U.S. patent application number 14/469152 was filed with the patent office on 2014-12-11 for system and method of evaluating an investment portfolio.
This patent application is currently assigned to Edward Jones & Co.. The applicant listed for this patent is William Elliott Fiala, Matthew James Mikula. Invention is credited to William Elliott Fiala, Matthew James Mikula.
Application Number | 20140365400 14/469152 |
Document ID | / |
Family ID | 45698472 |
Filed Date | 2014-12-11 |
United States Patent
Application |
20140365400 |
Kind Code |
A1 |
Fiala; William Elliott ; et
al. |
December 11, 2014 |
SYSTEM AND METHOD OF EVALUATING AN INVESTMENT PORTFOLIO
Abstract
A system and method for performing a diagnostic evaluation of an
investment portfolio by categorizing the assets in the portfolio,
establishing thresholds for each category and identifying assets
that are not in compliance with the established thresholds.
Inventors: |
Fiala; William Elliott;
(Creve Coeur, MO) ; Mikula; Matthew James; (St.
Louis, MO) |
|
Applicant: |
Name |
City |
State |
Country |
Type |
Fiala; William Elliott
Mikula; Matthew James |
Creve Coeur
St. Louis |
MO
MO |
US
US |
|
|
Assignee: |
Edward Jones & Co.
St. Louis
MO
|
Family ID: |
45698472 |
Appl. No.: |
14/469152 |
Filed: |
August 26, 2014 |
Related U.S. Patent Documents
|
|
|
|
|
|
Application
Number |
Filing Date |
Patent Number |
|
|
13016919 |
Jan 28, 2011 |
|
|
|
14469152 |
|
|
|
|
12869529 |
Aug 26, 2010 |
8732059 |
|
|
13016919 |
|
|
|
|
Current U.S.
Class: |
705/36R |
Current CPC
Class: |
G06Q 40/06 20130101 |
Class at
Publication: |
705/36.R |
International
Class: |
G06Q 40/06 20120101
G06Q040/06 |
Claims
1-11. (canceled)
12. A diagnostic method for evaluating investment portfolios
comprising: a. electronically receiving a plurality of investment
portfolios for a plurality of clients, each investment portfolio
including a plurality of types of assets and at least one
investment objective for the portfolio wherein the investment
objective identifies the percentage of each asset type in the
portfolio; b. for each investment portfolio, selecting for each
asset at least one evaluation category, wherein each evaluation
category identifies criteria to be used to evaluate each asset; c.
by a computer processor, for each investment portfolio,
establishing a plurality of thresholds for each evaluation
category; d. for each portfolio, determining the current market
value for each of the assets in the portfolio; e. by the computer
processor, for each portfolio, classifying each evaluation category
as a function of an amount of deviation of the evaluation category
from the established thresholds; f. by the computer processor, for
each portfolio, assigning a score for each of the classifications
of the evaluation categories for that portfolio; g. by the computer
processor, for each portfolio, determining an aggregate score using
the assigned scores for all the classifications of the evaluation
categories for that portfolio; h. by the computer processor,
ranking the portfolios as a function of the aggregate scores of the
portfolios; and i. displaying a listing of the ranked
portfolios.
13. The method of claim 12 further comprising issuing an alert as a
function of the aggregate score of a portfolio.
14. The method of claim 13 wherein the alert is based on an amount
of time that a portfolio exceeds a suggested guideline.
15. The method of claim 14 wherein the alert is based on the
occurrence of exceeding a threshold.
16.-24. (canceled)
25. The method of claim 12 further comprising: j. receiving a
selection of a displayed ranked portfolio; k. by the computer
processor, for the selected displayed ranked portfolio, identifying
at least one transaction to perform that will change the
classification of at least one evaluation category; l. receiving a
selected transaction from the at least one identified transaction
to perform; and m. executing the selected transaction.
26. The method of claim 25 further comprising the steps of: n.
providing a user interface to display the selected transaction to a
user; and o. receiving instructions via the user interface to
execute the transaction.
27. The method of claim 12 wherein the plurality of thresholds
includes a concentration of an individual asset as compared to all
assets held in the portfolio.
28. The method of claim 12 wherein the plurality of thresholds
includes an industry sector allocation.
29. The method of claim 12 wherein the industry sectors include
communications, utilities, consumer staples, energy, health care,
financial services, industrials, consumer discretionary and
technology.
30. The method of claim 12 wherein the step of classifying includes
determining a difference between an actual concentration of an
asset and a suggested guideline.
31. The method of claim 12 where the step of classifying includes
comparing the determined difference with the plurality of
thresholds.
32. A system for evaluating an investment portfolio comprising: a
memory for storing computer readable code; and a processor
operatively coupled to the memory, the processor configured to:
receive a plurality of investment portfolios for a plurality of
clients, each investment portfolio including a plurality of types
of assets and at least one investment objective for the portfolio
wherein the investment objective identifies the percentage of each
asset type in the portfolio; for each investment portfolio, select
for each asset at least one evaluation category, wherein each
evaluation category identifies criteria to be used to evaluate each
asset; for each investment portfolio, establish a plurality of
thresholds for each evaluation category; for each portfolio,
determine the current market value for each of the assets in the
portfolio; for each portfolio, classify each evaluation category as
a function of an amount of deviation of the evaluation category
from the established thresholds; for each portfolio, assign a score
for each of the classifications of the evaluation categories for
that portfolio; for each portfolio, determine an aggregate score
using the assigned scores for all the classifications of the
evaluation categories for that portfolio; rank the portfolios as a
function of the aggregate scores of the portfolios; and display a
listing of the ranked portfolios.
