement.

6. A computerized method for a referral program where a financial institution refers investors to a financial advisor that provides asset management services, comprising:

creating an on-going referral fee sharing agreement that includes a referral fee structure, wherein the financial institution and the financial advisor are parties to the on-going referral fee sharing agreement, and the financial institution refers investors to the financial advisor and a referral fee is periodically paid to the financial institution;

storing data about the on-going referral fee sharing agreement, including the referral fee structure, in a database system;

referring an investor to the financial advisor according to the on-going referral fee sharing agreement, wherein the financial institution, the financial advisor and the investor meet criteria established for the on-going referral fee sharing agreement and wherein the investor retains the service of the financial advisor to manage an investor account associated with the investor;

storing client of advisor data in the database system when the investor retains the service of the financial advisor to manage the investor account, wherein the client of advisor data indicates that the investor has retained the services of the financial advisor, and that the investor account is a referred financial account, is subject to the on-going referral fee sharing agreement, is above a minimum threshold required by the on-going referral fee sharing agreement, and identifies a plurality of assets held in the referred financial account;

periodically analyzing the client of advisor data from the database system;

periodically determining, by a processor system, a total asset value based on the value of the plurality of assets held in the referred financial account identified by the client of advisor data;

analyzing, from the database system, data about the on-going referral fee sharing agreement including the referral fee structure;

periodically determining, by the processor system, a referral fee based on the periodic determination of the total asset value and the analysis of the data about the on-going referral fee sharing agreement including the referral fee structure; and

providing on-going periodic automated electronic transfers of the referral fee to the financial institution from the investor account.

7. The method of claim 6 wherein the periodic intervals, are quarterly intervals.

8. The method of claim 6 further comprising:

analyzing a plurality of data in the database system

identifying a plurality of referred financial accounts managed by the financial advisor; and

periodically calculating the referral fee for each of the plurality of referred financial accounts managed by the financial advisor.

9. The method of claim 8 further comprising:

periodically calculating an aggregate referral fee for the plurality of referred financial accounts managed by the financial advisor, wherein the aggregate referral fee is equal to the sum of the referral fees for each of the plurality of referred financial accounts managed by the financial advisor; and

comparing the aggregate referral fee with a specified minimum amount.

10. The method of claim 6 further comprising:

using a processor to determine the referral fee based on the amount to be charged to the referred financial account as an asset management fee;

automatically electronically transferring an advisor payment equal to the asset management fee minus the referral fee; and

automatically electronically transferring the referral fee to the financial institution.

11. The method of claim 6 further comprising:

receiving information from the advisor indicating an amount to be charged to the referred financial account as an asset management fee.

12. The method of claim 6 wherein an employee of the financial advisor agrees not to solicit the investor when the relationship between the employee and the financial advisor is terminated.

13. The method of claim 6 wherein prior to the referring of the investor to the financial advisor, the referred financial account is custodied by the financial institution.

14. The method of claim 13 wherein the financial advisor ensures that the referred financial account continues to be custodied by the financial institution for the duration of the on-going referral fee sharing agreement.

15. The method of claim 6 wherein the financial institution holds the referred financial account.