Asset allocation, rebalancing, and investment management system

• US 20050154662A1
• Filed: 11/05/2004
• Published: 07/14/2005
• Est. Priority Date: 11/06/2003
• Status: Abandoned Application

• Current Assignee: Rolloversystems Incorporated
• Original Assignee: Rolloversystems Incorporated
• Inventors: Langenwalter, James Alan
• Application Number:
  US10/982,736
• Publication Number:
  US 20050154662A1
• 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 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange

Abstract

A computer implemented or enabled method for providing advisors and/or investment management firms with an asset allocation model manager for advising individual investors. This method enables investment management firms to globally define allocation model sets for use firm-wide by their advisors. It may also provide advisors with a customization process for tailoring these global allocation models to their own client investors. The asset allocation models are tailored to the investment suitability and risk tolerance needs of the investor clients. One object of this invention is to assist advisors and investment management firms in targeting a broad spectrum of investors of virtually all income levels. Transactional fees associated with investing, including transfer agency fees and advisor fees, are greatly minimized as a result of this automated, mass customization tool which groups investors into discrete categories so as to provide them with optimum asset management. As a result of this low cost, less hassle method, advisors and/or investment management firms may advise a broader range of individual investors than otherwise. In one embodiment, the disclosed asset allocation model management system operates as a kernel. However, a plug and play system may be incorporated. In a further embodiments, an ACH system, trading system, record keeping system, and/or communication interface(s) (such as advisor-client investor) may utilized in conjunction with this central kernel. An investor interface is also disclosed. The investor can set up an investment account, monitor investment transactions, self-direct investments or communicate with an advisor to facilitate certain investment transactions.

Claims

1. A computer implemented or enabled automated asset allocation management system for delivering and managing investment services to multiple investors, wherein said system comprises:

a. an asset allocation model matrix comprising;

i. at least one asset allocation model which is prepackaged or user defined, wherein each said asset allocation model comprises at least two investment vehicles having allocated portions, wherein said allocated portions total one-hundred percent,

ii. at least two asset allocation model groups, wherein each of said asset allocation model groups comprises at least two or more of each said asset allocation model and wherein each of said asset allocation model groups spans a unique time horizon which consists of a period of time until an investment end goal date,

iii. at least one asset allocation model set comprising at least two of said asset allocation model groups, wherein said asset allocation model set comprises an investment portfolio of at least one investor; and

b. a data manager for managing said matrix which comprises;

i. creating each said asset allocation model for said asset allocation model set where said asset allocation model and said asset allocation model set is user defined,

ii. storing said asset allocation model set,

iii. linking at least one said asset allocation model set to at least one investor account with a database

iv. retrieving said asset allocation model from said asset allocation model set for a unique time horizon for at least one investor where said asset allocation model is user defined or prepackaged, and

v. changing said asset allocation model from said time horizon to a subsequent time horizon for at least one investor upon reaching said goal date.

2. The system in claim 1 further comprising:

an allocator for allocating investor assets of an investor to apportion said assets to equal weights in said asset allocation model.

3. The system in claim 1 further comprising:

a rebalancing tool for rebalancing assets when an investor purchases or redeems assets from an investment account, wherein said assets equal weights in said asset allocation model.

4. The system in claim 1 further comprising:

at least one database for associating at least one asset allocation model set with at least one investment account.

5. The system in claim 1 further comprising:

an integration manager for synchronizing transactions between at least one record keeping system.

6. The system in claim 1 further comprising:

an electronic find transfer system for purchasing or redeeming assets from or to an investor account.

7. The system in claim 1 further comprising:

a trading system for executing at least one investment transaction.

8. The system in claim 1 further comprising:

a global allocation model set which is a species of said allocation model set, wherein an administrator creates and maintains said global allocation model set and wherein an advisor can utilize said global allocation model set in servicing investor needs.

9. The system in claim 1 further comprising:

a selection mechanism wherein a user may select all or a subset of funds from a list, thereby constituting a list of available funds for all of the global allocation model sets as managed by said user.

10. The system in claim 1 further comprising:

a global allocation model set wherein a user creates at least one allocation model by selecting at least two funds with at least two different allocations for each of said funds,

a user defined number for the total number of each of said allocation models that comprise said set, and

an algorithm for calculating said allocations of each of said investment vehicles for each said allocation model for each said time horizon wherein each of said allocation models is not already existing in said set to generate succeeding calculated allocation asset models.