33. The system of claim 32 wherein the processor is programmed to
issue an alert as a function of the aggregate score of a
portfolio.
34. The system of claim 33 wherein the alert is based on an amount
of time that a portfolio exceeds a suggested guideline.
35. The system of claim 34 wherein the alert is based on the
occurrence of exceeding a threshold.
36. The system of claim 32 wherein the processor is programmed to:
receive a selection of a displayed ranked portfolio; for the
selected displayed ranked portfolio, identify at least one
transaction to perform that will change the classification of at
least one evaluation category; receive a selected transaction from
the at least one identified transaction to perform; and execute the
selected transaction
37. The system of claim 36 further comprising: a user interface to
display the at least one transaction to a user, and to receive
instructions to execute the at least one transaction from the
user.
38. The system of claim 32 wherein the plurality of thresholds
includes a concentration of an individual asset as compared to all
assets held in the portfolio.
39. The system of claim 32 wherein the plurality of thresholds
includes an industry sector allocation.
40. The system of claim 32 wherein the industry sectors include
communications, utilities, consumer staples, energy, health care,
financial services, industrials, consumer discretionary and
technology.
41. The system of claim 32 wherein the processor is programmed to
classify by determining a difference between an actual
concentration of an asset and a suggested guideline.
42. The system of claim 32 wherein the processor is programmed to
classify by comparing the determined difference with the plurality
of thresholds.
43. A computer program for evaluating an investment portfolio, the
computer program comprising: a computer usable non-transitory
medium having computer readable program code modules embodied in
said medium for performing a diagnostic evaluation of an investment
portfolio; a computer readable first program code module for
receiving a plurality of investment portfolios for a plurality of
clients, each investment portfolio including a plurality of types
of assets and at least one investment objective for the portfolio
wherein the investment objective identifies the percentage of each
asset type in the portfolio; a computer readable second program
code module for selecting, for each asset for each investment
portfolio, at least one evaluation category, wherein each
evaluation category identifies criteria to be used to evaluate each
asset; a computer readable third program code module for
establishing, for each investment portfolio, a plurality of
thresholds for each evaluation category; a computer readable fourth
program code module for determining, for each portfolio, the
current market value for each of the assets in the portfolio; a
computer readable fifth program code module for classifying, for
each portfolio, each evaluation category as a function of an amount
of deviation of the evaluation category from the established
thresholds; a computer readable sixth program code module for
assigning, for each portfolio, a score for each of the
classifications of the evaluation categories for that portfolio; a
computer readable seventh program code module for determining, for
each portfolio, an aggregate score using the assigned scores for
all the classifications of the evaluation categories for that
portfolio; a computer readable eighth program code module for
ranking the portfolios as a function of the aggregate scores of the
portfolios; and a computer readable ninth program code module for
displaying a listing of the ranked portfolios.
Description
[0001] The present application is a continuation in part of U.S.
patent Ser. No. 12/869,529 filed Aug. 26, 2010, titled "Method and
System for Building an Investment Portfolio", the disclosure of
which is hereby incorporated by reference herein.
[0002] The present disclosure is directed to the maintenance of an
investment portfolio in compliance with an investment objective.
Specifically, the present disclosure is directed to the maintenance
of an investment portfolio created for an investor based on
investment objectives by applying a diagnostic tool that
facilitates compliance with the investment objectives by tracking
the current state of the portfolio, identifying areas that are not
in compliance and offering solutions to satisfying the investment
objectives.
[0003] It is known in the prior art to develop investment
objectives based on basic financial information provided by an
investor, which typically includes information related to
investment goals, financial status, age, income, retirement goals,
and financial needs. Investment goals are well known and may
include preservation of capital, aggressive growth, balance and
risk tolerance. Standard portfolio models are well known to achieve
investment objectives and are normally presented in terms of a pie
chart with the asset allocation portrayed as a piece of the pie. In
its simplest form, the asset allocation is typically divided
between individual financial instruments having different
classifications, e.g., equity, bonds, cash or equivalents, etc.
with a designated goal of percentage for each financial instrument
being identified. Assets can then be acquired in accordance with
the goals corresponding to the pie chart. Periodically, the
portfolio is reviewed and any deviations from the allocation
designated by the pie chart can be identified. For example, an
investment objective may dictate an asset allocation of goal of 55%
equity, 35% bonds, and 10% cash can be reviewed periodically to
ascertain the current market value of the assets to determine
compliance with the investment goals. If the current market value
indicates 47% equity, 43% bonds and 10%, prior art systems can
identify the deviation for the investment goal. However, most prior
art systems are manual in nature and are thus limited in providing
a detailed solution and options to return the asset allocation to
comply with the investment goals. Moreover, asset allocation based
on asset type may not provide sufficient granularity to achieve the
investment goals. These prior art systems that rely solely on asset
allocation are one dimensional in that they do not drill down
further to the individual financial instruments that make up the
asset allocation.
