Systems, methods, and computer program products for adjusting the assets of an investment account

• US 7,711,626 B2
• Filed: 06/30/2006
• Issued: 05/04/2010
• Est. Priority Date: 06/30/2006
• Status: Active Grant

• Current Assignee: Tegra118 Wealth Solutions, Inc.
• Original Assignee: Checkfree Corporation (Fiserv Incorporated)
• Inventors: Nanjundamoorthy, Hari, Pierdinock, Michele, Barone, Joseph A., Gonzales, Reo A., Zyvith, Lavinia S., McKinney, William, Smith, Charles R. III
• Primary Examiner(s): Kyle; Charles R
• Assistant Examiner(s): Niquette; Robert R
• Application Number:
  US11/480,688
• Publication Number:
  US 20080016010A1
• Time in Patent Office: 1,404 Days
• Field of Search: 705 35- 45
• US Class Current: 705/36.00R
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/03 Credit; Loans; Processing thereof
• 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
• CPC Class Codes: G06Q 40/10 Tax strategies

Abstract

Methods of the present invention identify an asset allocation model and at least one security associated there with. An investment account portfolio is stored that includes at least one substitute security associated with the identified at least one security. A virtual portfolio is then generated that includes the identified at least one security. A tax lot is created for the identified at least one security to identify a total value for the at least one security, and the method determines whether the virtual portfolio complies with the asset allocation model. The identified at least one security associated with the asset allocation model is restricted from the investment account portfolio.

Claims

1. A method, comprising:

storing an asset allocation model for an investment account, wherein the asset allocation model specifies at least a first asset allocation for a first security and a second asset allocation for a second security;

maintaining an account portfolio for the investment account that specifies actual holdings of the investment account, wherein the actual holdings include a first tax lot of the first security and a second tax lot of a substitute security for the second security, wherein the second tax lot of the substitute security is obtained based upon executing a modified first trade order, wherein the modified first trade order is a result of;

determining that a restriction applies to a proposed first trade order specifying the second security for the investment account;

modifying the proposed first trade order to replace the second security with the substitute security to generate the modified first trade order;

maintaining a virtual portfolio for the investment account that attributes the first tax lot of the first security to a virtual first security, and the second tax lot of the substitute security to a virtual second security, wherein the virtual first security corresponds to the first security and the virtual second security corresponds to the second security;

calculating a first total account position associated with the virtual first security, and a second total account position associated with the virtual second security,

wherein the first total account position comprises one of (i) a first total monetary value of tax lots associated with the first virtual security, or (ii) a first percentage representing a proportion of the first total monetary value of the tax lots associated with the first virtual security to a second total monetary value of the investment account, and wherein the second total account position comprises one of (i) a third total monetary value of tax lots associated with the second virtual security, or (ii) a second percentage representing a proportion of the third total monetary value of the tax lots associated with the second virtual security to the second total monetary value of the investment account; and

determining drift of the investment account from the asset allocation model based at least on calculating (i) a first drift between the first total account position and a first desired total account position determined based upon the first asset allocation for the first security, and (ii) a second drift between the second total account position and a second desired total account position determined based upon the second asset allocation for the second security,

wherein the first desired total account position comprises one of (i) a first model percentage for the first security or (ii) a fourth total monetary value for the first security calculated by applying the first model percentage for the first security to the second total monetary value of the investment account, and wherein the second desired total account position comprises one of (i) a second model percentage for the second security or (ii) a fifth total monetary value for the second security calculated by applying the second model percentage for the second security to the second total monetary value of the investment account; and

generating, responsive to the determining of the drift of the investment account, a second trade order,

wherein the prior steps are performed by one or more computers associated with a portfolio management system.

2. The method of claim 1, wherein the substitute security is a first substitute security, and the wherein the actual holdings further include a third tax lot of a second substitute security for the second security.

3. The method of claim 2, wherein calculating the second total account position associated with the virtual second security includes calculating the second total account position based upon the second tax lot of the first substitute security and the third tax lot of the second substitute security.

4. The method of claim 2, wherein the second substitute security is the same as the first security.

5. The method of claim 1, wherein the actual holdings of the investment account further include a third tax lot of the first security, and wherein the virtual portfolio for the investment account attributes the third tax lot of the first security to the virtual second security.

6. The method of claim 1, wherein calculating the first total account position associated with the virtual first security comprises summing respective account positions for all tax lots associated with the virtual first security, and wherein calculating a second total account position associated with the virtual second security comprises summing respective account positions for all tax lots associated with the virtual second security.

7. The method of claim 1, wherein the second trade order is generated to bring the virtual portfolio into compliance with the asset allocation model.

