METHOD AND SYSTEM FOR FINANCIAL ADVISING

• US 20100082501A1
• Filed: 11/06/2009
• Published: 04/01/2010
• Est. Priority Date: 11/05/1998
• Status: Abandoned Application

• Current Assignee: Wealthare Capital Management IP LLC
• Original Assignee: Financeware Incorporated
• Inventors: Loeper, David B.
• Application Number:
  US12/613,577
• Publication Number:
  US 20100082501A1
• Time in Patent Office: Days
• US Class Current: 705/36.R
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/02 Banking, e.g. interest calculation or account maintenance credit or loans G06Q40/03
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis

Abstract

A method of financial advising comprises performing, by a computer, a simulation of an investment allocation over a predetermined time period. The computer determines, using the simulation of the investment allocation, a plurality of upper and lower boundary portfolio values. Each upper boundary portfolio value comprises an amount of money calculated to provide a first predetermined likelihood of exceeding a value for a client goal from a present date until a corresponding date. Each lower boundary portfolio value comprise an amount of money calculated to provide a second predetermined likelihood of exceeding the value for the goal from a present date until the corresponding date. The computer determines a plurality of anticipated future portfolio values and an estimated chance that the anticipated future portfolio values will be greater than the upper boundary portfolio value or less than the lower boundary portfolio value on a corresponding date.

Claims

1. A method of financial advising comprising:

performing, by a computer, a simulation of an investment allocation over a predetermined time period using a capital market modeling technique, the simulation accounting for investments and expenditures planned to occur during the predetermined time period; and

determining, by the computer, using the simulation of the investment allocation, (1) a plurality of upper boundary portfolio values, each upper boundary portfolio value corresponding to a date in the predetermined time period, each upper boundary portfolio value comprising an amount of money calculated to provide a first predetermined likelihood of exceeding a value for a client goal from a present date until the corresponding date, (2) a plurality of lower boundary portfolio values, each lower boundary portfolio value corresponding to a date in the predetermined time period, each lower boundary portfolio value comprising an amount of money calculated to provide a second predetermined likelihood of exceeding the value for the goal from a present date until the corresponding date, (3) a plurality of anticipated future portfolio values, each anticipated future portfolio value corresponding to a date in the predetermined time period, and (4) an estimated chance that the anticipated future portfolio values will be greater than the upper boundary portfolio value on a corresponding date or be less than the lower boundary portfolio value on a corresponding date.

2. The method of claim 1, wherein each upper boundary portfolio value comprises an amount of money calculated to provide a first predetermined likelihood of exceeding a respective value for each of a plurality of client goals from a present date until the corresponding date, and wherein each lower boundary portfolio value comprises an amount of money calculated to provide a second predetermined likelihood of exceeding the respective value for each of the plurality of goals from a present date until the corresponding date.

3. The method of claim 1, wherein the recommended investment allocation includes only passive investments.

4. The method of claim 1, wherein the capital market modeling technique comprises a Monte Carlo analysis.

5. The method of claim 1, wherein the predetermined time period is one year.

6. The method of claim 1, further comprising:

determining, by the computer, an initial value of a client investment portfolio.

7. The method of claim 1, further comprising:

obtaining, by the computer, a client targeted end date and targeted end investment portfolio value.

8. The method of claim 1, wherein the capital market modeling technique comprises a reverse iteration algorithm.

9. The method of claim 8, wherein performing a simulation of a plurality of model investment portfolio allocations using a reverse iteration algorithm comprises:

obtaining by the computer a targeted portfolio end date and a targeted portfolio end value; and

for each of a plurality of periodic dates over a time period extending from a present time to the targeted portfolio end date, determining by the computer an amount of money needed to have a targeted confidence of having the targeted portfolio end value at the targeted portfolio end date.

10. A computer-readable storage medium having computer-executable instructions that, when executed by a computer, control the computer to implement a method of financial advising comprising:

performing, by a computer, a simulation of an investment allocation over a predetermined time period using a capital market modeling technique, the simulation accounting for investments and expenditures planned to occur during the predetermined time period; and

determining, by the computer, using the simulation of the investment allocation, (1) a plurality of upper boundary portfolio values, each upper boundary portfolio value corresponding to a date in the predetermined time period, each upper boundary portfolio value comprising an amount of money calculated to provide a first predetermined likelihood of exceeding a value for a client goal from a present date until the corresponding date, (2) a plurality of lower boundary portfolio values, each lower boundary portfolio value corresponding to a date in the predetermined time period, each lower boundary portfolio value comprising an amount of money calculated to provide a second predetermined likelihood of exceeding the value for the goal from a present date until the corresponding date, (3) a plurality of anticipated future portfolio values, each anticipated future portfolio value corresponding to a date in the predetermined time period, and (4) an estimated chance that the anticipated future portfolio values will be greater than the upper boundary portfolio value on a corresponding date or be less than the lower boundary portfolio value on a corresponding date.