[0004] A more sophisticated prior art model may use multiple
accounts, each containing a different model allocation. Each of the
different models can be a component of a unified managed account
(UMA) where individual account managers designate the investment
criteria for the individual accounts, also known as investment
sleeves, and an overlay manager assists in optimizing investment
goals across the individual accounts. For example, in one prior art
UMA system, the overlay manager assists with tax harvesting across
the individual accounts. If one account presents an opportunity to
realize a gain, the overlay manager may identify a loss which
presents a beneficial shielding of the gain. Typically, this type
of tax harvesting is opportunistic in the sense that it optimizes
the tax treatment across multiple accounts as they occur but may
not assist in proactive investment planning.
[0005] The use of models is problematic in that the evaluation is
one dimensional in the sense that assets are typically tracked by
their relative position with respect to the overall portfolio.
There is limited ability to differentiate between assets in an
asset class. For example a portfolio model may identify an asset
class as a security without regard to the technology sector or the
consumer discretionary sector corresponding to the security. A
security in the high tech industry may behave much differently than
a security in the hospitality industry. Typical prior art financial
diagnostic tools can not differentiate in a specific asset class
for differences in the characteristics of the individual
assets.
[0006] Applicant's co-pending application Ser. No. 12/869,529
provides a detailed method of building an investment portfolio by
allocating assets among not only asset classes but also selecting
specific financial instruments in specific sectors, as well as
specific product types.
[0007] The present disclosure is directed to a processor
implemented method of monitoring of the asset allocation of a
portfolio and includes a diagnostic tool that not only identify
deviations from the portfolio objectives but provides greater
granularity than afforded in the prior art by recommending specific
transactions to return the portfolio to compliance with the
portfolio objectives.
[0008] In one embodiment, the present disclosure can be utilized by
a financial advisor in reviewing the investment portfolios of many
clients to identify portfolios that may need to reallocate assets
in order to meet the respective clients' investment objectives.
Once these portfolios are identified, the financial advisor may
utilize the present disclosure to prioritize the portfolios and
recommend specific transactions in specific financial instruments
to ensure compliance with the respective investment objectives.
BRIEF DESCRIPTION OF THE DRAWINGS
[0009] FIG. 1 is a simplified flow diagram of one embodiment of the
present disclosure.
[0010] FIGS. 2A-2D is a simplified pictorial representation of a
diagnostic report generated using the embodiment of FIG. 1.
[0011] FIG. 3 illustrates one embodiment of a user interface
showing the use of the present disclosure for evaluating a
portfolio.
[0012] FIG. 4 illustrates one embodiment of a user interface
showing the use of the present disclosure for evaluating a
portfolio.
[0013] FIG. 5 illustrates one embodiment of a user interface
showing the use of the present disclosure to invest additional
money in the portfolio.
[0014] FIG. 6 illustrates one embodiment of a user interface
showing the results of a diagnostic evaluation of a portfolio using
the present disclosure.
[0015] FIG. 7A-B illustrates one embodiment of a user interface
showing the results of a diagnostic evaluation regarding "Sell
Rated Securities".
[0016] FIG. 8 illustrates one embodiment of a user interface
showing the results of a diagnostic evaluation of a portfolio using
the present disclosure.
[0017] FIG. 9 illustrates one embodiment of a user interface
showing the options generated as a result of a diagnostic
evaluation of a portfolio using the present disclosure.
[0018] FIG. 10 illustrates one embodiment of a user interface
showing portfolios ranked in priority order generated as a result
of a diagnostic evaluation of a portfolio using the present
disclosure.
[0019] FIG. 11 illustrates one embodiment of a user interface
showing portfolios ranked in priority order based on a single
evaluation category generated as a result of a diagnostic
evaluation of a portfolio using the present disclosure.
[0020] FIG. 12 illustrates one embodiment of a user interface
showing portfolios that have recently been identified as not within
suggested guidelines generated as a result of a diagnostic
evaluation of a portfolio using the present disclosure.
[0021] FIG. 13 illustrates one embodiment of a user interface
showing portfolios suitable for a specific asset generated as a
result of a diagnostic evaluation of a portfolio using the present
disclosure.
DETAILED DESCRIPTION
[0022] FIG. 1 illustrates one embodiment of the present disclosure
illustrating the steps of a diagnostic tool. In step 100 an
investment portfolio is received for a customer. The investment
portfolio may include a plurality of assets and an investment
objective for the portfolio. The assets may be represented by a
plurality of financial instruments. The term "financial instrument"
refers to an instrument representing equity ownership, debt or
credit, typically in relation to a corporate or governmental
entity, wherein the instrument is saleable, including without
limitation, stocks, bonds, unit investment trusts (UITs), mutual
funds, exchange traded funds (ETFs), money market funds, etc. Each
investment portfolio may also include an investment objective that
includes goals for each of the financial instruments. The
investment objective may establish suggested guidelines providing
for the percentage of each asset in various categories as compared
to all assets, or the percentage of each specific financial
instrument as compared to all other financial instruments. The
investment objective can be used to identify corresponding
financial instruments that are within recommended guidelines used
by a particular investment advisor to achieve the investment
objective of a particular client.
[0023] The investment portfolio may be a pre-existing portfolio as
in the case when a client brings a portfolio to a financial advisor
from another investment firm or advisor. In the alternative, the
portfolio may be the result of a portfolio created by the advisor.
For example, the portfolio may be created by the financial advisor
using the systems and methods disclosed in co-pending and commonly
owned application Ser. No. 12/869,529.