11. The system in claim 1 further comprising:

an advisor allocation model set wherein an advisor creates at least one allocation model by selecting at least two investment vehicles with at least two different allocations for each of said investment vehicles,

a user defined total number of each of said allocation models that comprise said set, and

an algorithm for calculating said allocations of each of said investment vehicles for each said allocation model for each said time horizon when each of said allocation models is not already existing in said set to successively generate calculated allocation asset models.

12. The system in claim 1 further comprising:

a global allocation model set wherein an administrator creates at least one allocation model by selecting at least two investment vehicles with at least two different allocations for each of said investment vehicles,

a user defined number for total number of each of said allocation model that comprise said set, and

an user defined percentage change of risk level for calculating said allocations of each of said funds for each said allocation model for each said time horizon where each of said allocation model is not already existing in said set to generate succeeding calculated allocation asset models and where said calculated allocation asset models vary in said risk level by said user defined percentage change of said risk level.

13. The system in claim 1 further comprising:

an advisor allocation model set wherein an advisor creates at least one allocation model by selecting at least two investment vehicles with at least two different allocations for each of said investment vehicles,

a user defined number for total number of each of said allocation model that comprise said set, and

a user defined percentage change of said risk level for calculating said allocations of each of said funds for each said allocation model for each said time horizon where each of said allocation model is not already existing in said set to generate succeeding calculated allocation asset models and where said calculated allocation asset models vary in said risk level by said user defined percentage change of said risk level.

14. The system in claim 1 further comprising:

an advisor allocation model set which is a species of said allocation model set, wherein an advisor copies and/or modifies a global allocation model set to suit his or her investment style and/or investor needs.

15. The system in claim 1 further comprising:

an advisor allocation model set wherein an advisor selects at least one said allocation model set to link to at least one said investor account with said database.

16. The system in claim 1 further comprising:

a graphic user interface which allows an administrator or advisor to alter said allocated portions of said investment vehicles contained in at least one of said allocation models or said allocation model sets.

17. The system in claim 1 further comprising:

a questionnaire wizard for presenting investor profile and suitability questions comprising;

at least two classifications, wherein said classifications comprise risk tolerance level, investment style, or a combination thereof,

at least two answer types for each of said classifications,

at least one investor question corresponding to each of said types,

a first configuration mechanism for selecting an allocation model set to correspond with each said type, and

a second configuration mechanism for linking said one or more investor accounts with a particular asset allocation model set based upon an associated profile score, whereby the system automatically proposes an allocation model set or an advisor selects a substitute allocation model set.

18. The system as described in claim 1 further comprising:

at least one record keeping system for tracking investment transactions, wherein said record keeping system has an integration manager, wherein said integration manager acts as an synchronizing interface between said record keeping system and said embedded advisor by posting pending trades or other investment transactions at a certain designated time to the record system and performing reallocating and/or rebalancing of assets of at least one investment vehicle of at least one investor account wherein the reallocating and/or rebalancing of assets occur as defined in rebalancing and/or reallocating schedules.

19. The system as described in claim 1 further comprising:

reallocating assets of at least one investment vehicle of at least one investor wherein an advisor, administrator, or individual investor reallocates by utilizing a new allocation model,

wherein the difference between a new model weight of said new allocation model and a current model weight of said current allocation model is reflected by a quantitative percentage value other than zero,

wherein said difference is a positive numeric percentage, the difference between the beginning assets compared to the assets existing at the time of applying at least one new allocation model set is calculated to equate to a quantitative value which is defined as a redemption amount and said redemption amount is posted to at least one said record keeping system.