11. The computer-readable storage medium of claim 10, wherein each upper boundary portfolio value comprises an amount of money calculated to provide a first predetermined likelihood of exceeding a respective value for each of a plurality of client goals from a present date until the corresponding date, and wherein each lower boundary portfolio value comprises an amount of money calculated to provide a second predetermined likelihood of exceeding the respective value for each of the plurality of goals from a present date until the corresponding date.

12. The computer-readable storage medium of claim 10, wherein the recommended investment allocation includes only passive investments.

13. The computer-readable storage medium of claim 10, wherein the capital market modeling technique comprises a Monte Carlo analysis.

14. The computer-readable storage medium of claim 10, wherein the predetermined time period is one year.

15. The computer-readable storage medium of claim 10, further comprising:

determining, by the computer, an initial value of a client investment portfolio.

16. The computer-readable storage medium of claim 10, further comprising:

obtaining, by the computer, a client targeted end date and targeted end investment portfolio value.

17. The computer-readable storage medium of claim 10, wherein the capital market modeling technique comprises a reverse iteration algorithm.

18. The computer-readable storage medium of claim 17, wherein performing a simulation of a plurality of model investment portfolio allocations using a reverse iteration algorithm comprises:

obtaining by the computer a targeted portfolio end date and a targeted portfolio end value; and

for each of a plurality of periodic dates over a time period extending from a present time to the targeted portfolio end date, determining by the computer an amount of money needed to have a targeted confidence of having the targeted portfolio end value at the targeted portfolio end date.

19. A device for financial advising comprising:

a processor configured for performing a simulation of an investment allocation over a predetermined time period using a capital market modeling technique, the simulation accounting for investments and expenditures planned to occur during the predetermined time period; and

the processor further configured for determining using the simulation of the investment allocation, (1) a plurality of upper boundary portfolio values, each upper boundary portfolio value corresponding to a date in the predetermined time period, each upper boundary portfolio value comprising an amount of money calculated to provide a first predetermined likelihood of exceeding a value for a client goal from a present date until the corresponding date, (2) a plurality of lower boundary portfolio values, each lower boundary portfolio value corresponding to a date in the predetermined time period, each lower boundary portfolio value comprising an amount of money calculated to provide a second predetermined likelihood of exceeding the value for the goal from a present date until the corresponding date, (3) a plurality of anticipated future portfolio values, each anticipated future portfolio value corresponding to a date in the predetermined time period, and (4) an estimated chance that the anticipated future portfolio values will be greater than the upper boundary portfolio value on a corresponding date or be less than the lower boundary portfolio value on a corresponding date.

20. The device of claim 19, wherein each upper boundary portfolio value comprises an amount of money calculated to provide a first predetermined likelihood of exceeding a respective value for each of a plurality of client goals from a present date until the corresponding date, and wherein each lower boundary portfolio value comprises an amount of money calculated to provide a second predetermined likelihood of exceeding the respective value for each of the plurality of goals from a present date until the corresponding date.

21. The device of claim 19, wherein the recommended investment allocation includes only passive investments.

22. The device of claim 19, wherein the capital market modeling technique comprises a Monte Carlo analysis.

23. The device of claim 19, wherein the predetermined time period is one year.

24. The device of claim 19, wherein the processor is further configured for determining an initial value of a client investment portfolio.

25. The device of claim 19, wherein the processor is further configured for obtaining a client targeted end date and targeted end investment portfolio value.

26. The device of claim 19, wherein the capital market modeling technique comprises a reverse iteration algorithm.

27. The device of claim 26, wherein the processor is further configured for performing a simulation of a plurality of model investment portfolio allocations using a reverse iteration algorithm by performing the steps of:

obtaining by the computer a targeted portfolio end date and a targeted portfolio end value; and

for each of a plurality of periodic dates over a time period extending from a present time to the targeted portfolio end date, determining by the computer an amount of money needed to have a targeted confidence of having the targeted portfolio end value at the targeted portfolio end date.