[0024] In Step 110, each asset can be categorized into at least one
evaluation category. The evaluation categories can include "Asset
Allocation", "International", "Niche", "Fixed-income (Bond)
Ladder", "Corporate Bond Diversification", "Municipal Bond
Diversification", "Stock Sector Diversification", "Security Over
Concentration", "Sell Rated". The above mentioned evaluation
categories are but just one example, and many different evaluation
categories can be selected. In addition, the present disclosure
allows a multi-dimensional analysis of the portfolio by analyzing
evaluation categories that are overlapping. For instance, the
evaluation category "Asset Allocation" will overlap with the
"International" category when international securities are held in
the portfolio. Likewise, the "Asset Allocation" category will
overlap with the "Corporate Bond Diversification" category when
corporate bonds are held in the portfolio.
[0025] Another multi-dimensional aspect not found in the prior art
is that the evaluation categories can be hierarchical in nature.
For example, for each of the evaluation categories discussed above,
additional evaluation categories can be directed the financial
instruments held in the category. For example, the "Asset
Allocation" evaluation category can be further broken down to
evaluation categories corresponding to the suitability categories
of "Aggressive", "Growth", "Growth & Income", "Income",
"Aggressive Income & Cash." The use of sub-categories allows a
more robust evaluation of the portfolio than the prior art one
dimensional evaluation systems. For example, an investment
objective of "Balanced Toward Growth" may have an asset allocation
of 65% equities and 35% cash/income. In a prior art system, the
portfolio would be deemed to be in compliance with the suggested
guidelines if this 65/35 allocation was met. However, using the
diagnostic tool of the present disclosure, this same portfolio may
be deemed to be not in compliance if the "Aggressive" equities
exceed a predetermined threshold and are over-concentrated with
respect to the other equities, notwithstanding that the portfolio
satisfies the 65/35 asset allocation.
[0026] Likewise, the "International" evaluation category can be
further broken down to evaluation categories corresponding to
"International Equity" and International Income." The "Niche",
sometimes referred to as "non-core" assets, evaluation category can
be further broken down to evaluation categories corresponding to
"Aggressive Income", "Emerging Markets", "Natural Resources", and
"Real Estate." The "Fixed-Income Ladder" evaluation category can be
further broken down to evaluation categories corresponding to
"Aggressive Income", "Emerging Markets", "Natural Resources", and
"Real Estate." The "Corporate Bond Diversification" evaluation
category can be further broken down to evaluation categories
corresponding to industry sectors such as "Financial",
"Industrials", and "Utilities". The "Municipal Bond
Diversification" evaluation category can be further broken down to
evaluation categories corresponding to "General Obligation" and
"Revenue" and subcategories of "Revenue" including "Taxed Back",
"Utilities", "Transportation", "Education", "Health Care", and
"Housing." The "Stock Sector" evaluation category can be further
broken down to evaluation categories corresponding to industry
sectors, including "Communications", "Utilities", "Consumer
Staples", "Energy", "Health Care", "Financial Services",
"Industrials", "Consumer Discretionary" and "Technology."
[0027] Thus the present disclosure contemplates breaking down the
portfolio into many overlapping "slices", equity vs. cash vs.
income, (asset allocation), or international vs. domestic, or core
vs. non-core, The present disclosure also contemplates a breakdown
by style, i.e., growth, blend value, large mid and small cap.
[0028] In step 120, thresholds can be established for each
evaluation category as a function of the investment objective. For
example, for an "Asset Allocation" category for a portfolio having
a growth focused investment objective, the assets goals may be 80%
equities and 20% cash/income. Each asset type may have multiple
threshold which require different actions. For example, this
portfolio may have a first tier threshold for equities at 83% and a
second tier threshold for equities at 87%. Unlike in the prior art,
in which an investment criteria was either satisfied or not, the
present disclosure uses thresholds to establish how far from the
criteria is the portfolio and for selecting different responses
based on the thresholds.
[0029] In one embodiment, financial instruments may be assigned
grades or the like that identify varying levels of suitability for
investment. The suitability categories can be identified as
"Aggressive", "Growth", "Growth & Income", "Income",
"Aggressive Income & Cash", and each category can have a
desired range based on the entire portfolio. The assets may have
thresholds based on the suitability of the constituent fmancial
instruments included in the assets. For example, the equity assets
may have threshold corresponding to the suitability classification
of the financial instruments such as "Aggressive" threshold
established to be 0-2% over the suggested guidance, a "Growth"
threshold established to be 0-4% over the suggested guidance and a
"Growth & Income" threshold established to be 0-5% over the
suggested guidance. The thresholds for a given financial instrument
may also be tiered such that a first tier threshold for
"Aggressive" instruments is 0-2% over the suggested guidance and a
second tier threshold is >3% over the suggested guidance.
[0030] Thus, a threshold can be established using a percentage of
the total portfolio as a function of the investment objective of
the portfolio. In addition, tiered thresholds can be used to
indicate the relative deviation of an asset from the suggested
guidance provided by the investment objective, e.g., when the asset
allocation is deemed to be slightly outside or definitely outside
the recommended guidelines used by the investment advisor to meet
the client's investment objective. For income/cash assets, separate
thresholds can be established for cash and income. The thresholds
can indicate when the Asset Allocation is above or below suggested
guidelines for the investment objective.
