Patent Application
20090125449
Many investment products have characteristics and features which contribute to their suitability for particular investors. For example, mutual funds typically charge investors fees and expenses to pay for, for example, investment advisory services, transaction fees, marketing costs, distribution costs, and other operating expenses, and these fees may make some funds more suitable for certain investors than others. The amount each investor is charged may vary depending on, for example, the amount initially invested, whether additional ongoing investments and/or redemptions are planned, and various fund policies relating to fees and expenses. These fund policies may define, for example, whether a load is charged for fund trades, whether distribution (i.e., 12b-1) and/or management fees are charged, etc.
Although the Securities and Exchange Commission (SEC) requires each mutual fund to provide compliance information that defines fund policies relating to fees and expenses, these policies are generally very difficult for the average investor to interpret and analyze. For example, a fund's policies may not be set out in a single document, such that the investor may need to examine multiple documents to determine the fees and expenses associated with the fund. For example, a fund may first issue a prospectus setting forth policies, but then update the policies in a statement of additional information (SAI) or supplement, or both.
Further complicating matters is the fact that many mutual funds offer several share classes, each having different policies relating to fees and expenses. For example, many mutual funds offer a first class of shares that impose a “front-end” sales load (which is paid when the investor first buys shares in the fund), a second class of shares which imposes “back-end” sales load (which is paid when the investor redeems, or sells, the shares), and/or a third class which charges a “level load” (generally, a small front-end load and a back-end load which varies based on how long the investor holds the shares). Many funds charge 12b-1 and management fees in addition to loads, and these fees may vary by fund share class. In addition, some funds offer share classes which convert automatically to other share classes with lower back-end loads and/or fees if the investor holds the shares long enough. Many funds also offer share classes which employ breakpoints, which enable investors to be charged lower loads in return for investing larger amounts (the amount required to obtain a reduced sales load is referred to as the breakpoint).
Applicants have appreciated that the complexity associated with determining the characteristics of investment products may make it difficult for many investors to compare different investment products to determine which investment product(s) are most suitable for them. Using the particular, non-limiting example of mutual funds to illustrate, the fees and expenses associated with owning different share classes of a fund may be difficult to discern, such that many mutual fund investors may find it difficult to determine which fund share class(es) is (are) most suitable for them, based on the investor's characteristics and situation, and the characteristics and policies (e.g., expenses) defined by the fund for various fund share classes. Accordingly, some embodiments of the invention provide systems and methods for evaluating the suitability of various investment products for one or more investors based on factors relating to the investor(s) and the investment product(s). Some embodiments of the invention may, for example, identify a particular investment product that is most suitable for a particular investor.
The suitability of an investment product for a particular investor may be evaluated based on any of numerous factors. Again using the particular, non-limiting example of mutual fund share classes, the loads, fees and expenses associated with various fund share classes may be compared, and the least costly share class (taking into account the investor's individual situation, such as the amount the investor is prepared to invest initially and over time, when the investor plans to redeem the investment, and/or other factors) may be identified as the most suitable investment product. Of course, the invention is not limited to evaluating suitability based on cost information, as any one or more evaluation criteria may be employed to determine the suitability of product for a particular investor, including, for example, any of various characteristics of the investor(s) and the investment product(s) and/or other information. For example, some embodiments of the invention may compare the tax treatment of different investment products to determine which is most suitable for a particular investor. In addition, embodiments of the invention are not limited to evaluating the suitability of mutual funds or share classes, as any type(s) of investment product(s) may be evaluated. For example, embodiments of the invention may evaluate the suitability of investment products such as stocks, bonds, variable annuities and/or 1035 exchanges, 529 and/or other educational investment or savings plans, Uniform Gift to Minors Act (UGMA) plans, and/or any other one or more investment products.