8. The method of claim 1, wherein the substitute security and the first security are a same security.

9. The method of claim 1, wherein the substitute security is (i) a sole substitute security in a one-for-one security substitution, (ii) one of a plurality of substitute securities in a one-to-many security substitution or a group substitution.

10. The method of claim 1, wherein the restriction is a first restriction, the substitute security is a first substitute security, and the first restriction is associated with a resolution rule associated with a second substitute security, and further comprising:

determining that a second restriction applies with respect to the second substitute security,

wherein the proposed first trade order is modified to replace the second security with the first substitute security to generate the modified first trade order as a result of determining that the second restriction applies with respect to the second substitute security,

wherein the prior step is performed by one or more computers associated with a portfolio management system.

11. The method of claim 1, wherein the second trade order is for the substitute security.

12. A system, comprising:

a memory for storing computer program instructions; and

a processor configured to access the memory and execute the computer program instructions to;

store, in the memory, an asset allocation model for an investment account, wherein the asset allocation model specifies at least a first asset allocation for a first security and a second asset allocation for a second security;

maintain an account portfolio for the investment account that specifies actual holdings of the investment account, wherein the actual holdings include a first tax lot of the first security and a second tax lot of a substitute security for the second security, wherein the second tax lot of the substitute security is obtained based upon executing a modified first trade order, wherein the modified first trade order is a result of;

determining that a restriction applies to a proposed first trade order specifying the second security for the investment account;

modifying the proposed first trade order to replace the second security with the substitute security to generate the modified first trade order;

maintain a virtual portfolio for the investment account that attributes the first tax lot of the first security to a virtual first security, and the second tax lot of the substitute security to a virtual second security, wherein the virtual first security corresponds to the first security and the virtual second security corresponds to the second security;

calculate a first total account position associated with the virtual first security, and a second total account position associated with the virtual second security,

wherein the first total account position comprises one of (i) a first total monetary value of tax lots associated with the first virtual security, or (ii) a first percentage representing a proportion of the first total monetary value of the tax lots associated with the first virtual security to a second total monetary value of the investment account, and wherein the second total account position comprises one of (i) a third total monetary value of tax lots associated with the second virtual security, or (ii) a second percentage representing a proportion of the third total monetary value of the tax lots associated with the second virtual security to the second total monetary value of the investment account; and

determine drift of the investment account from the asset allocation model based at least on calculating (i) a first drift between the first total account position and a first desired total account position determined based upon the first asset allocation for the first security, and (ii) a second drift between the second total account position and a second desired total account position determined based upon the second asset allocation for the second security,

wherein the first desired total account position comprises one of (i) a first model percentage for the first security or (ii) a fourth total monetary value for the first security calculated by applying the first model percentage for the first security to the second total monetary value of the investment account, and wherein the second desired total account position comprises one of (i) a second model percentage for the second security or (ii) a fifth total monetary value for the second security calculated by applying the second model percentage for the second security to the second total monetary value of the investment account; and

generate, responsive to the determining of the drift of the investment account, a second trade order.

13. The system of claim 12, wherein the substitute security is a first substitute security, and the wherein the actual holdings further include a third tax lot of a second substitute security for the second security.

14. The system of claim 13, wherein the processor is configured to calculate the second total account position associated with the virtual second security by calculating the second total account position based upon the second tax lot of the first substitute security and the third tax lot of the second substitute security.

15. The system of claim 13, wherein the second substitute security is the same as the first security.

16. The system of claim 12, wherein the actual holdings of the investment account further include a third tax lot of the first security, and wherein the virtual portfolio for the investment account attributes the third tax lot of the first security to the virtual second security.

17. The system of claim 12, wherein the processor is configured to calculate the first total account position associated with the virtual first security by summing respective account positions for all tax lots associated with the virtual first security, and wherein the processor is configured to calculate a second total account position associated with the virtual second security by summing respective account positions for all tax lots associated with the virtual second security.

18. The system of claim 12, wherein the second trade order is generated to bring the virtual portfolio into compliance with the asset allocation model.

19. The system of claim 12, wherein the substitute security and the first security are a same security.

20. The system of claim 12, wherein the substitute security is (i) a sole substitute security in a one-for-one security substitution, (ii) one of a plurality of substitute securities in a one-to-many security substitution or a group substitution.

21. The system of claim 12, wherein the restriction is a first restriction, the substitute security is a first substitute security, and the first restriction is associated with a resolution rule associated with a second substitute security, and wherein the processor is further configured to:

determine that a second restriction applies with respect to the second substitute security,

wherein the proposed first trade order is modified to replace the second security with the first substitute security to generate the modified first trade order as a result of determining that the second restriction applies with respect to the second substitute security.

22. The system of claim 12, wherein the second trade order is for the substitute security.