[0031] For the evaluation category of "International Investments",
a threshold may be established for the percentage of domestic
investments as compared to international investments. Another
threshold may be the amount of diversification between
International Income and Equity investments. Multiple thresholds
may be used to indicate when the international investments are
either slightly outside, or definitely outside suggested guidelines
for the investment objective.
[0032] For the "Security Overconcentration" category, a threshold
may be established to highlight when a portfolio is over
concentrated in a security. Different threshold levels may be
selected to identify the level of overconcentration, e.g., slightly
over concentrated as compared to definitely over concentrated.
[0033] For the "Fixed Income Ladder" evaluation category,
thresholds may be established as a function of the maturity dates
of the bonds held in the portfolio. For example thresholds can be
established so that bond maturities are spread across short,
intermediate and long term to balance the risks of price
swings.
[0034] For the "Corporate Bond Diversification" evaluation
category, thresholds may be established which indicate
overconcentration in a bond sector. Three main bond corporate bonds
sectors may be financial services, utilities and industrials. The
thresholds can be set to identify overconcentration in any of the
sectors.
[0035] For the "Municipal Bond Diversification" evaluation
category, thresholds may be established to indicate diversification
between general obligation bonds and revenue bonds. Further
thresholds may be established to diversify revenue bonds by
sector.
[0036] For the "Stock Sector Diversification" evaluation category,
thresholds can be established to indicate diversification between
industry sectors. Industry sectors for stocks may be
communications, utilities, consumer staples, energy, health care,
financial services, industrials, consumer discretionary and
technology.
[0037] For the "Sell Rated" evaluation category, a threshold may be
set to indicate ownership of a stock, bond, mutual fund or ETF that
is subject to a sell recommendation.
[0038] For the "Niche Investment" evaluation category, a threshold
can be established to indicate diversification between non-core
assets such as Aggressive income investment products, Emerging
Markets investment products, Natural Resources investment products
and Real Estate investment products.
[0039] In step 130, the market value of each asset in the portfolio
can be determined. For example. the market value of each financial
instrument can be determined based on its then available current
market price.
[0040] In step 140, each asset is classified as a function of the
current market value and the established thresholds for each
category. For example, the classification for a category may
indicate that the investments are within the recommended
guidelines. If the investments are within the recommended
guidelines, no further action is required for that category.
Another classification may be that the investments for the category
are slightly outside the recommended guidelines because a first
threshold is exceeded. If the investments are slightly outside the
guidelines, further action may not be necessary depending on the
particular facts and circumstances, but an alert can be provided to
prompt the user to take action if desired. Another classification
can be that the investment definitively falls outside the
recommended guidelines when a second tier threshold is surpassed.
Under this classification, the investments holdings may put
compliance with the investment objective in jeopardy. The
classification of the categories are exemplary and further
classifications based on further thresholds can be utilized if
desired. The classifications of the categories can be displayed to
the user using a graphical user interface and the classifications
may be represented by a numerical system, e.g., 1, 2, 3, a color
coded system, e.g., red, yellow, green, and an alphabetical system
e.g., A, B and C and the like.
[0041] In step 150, assets which are classified as not within
suggested guidelines can be selected to evaluate options for
returning them to within guidelines.
[0042] In Step 160, options can be generated that return the asset
to within the guidelines. For example, if the asset allocation is
not within guidelines due to the "Aggressive" equities in excess of
a threshold, the present disclosure can identify options to reduce
the relative holdings of the "Aggressive" equities. For example, an
option may be to sell some of the financial instruments in the
"Aggressive" equity category. Another option could be to purchase
financial instruments in the income asset class to reduce the
relative position of the "Aggressive" equities. Thus a transaction
in one asset class can be identified to solve a potential problem
in another asset class.
[0043] By evaluating all of the evaluation categories for assets
not within the guidelines, a number of options can be presented to
return the portfolio to the suggested guidelines in order to
achieve the investment objective. In some cases, execution of a
transaction for one evaluation category may impact another. For
example, in a scenario where a cash position is larger the
suggested guidelines, the cash can be used to purchase equities to
bring the portfolio back within the suggested guidelines. The
identified transaction options may also be based on research
available to the financial advisor. For example, in the case where
the "Asset Allocation" evaluation indicates that the amount of
equities is below the suggested guidelines for the investment
objection, the financial advisor can be presented with recommended
stocks that are eligible for inclusion in the portfolio in view of
the portfolio objective.
[0044] In step 170, the available transaction options can be
presented to the client for the client to make a determination of
which options to execute.
[0045] Thus, through the use of thresholds and classifications,
each evaluation category can provide a quick indication of whether
the category is within guidelines, and if not, how far it is from
the guidelines. Moreover the present disclosure can provide options
to return the assets in the evaluated category to within
guidelines.
[0046] FIGS. 2A-2D illustrate one embodiment of a report that can
be generated using the diagnostic method of the present disclosure.
With reference to FIG. 2A, a portfolio diagnostic report can be
generated by a financial advisor 210 to evaluate the current status
of an investment portfolio of a client 220. The investment
portfolio can be a portfolio created by the financial advisor 210,
or can be a pre-existing portfolio that is currently being handled
by the financial advisor. The investment portfolio has an
investment objective 230 of "Balanced Toward Growth", which in this
embodiment may be subject to suggested guidelines of 65% equities
and 35% cash/income. The total portfolio value 240 indicates the
value of the portfolio held at the firm of the financial advisor,
as well as at other firms.