wherein said difference is a negative numeric percentage, the difference between the beginning assets compared to the assets existing at the time of applying at least one new allocation model set is calculated to equate to a quantitative value which is defined as a purchase amount and said purchase amount is posted to at least one said record keeping system,

rebalancing assets of at least one fund of at least one investor wherein an advisor, administrator, or individual investor manually, semi-automatically, or automatically rebalances according to actual model weight compared to actual model weight, wherein said model weight and said actual weight are retrieved from said record keeping system and the quantitative percentage between said model weight and said actual weight is such that a positive percentage value will result in a redemption with a corresponding monetary redemption amount whereas a negative percentage value will result in a purchase with a corresponding monetary purchase amount,

rebalancing assets of at least one fund of at least one investor wherein an advisor, administrator, or individual investor manually, semi-automatically, or automatically rebalances upon purchase of at least one investment, wherein said investment is totaled with all other investments of the investor in the model allocation set and reallocating assets of at least one fund of at least one investor occurs by multiplying totaled investment by a corresponding model weight of an associated fund or other investment, and

rebalancing assets of at least one fund of at least one investor wherein an advisor, administrator, or individual investor manually, semi-automatically, or automatically rebalances upon purchase of at least one investment, wherein said investment is subtracted from the total of all other investments of the investor in the model allocation set to equate to a new total and reallocating assets of at least one fund of at least one investor occurs by multiplying the new total investment by a corresponding model weight of an associated fund or other investment.

20. The system as described in claim 19 further comprising:

a redemption amount defined as a fixed monetary value wherein a trade or other investment transaction is performed by at least one trading system or other investment transaction system such that a particular investment is sold at a certain defined quantity which is equal to the redemption amount, and

deposit of a monetary value of the redemption amount into an account of the affected investor.

21. The system as described in claim 19 further comprising:

said purchase amount defined as a fixed monetary value wherein a trade or other investment transaction is performed by at least one trading system or other investment transaction system such that a particular investment is purchased at a certain defined quantity which is equal to the purchase amount, and

debit of a monetary value of the purchase amount from an account of the affected investor.

22. The system as described in claim 18 further comprising:

a trading system capable of processing omnibus trade transactions wherein net purchases and net redemptions of all investor transactions are synchronized in a trading list so that the net trades for all investors for a certain day are sent to a designated trading system.

23. The system as described in claim 22 further comprising:

an electronic fund transfer source capable of performing automatic, semi-automatic, or manual withdrawal of electronic funds from at least one said electronic funds transfer source of an individual investor for investment purposes, as determined by a designated investment vehicle of a relevant asset allocation model.

24. The system as described in claim 23 further comprising:

automatic, semi-automatic, or manual deposit of electronic funds to at least one electronic funds transfer source of the individual investor, wherein said deposit is derived from the monetary exchange of the selling of at least one or more investments, in whole or in part.

25. The system as described in claim 1 further comprising:

a secure messaging system for notifying an advisor or equivalent thereof of pending rebalancing and reallocation transactions relating to at least one investor,

an approval or rejection mechanism for approving or rejecting the pending balancing and reallocation transactions relating to at least one investor, and

a secure messaging system for notifying the investor of executed investment transactions, including any reallocating or rebalancing transactions.

26. The system as described in claim 1 further comprising:

an optional web browser and interface so that a user can interact with an embedded advisor interface,

the embedded advisor interface with an administrator component and an advisor component which interacts with the optional web browser and interface as well as,

a database for storing and retrieving data relating to the investor profile of each individual investor,

a user selected set of allocation models for a certain category of investor profile and a certain time horizon corresponding to the investment term,

at least one record keeping system,

at least one trading system or investment system,

the allocation models consisting of the group selected from global allocation models, advisor allocation models, and specific client allocation models,

a first module or other mechanism for linking at least one of the allocation models to advisor and/or investor accounts,

a second module or other mechanism for creating and maintaining the rebalancing schedules,

a third module or other mechanism for creating and maintaining the reallocating schedules,

a fourth module or other mechanism for creating and maintaining trades or other investments in accordance with the rebalancing schedules.

27. The system as described in claim 1 further comprising:

an administrator module comprising of the following;

an authentication mechanism wherein an administrator may access said module using a username and a password,

a first selection mechanism wherein said administrator selects all or a subset of predefined funds from a list, thereby constituting a list of available funds for all of the global allocation model sets as managed by the administrator or the functional equivalent thereof,

a second selection mechanism wherein said administrator selects all or a subset of funds as listed in the list of available funds for use in creating at least one of the global allocation model whereby each global allocation model group consisting of two or more global allocation models bears a unique global allocation model set name,

a first configuration mechanism wherein said administrator configures percentage values for each of the funds associated with a particular global allocation model such that the sum total of the percentage values equals one-hundred percent,

a second configuration mechanism wherein an administrator or the functional equivalent may configure multiple global allocation models for association into a single global model allocation set, whereby said global model allocation set bears a unique global model allocation set name,