The accompanying drawings are not intended to be drawn to scale. In the drawings, each identical or nearly identical component that is illustrated in various figures is represented by a like numeral. For purposes of clarity, not every component may be labeled in every drawing. In the drawings:
Some embodiments of the invention provide a system for evaluating the suitability of investment products for a particular investor. (It should be appreciated that the term “investor” is used herein in the singular for convenience, and that embodiments of the invention may be utilized to evaluate the suitability of investment products for any number of entities, such as one or more people, business organizations, other entities or a combination thereof. It should also be appreciated that use of the term “investor” does not mean that, at the time the suitability of an investment product is evaluated, the entity(ies) owns or holds a position in the investment product.) As intended herein, the suitability of any investment product to an investor is based upon any characteristic or set of characteristics of an investor and can vary based on application. The suitability determinator therefore should not be construed to be based upon any particular characteristic or set of characteristics. The examples of characteristics used herein are intended to be non-limiting examples.
In some embodiments, the system may present a graphical user interface (GUI) which a user (e.g., the investor, an investment broker, any other user, or combination thereof) may employ to supply various input relating to the investor, and which may present information relating to the suitability of various investment products for the investor. Information presented by the GUI may, for example, be retrieved from electronic file storage (e.g., one or more databases, which may store information relating to particular investment products and/or policies defined thereby), calculated or otherwise processed for presentation. The GUI may further enable the user to retrieve compliance documents which set forth one or more of these policies, so that the user may get clarification on certain policies and/or reference the documents in defining an investment strategy.
The suitability of various investment products for an investor may, in some embodiments, be based primarily on the costs associated with the investor owning each investment product. As a result, the input provided by a user may define how certain policies (e.g., defining fixed and/or variable costs) imposed by each investment product apply to the investor. For example, the user may provide input regarding the investor's planned initial investment, periodic investment over time, and planned redemption timeframe, because this may affect how loads and/or fees imposed by different mutual fund share classes may apply to the investor. However, the invention is not limited to such an implementation, and embodiments of the invention may enable a user to provide input defining any characteristic(s) of an investor, including, but not limited to, the investor's age, annual income, financial situation and needs, investment experience, investment objectives, intended use for the investment product(s), investment time horizon, existing assets, liquidity needs, liquid and/or overall net worth, risk tolerance, tax status, whether and how recently the investor has invested in the same or a different security in a prior time period, and/or any other information considered relevant by the user, investor or other party. Any one or more of these and/or other characteristics may be used to evaluate the suitability of the investment product(s) for the investor.
Embodiments of the invention may also, or alternatively, enable a user to provide input defining characteristics of one or more investment products. For example, if certain information relating to a particular investment product is not accessible by the system, embodiments of the invention may enable a user to provide this information, and incorporate it into the evaluation of one or more related products. For example, embodiments of the invention may enable a user to specify characteristics such as charges (e.g., redemption fees and/or surrender charges), attributes (e.g., if the investment product is a variable annuity or similar product, the terms, conditions and benefits specified in the underlying contract), exchange conditions (e.g., if an exchange of investment products results in an enhancement or change in terms) and/or any other information considered relevant by the user, investor or another party. Any one or more of these investment product characteristics may then be used to evaluate the suitability of an investment product for the investor.
A specific, illustrative, non-limiting example is given below relating to evaluating the suitability of different share classes offered by a mutual fund for a particular investor. In this example, a GUI allows a user to provide input relating to the investor and the investor's investment strategy and situation, and this input defines the application of one or more policies for each fund share class to the investor. Based at least in part on the input, the GUI may cause information to be retrieved from electronic file storage relating to mutual funds, share classes and/or policies, and may present information that enables the user to evaluate the suitability of different share classes of the fund for the investor. While the example below is illustrative, embodiments of the invention may be implemented in any of numerous other ways, and employed to evaluate the suitability of any number and/or type of investment products. For example, embodiments of the invention are not limited to comparing different share classes offered by a particular mutual fund, and may, for example, enable a user to compare a share class offered by one mutual fund with a share class offered by another mutual fund, a mutual fund with another mutual fund, a mutual fund with one or more other types of investment product (e.g., a variable annuity), one or more investment products that do not include a mutual fund, and/or any other types of investment product(s). The invention is not limited to any particular implementation.