[0047] The summary includes each of the evaluation categories 250,
as well as the classification 260 of the evaluation category. In
this embodiment, a green circle indicates the category is within
suggested guidelines, a yellow triangle indicates the category is
slightly outside suggested guidelines and a red square indicates
the category is well outside the suggested guidelines. Each
evaluation category 250 is then described in more detail in
individual sections.
[0048] The "Asset Allocation" category 270 is generally indicated
to be well outside the suggested guidelines as indicated by the red
square 280. The financial instruments that make up the assets,
characterized by their suitability, can be displayed with an
indication of whether the financial instruments concentrations are
within the suggested guidelines and whether any action is
necessary. In this embodiment, the suggested concentration
guideline 272 for "Aggressive" equities 274 is 5%. Based on the
market value of the equities, the actual concentration 276 is 3%.
Although the "Aggressive" equities is 2% less than the guidelines,
it is not greater than a threshold established for the "Aggressive"
equities and thus no action is recommended for the "Aggressive"
equities. With respect to the "Growth" equities, the actual
concentration 276 is 6% less than the suggested guideline 272.
Because this difference 278 is greater than a first tier threshold
for "Growth" equities, this equity is classified as slightly below
the suggested guideline as indicated by the yellow triangle 284.
The first tier threshold for "Growth" equities in this embodiment
is >4% from the guidelines, and the second tier threshold is
>10%.
[0049] The "Growth & Income" equities actual concentration 276
is 22% less than the suggested guideline 272. Because this
difference 278 is greater than a second tier threshold for "Growth
& Income" equities, this equity is classified as well below the
suggested guideline as indicated by the red square 294. The first
tier threshold for "Growth & Income" equities in this
embodiment is >4% from the guidelines, and the second tier
threshold is >10%.
[0050] As a result of the evaluation of the equity portion of the
portfolio, the "Total Equity" 296 is 30% less than the suggested
guideline 272 and because the difference 278 is greater than a
second tier threshold, the "Total Equity" is classified as well
below the suggested guidelines and is indicated by a red square
298.
[0051] A similar evaluation can be done for the "Cash/Income"
assets 297. The net result is that the "Asset Allocation" 270 is
indicated to be well below the suggested guidelines as indicated by
the red square 280.
[0052] With reference to FIG. 2B, a similar evaluation is done for
"International" 222, "Niche" 232 and "Bond Ladder" 242 assets. Each
of the categories has an actual concentration 224, guideline
concentration 226, difference 228 between the actual and suggested
and associated thresholds (not shown) for each of the financial
instruments included in the category. Based on a comparison of the
difference 228 with the appropriate thresholds, each category 222,
232 and 242 can be classified.
[0053] With reference to FIG. 2C, a similar evaluation is done for
"Corporate Bond Diversification" 252, "Muni Bond Diversification"
262 and "Stock Sector Diversification" 264 assets. For "Corporate
Bond Diversification" 252, an actual concentration 254, guideline
concentration 256, difference 258 between the actual and suggested
and associated thresholds (not shown) is indicated for each of the
financial instruments included in the category.
[0054] With respect to "Muni Bond Diversification" 262 and "Stock
Sector Diversification" 264 assets, the suggested guidelines 266
provide a range and the difference 268 is determined to be above or
below the guideline range. The appropriate thresholds are selected
based on the guideline range.
[0055] FIG. 2D provides the diagnostics results for the "Security
Overconcentration" 211 and "Sell-rated Securities" 213 categories.
Unlike the other categories, the "Security Overconcentration" 211
and "Sell-rated Securities" 213 identify the specific financial
instruments that do not satisfy the suggested guidelines.
[0056] FIG. 3 illustrates one embodiment of a user interface
illustrating a portfolio that can be evaluated using the present
disclosure. The portfolio investment objective 300 is identified as
Balanced Toward Growth. The portfolio consists of several accounts
320, each having a respective suitability category(ies) 330. The
diagnostic tool can be run to evaluate the portfolio as a whole, or
can be run to evaluate an individual account, or subset of
accounts. In the case where the diagnostic tool indicates that the
investment objective is not being met, and the client is
comfortable with the current holdings, the investment objective can
be selected from a pull-down menu 310 to more accurately reflect
the client's current investment strategy, and the diagnostic tool
can be re-run using the new investment objective and the respective
threshold for that objective.
[0057] Once the evaluation is complete, the diagnostic tool can
identify options to return each of the evaluation categories to the
suggested guidelines. FIG. 4 illustrates one embodiment a user
interface illustrating a portfolio that can be evaluated using the
present disclosure. In response to the diagnostic results, a client
may wish to add money to his account to address any deficiencies
identified by the portfolio diagnostics. A client can indicate that
it will add new money 400, and can specify which account it will be
adding the new money to 420.
[0058] FIG. 5 illustrates how the new money added can be allocated
to the assets in the portfolio instruments. For the selected
account, the mix of assets is listed 500, and also illustrated in
chart form 510. The current allocation 520 can be shown in value
and allocation percentage, and illustrated in charts 510 and 530.
The amount to invest is shown 540 and selectable amounts can be
designated 550 for each of the types of financial instruments
making up the assets of the account. As the money is allocated, the
new allocation is indicated 560.
[0059] FIG. 6 illustrates how the asset allocation can be adjusted
in response to the results provided by the portfolio evaluation.