a third configuration mechanism wherein said administrator configures a global model allocation set to assign the unique global model allocation set name, define the number of global allocation models in the set, define a text description of the model set, define an owner of the model set, define the time points for reallocating and/or reinvesting, choose whether to rebalance on purchase, choose whether to rebalance on redemption, optionally choose a time period for automatic rebalancing, define a percentage corresponding to risk level threshold for rebalancing, select the predefined fund type, select the classification, and select the associated risk level of the funds in the global allocation model set,

a first display mechanism wherein an administrator or the functional equivalent may view all of the global allocation model sets, the associated risk level for each of the sets, and the global allocation model set name for each of the sets,

a fourth configuration mechanism for modifying the set name or associated risk level for one or more of the sets,

a fifth configuration mechanism for creating, viewing, modifying, or removing one or more advisors and their associated information from the system,

a sixth configuration mechanism for creating, viewing, modifying, or removing one or more advisors with respect to association with one or more of the sets

a questionnaire wizard for investor profile and suitability questions comprising;

at least two classifications such as, but not limited to, risk tolerance level and investment style,

at least two types as subcategories of the classifications such as, but not limited to, conservative, moderate, and aggressive,

at least one investor question corresponding to each of the types,

a seventh configuration mechanism for selecting an allocation model set to correspond with the type, such as, but not limited to conservative, moderate, and aggressive

an eighth configuration mechanism for selecting one or more investors for linking said one or more investor accounts with a particular asset allocation model set based upon an associated profile score, whereby the system automatically proposes an allocation model set or the advisor selects the allocation model set

an advisor module comprising of the following;

an authentication mechanism wherein an advisor may access the administrator module with the correct username and password,

a first module for viewing, editing, or removing existing global and/or advisor allocation model sets,

a second module for creating the advisor allocation model sets comprising the model set name, number of models in the set, the description, the advisor owner, the investment time points, whether to rebalance on purchase, whether to rebalance on redemption, whether to automatically periodically rebalance, whether to automatically rebalance, number of months for automatic rebalancing, percentage of the rebalance tolerance, the type, the classification, the associated risk level, and the selection of all or a subset of the available funds, selecting asset allocation percentages corresponding to the selected funds,

a third module for viewing, searching, and/or editing investor accounts which the advisor or functional equivalent thereof manages, and

a fourth module for selectively canceling rebalancing or reallocating transactions for the investor accounts which the advisor or functional equivalent thereof manages.

28. A computer implemented or enabled automated asset allocation management system for delivering and managing investment services to multiple investors through a user interface, wherein said interface comprises:

a. an asset allocation model matrix comprising;

i. at least one asset allocation model which is prepackaged or user defined, wherein each said asset allocation model comprises at least two investment vehicles having allocated portions, wherein said allocated portions total one-hundred percent,

ii. at least two asset allocation model groups, wherein each of said asset allocation model groups comprises at least two or more of each said asset allocation model and wherein each of said asset allocation model groups spans a unique time horizon which consists of number of years remaining until an investment end goal date,

iii. at least one asset allocation model set comprising at least two of said asset allocation model groups, wherein said asset allocation model set comprises an investment portfolio of at least one investor.

b. a data manager for managing said matrix which comprises;

i. creating each of said asset allocation model for said asset allocation model set where said asset allocation model and said asset allocation model set is user defined,

ii. storing said asset allocation model set,

iii. linking at least one said asset allocation model set to at least one investor account with a database

iv. retrieving said asset allocation model from said asset allocation model set for a unique time horizon for at least one investor where said asset allocation model is user defined or prepackaged, and

v. changing said asset allocation model from a prior time horizon to a subsequent time horizon for at least one investor upon expiration of said prior time horizon.

c. an allocator for allocating investor assets of an investor to apportion said assets to equal weights in said asset allocation model.

d. a rebalancing tool for rebalancing assets where an investor purchases or redeems assets from an investment account, wherein said assets equal said weights in said asset allocation model.

e. a graphic user interface for displaying to an investor pending and completed investment transactions, said graphic user interface comprises;

i. a user control for canceling one or more of said pending investment transactions,

ii. a user control for submitting and/or modifying electronic fund transfer source information, and

iii. an e-commerce component for online shopping with at least one of said designated merchants.