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

• US 8,019,669 B1
• Filed: 04/16/2010
• Issued: 09/13/2011
• Est. Priority Date: 04/12/2002
• Status: Expired due to Fees

• 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): Patek; Jagdish
• Assistant Examiner(s): Chandler; Sara
• Application Number:
  US12/762,005
• Time in Patent Office: 515 Days
• Field of Search: 705/35, 705/36.R
• 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 method for a referral program where a financial institution refers investors to a financial advisor that provides asset management services, comprising:

establishing, by a processor system, an investor account for an investor, wherein

the investor account is linked with information regarding at least one asset held by the investor, and

the processor system is operated on behalf of the financial institution;

creating, by the processor system, an on-going referral fee sharing agreement, wherein

the financial institution and the financial advisor are parties to the on-going referral fee sharing agreement for a referral,

the on-going referral fee sharing agreement defines a referral fee, and

the referral fee is charged to the financial advisor for the referral as long as the investor account is managed by the financial advisor;

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

referring, by the processor system, the investor to the financial advisor;

entering, by the processor system, financial account data into the database system when the investor retains the service of the financial advisor to manage the investor account, wherein the financial account data indicates that

the investor has retained the services of the financial advisor,

the investor account is a referred financial account, and

the investor account is subject to the on-going referral fee sharing agreement; and

periodically analyzing, by processor system, the financial account data for the referred financial account;

periodically determining, by processor system, a total asset value for the at least one asset held in the referred financial account; and

periodically calculating, by the processor system, an amount of the referral fee to charge the financial advisor based on the total asset value.

2. The method of a referral program of claim 1, further comprising:

providing, by the processor system, periodic electronic transfers of the referral fee to the financial institution.

3. The method of claim 2 wherein periodically refers to quarterly intervals.

4. The method of claim 1 further comprising:

analyzing, by the processor system, a plurality of financial account data in the database system;

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

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

5. The method of claim 4 further comprising:

periodically calculating, by the processor system, 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, by the processor system, the aggregate referral fee with a specified minimum amount.

6. The method of claim 5, further comprising:

charging, by the processor system, the financial advisor the aggregate referral fee if the aggregate referral fee is greater than the specified minimum amount.

7. The method of claim 1 further comprising:

determining, by the processor system, the referral fee based on the amount to be charged to the referred financial account as an asset management fee;

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

electronically transferring the referral fee to the financial institution.

8. The method of claim 1 wherein the financial institution holds the referred financial account.

9. The method of claim 2, wherein providing, by the processor system, periodic electronic transfers of the referral fee to the financial institution comprises providing from a master account of the financial advisor, an aggregate referral fee from the financial advisor for a plurality of investors to the financial institution, wherein:

the plurality of investors comprises the investor; and

the master account contains fees collected from the plurality of inventors by the financial advisor.