Each evaluation category which is found to not be in compliance
with the suggested guidelines can be highlighted using a selectable
guideline. In this embodiment, four categories are identified,
"Sell Rated", "Stock Sectors", "Over Concentration" and "Aggressive
Assets" as not within suggested guidelines 600. By selecting one of
the identified icons, the user interface will provide access to the
options identified to bring the selected category back into
compliance with the guidelines.
[0060] FIG. 7A illustrates the options identified for the "Sell
Rated" securities category. In this embodiment, two equities 700
and two bonds 710 are identified as being held in various accounts
720 in the portfolio that according to current research are sell
rated. The amount of each of the assets to be sold is selectable on
an individual basis 730, or all can be selected to be sold 740.
[0061] FIG. 7B illustrates the "Sell All Shares" option 740 being
chosen. The new allocation reflecting the sold shares will be
updated 750, and the amount of money from the proceeds of the sale
available to be invested is indicated 760, and is selectable
between stocks and bonds. Once the options for "Sell Rated
Securities" is chosen, the diagnostic tool can be rerun to account
for the sale of the securities, which may impact the previous
results presented in FIG. 6.
[0062] FIG. 8 illustrates the results of selecting options
presented by the diagnostic process which may result in additional
money being available to invest in the portfolio 800. Each of the
icons represents an amount of money available to invest and is
selectable and adjustable between categories.
[0063] FIG. 9 illustrates options presented when the "Stocks" icon
of FIG. 8 is selected. Each of the stocks identified 900 are the
results of research recommendations 910 and are suitable for the
portfolio in accordance with the investment objective, and the
current allocation of each is shown 930. The amount of money
available 920 can be allocated as desired among any of the options
940. The new allocation will be shown representing the selection
950. In order to assist the selection, charts may be provided
showing the impact on allocation. A box 970 can represent the
suggested guidelines, and the bar 972 can represent the current
allocation. Any allocation not within the guidelines can be
highlighted 975, which may assist in the selection process.
[0064] FIGS. 2A-2D illustrate how the diagnostic model can be
implemented for a single portfolio. In another embodiment, the
present disclosure can be used to periodically review a plurality
of portfolios. As illustrated in FIG. 10, for each portfolio 1000,
the classification of the evaluation categories 1010 an be scored
according to its classification, i.e., a higher score the greater
the threshold is exceeded. By totaling the scores of each
evaluation category, a portfolio can receive a cumulative score.
Each portfolio can then be ranked by its cumulative score 1000,
with the portfolios having the highest score indicating the highest
deviation from their respective investment objective. In this way,
the portfolios in greater need for review are highlighted for the
financial advisors and resources can be directed to the portfolios
in most need first.
[0065] In another embodiment, review of a single evaluation
category can be carried out for many portfolios, and by using a
scoring system, it can be determined which portfolios deviate the
greatest from the guidelines for a specific evaluation category.
With respect to FIG. 11, the diagnostic tool can score individual
evaluation categories and rank the portfolios based on individual
category. In this embodiment, each portfolio can have its "Asset
Allocation" 1110 evaluation category scored, and the portfolios can
be ranked according to score and presented showing the portfolios
having the worst compliance with this category 1120.
[0066] In another embodiment, an alert can be issued based on an
amount of time that a portfolio exceeds a suggested guideline. For
example, a processor can store the results from the diagnostic tool
in a memory means. On a subsequent evaluation of the portfolio, the
memory means can provide access to the stored data to analyze
trends in the data. One trend may be the amount of time that an
evaluation category or an asset has exceeded a threshold.
[0067] In another embodiment, an alert can be generated and issued
automatically to the financial advisor, his supervisor or the
client upon the occurrence of an evaluation category or an asset
exceeding a threshold. With respect to FIG. 12, a listing of all
portfolios which were previously in compliance but now are out of
compliance 1200 can be generated sorted by priority 1210.
[0068] The diagnostic tool can also be used to find candidate
portfolios for assets that may be available. With reference to FIG.
13, the financial advisor's firm may have bonds for Georgia Power
in inventory 1300. The diagnostic tool can be used to search for
portfolios which may be suitable for these assets. For example, a
search can be conducted for portfolios that are underweight in the
income category by a selectable amount 1310, underweight in the
bond sector 1320, and underweight by maturity 1330. The diagnostic
tool can search for all portfolios that meet this criteria and
provide a list of candidate portfolios ranked in order of need
1340. Thus the diagnostic tool of the present disclosure can be
used proactively to identify portfolios that may benefit from
assets that are available to the financial advisor.
[0069] The present disclosure can be implemented by a general
purpose computer programmed in accordance with the principals
discussed herein. It may be emphasized that the above-described
embodiments, particularly any "preferred" embodiments, are merely
possible examples of implementations, merely set forth for a clear
understanding of the principles of the disclosure. Many variations
and modifications may be made to the above-described embodiments of
the disclosure without departing substantially from the spirit and
principles of the disclosure. All such modifications and variations
are intended to be included herein within the scope of this
disclosure and the present disclosure and protected by the
following claims.
[0070] Embodiments of the subject matter and the functional
operations described in this specification can be implemented in
digital electronic circuitry, or in computer software, firmware, or
hardware, including the structures disclosed in this specification
and their structural equivalents, or in combinations of one or more
of them. Embodiments of the subject matter described in this
specification can be implemented as one or more computer program
products, i.e., one or more modules of computer program
instructions encoded on a tangible program carrier for execution
by, or to control the operation of, data processing apparatus. The
tangible program carrier can be a computer readable medium. The
computer readable medium can be a machine-readable storage device,
a machine-readable storage substrate, a memory device, or a
combination of one or more of them.
[0071] The term "processor" encompasses all apparatus, devices, and
machines for processing data, including by way of example a
programmable processor, a computer, or multiple processors or
computers. The processor can include, in addition to hardware, code
that creates an execution environment for the computer program in
question, e.g., code that constitutes processor firmware, a
protocol stack, a database management system, an operating system,
or a combination of one or more of them.
[0072] A computer program (also known as a program, software,
software application, script, or code) can be written in any form
of programming language, including compiled or interpreted
languages, or declarative or procedural languages, and it can be
deployed in any form, including as a standalone program or as a
module, component, subroutine, or other unit suitable for use in a
computing environment. A computer program does not necessarily
correspond to a file in a file system. A program can be stored in a
portion of a file that holds other programs or data (e.g., one or
more scripts stored in a markup language document), in a single
file dedicated to the program in question, or in multiple
coordinated files (e.g., files that store one or more modules, sub
programs, or portions of code). A computer program can be deployed
to be executed on one computer or on multiple computers that are
located at one site or distributed across multiple sites and
interconnected by a communication network.
[0073] The processes and logic flows described in this
specification can be performed by one or more programmable
processors executing one or more computer programs to perform
functions by operating on input data and generating output. The
processes and logic flows can also be performed by, and apparatus
can also be implemented as, special purpose logic circuitry, e.g.,
an FPGA (field programmable gate array) or an ASIC (application
specific integrated circuit).
[0074] Processors suitable for the execution of a computer program
include, by way of example, both general and special purpose
microprocessors, and any one or more processors of any kind of
digital computer. Generally, a processor will receive instructions
and data from a read only memory or a random access memory or both.
The essential elements of a computer are a processor for performing
instructions and one or more memory devices for storing
instructions and data. Generally, a computer will also include, or
be operatively coupled to receive data from or transfer data to, or
both, one or more mass storage devices for storing data, e.g.,
magnetic, magneto optical disks, or optical disks. However, a
computer need not have such devices. Moreover, a computer can be
embedded in another device, e.g., a mobile telephone, a personal
digital assistant (PDA), a mobile audio or video player, a game
console, a Global Positioning System (GPS) receiver, to name just a
few.
[0075] Computer readable media suitable for storing computer
program instructions and data include all forms of non volatile
memory, media and memory devices, including by way of example
semiconductor memory devices, e.g., EPROM, EEPROM, and flash memory
devices; magnetic disks, e.g., internal hard disks or removable
disks; magneto optical disks; and CD ROM and DVD-ROM disks. The
processor and the memory can be supplemented by, or incorporated
in, special purpose logic circuitry.
[0076] To provide for interaction with a user, embodiments of the
subject matter described in this specification can be implemented
on a computer having a display device, e.g., a CRT (cathode ray
tube) or LCD (liquid crystal display) monitor, for displaying
information to the user and a keyboard and a pointing device, e.g.,
a mouse or a trackball, by which the user can provide input to the
computer. Other kinds of devices can be used to provide for
interaction with a user as well; for example, input from the user
can be received in any form, including acoustic, speech, or tactile
input.
[0077] Embodiments of the subject matter described in this
specification can be implemented in a computing system that
includes a back end component, e.g., as a data server, or that
includes a middleware component, e.g., an application server, or
that includes a front end component, e.g., a client computer having
a graphical user interface or a Web browser through which a user
can interact with an implementation of the subject matter described
is this specification, or any combination of one or more such back
end, middleware, or front end components. The components of the
system can be interconnected by any form or medium of digital data
communication, e.g., a communication network. Examples of
communication networks include a local area network ("LAN") and a
wide area network ("WAN"), e.g., the Internet.
[0078] The computing system can include clients and servers. A
client and server are generally remote from each other and
typically interact through a communication network. The
relationship of client and server arises by virtue of computer
programs running on the respective computers and having a
client-server relationship to each other.
[0079] While this specification contains many specifics, these
should not be construed as limitations on the scope of any
invention or of what may be claimed, but rather as descriptions of
features that may be specific to particular embodiments of
particular inventions. Certain features that are described in this
specification in the context of separate embodiments can also be
implemented in combination in a single embodiment. Conversely,
various features that are described in the context of a single
embodiment can also be implemented in multiple embodiments
separately or in any suitable subcombination. Moreover, although
features may be described above as acting in certain combinations
and even initially claimed as such, one or more features from a
claimed combination can in some cases be excised from the
combination, and the claimed combination may be directed to a
subcombination or variation of a subcombination.
[0080] Similarly, while operations are depicted in the drawings in
a particular order, this should not be understood as requiring that
such operations be performed in the particular order shown or in
sequential order, or that all illustrated operations be performed,
to achieve desirable results. In certain circumstances,
multitasking and parallel processing may be advantageous. Moreover,
the separation of various system components in the embodiments
described above should not be understood as requiring such
separation in all embodiments, and it should be understood that the
described program components and systems can generally be
integrated together in a single software product or packaged into
multiple software products.
[0081] Those skilled in the art will appreciate that the present
invention can be practiced by other than the described embodiments,
which are presented for the purposes of illustration and not of
limitation, and the present invention is limited only by the claims
which follow.
* * * * *