At the start of process 100, a particular mutual fund is selected for the investor. This selection may be based on any of numerous criteria. For example, the investor, or a representative thereof (e.g., a broker) may select a particular fund based on one or more characteristics of the investor, such as his or her investment strategy, risk tolerance, desired return, and/or other investor characteristics, or one or more characteristics of the fund, such as its previous performance, underlying holdings, investment strategy, and/or other fund characteristics.
Process 100 then proceeds to act 120, wherein the share classes for the fund are determined. This may be performed in any of numerous ways. In some embodiments, a database may be provided which stores information relating to various mutual funds, share classes, and/or policies. For example, in some embodiments, a database may be populated with compliance information extracted in an automated fashion from various compliance documents and information published by various mutual funds. An exemplary technique for performing this automated extraction and database population is described in commonly assigned U.S. Pat. No. 6,122,635, entitled “Mapping Compliance Information Into Useable Format,” which is incorporated herein by reference. Of course, other techniques may be employed, as the invention is not limited to a particular implementation. In some embodiments, act 120 includes performing a query on the database(s) storing this information to determine the share classes offered by the mutual fund selected in act 110.
The process then proceeds to act 130, wherein the policies for each share class are determined. As with the determination occurring in the act 120, act 130 may be performed by performing a query on the database(s) storing share class policy information. Performing a query may determine, for example, the particular loads, management fees and/or 12b-1 fees which apply to particular fund share classes, and an indication whether an investment amount, investor rights of accumulation, letters of intent, and/or waivers apply to particular share classes. Of course, any type of information relevant to share class policies may be determined, and the invention is not limited to determining that any particular type(s) of information. The particular types of information noted above are described in the paragraphs that follow.
The process then proceeds to act 150, wherein an interface is presented for defining investor characteristics (e.g., the characteristics determined in act 140). In some embodiments, a GUI is presented to a user that enables the user to specify this information. One example of an interface 200 designed to receive this information, and some example investor characteristics, is depicted in
In general, interface 200 includes two display portions, including investor information portion 210 and investment product information portion 220. To summarize the functionality of interface 200 at a high level, a user may supply information relating to an investor using any of various input mechanisms provided in portion 210, and based on the input provided, information relating to the policies (e.g., cost) of various fund share classes is displayed in portion 220. Of course, an interface implemented in accordance with embodiments of the invention may present any information in any fashion, as the invention is not limited to the particular implementation of interface 200.
Investor information portion 210 employs a tab metaphor which is well-known to those skilled in the computer programming art. As shown in
In the example shown, input mechanisms 220A and 220B allow the user to specify investor assets held with a particular firm (e.g., a firm with which the user is affiliated) and/or with other firms or entities, respectively. Input mechanisms 220C and 220D allow the user to specify assets held by various parties related to the investor, including (in the example shown) a child, spouse, grantor, account trustee, or other party. Other parties may be identified or represented in other examples. Input mechanisms 220E-220I enable the user to access compliance information relating to policies applying to these and/or other parties, such that the user may determine the investor's eligibility for various policies. For example, in some embodiments, user input (e.g., a mouse click) to any of input mechanisms 220E-220I may initiate a retrieval of a particular portion of a share class policy as defined by a compliance document. Retrieval may be performed, as an example, using the systems and methods defined by commonly assigned U.S. patent application Ser. No. 10/135,184, entitled “System For Locating Data Elements Within Originating Data Sources,” filed Apr. 8, 2004, which is incorporated herein by reference. Of course, the invention is not limited to using the systems and methods described therein, as any suitable processing technique(s) may be employed. The invention is not limited to a particular implementation.
Input mechanisms 220J-220K enable the user to specify assets held by the investor with the firm and with other firms or entities, similar to input mechanisms 220A-220B. Input mechanisms 220L-220M allow the user to specify assets held by parties related to the investor with the firm and other firms or entities, respectively, similar to input mechanisms 220C-220D.
Input mechanisms 225B-225F enable the user to specify an additional investment (e.g., in addition to the amount specified using input mechanism 215C,
It should be appreciated that by displaying the additional investment required to achieve a particular breakpoint level which allows the investor to be charged a lower sales load, the interface enables the investor (or user) to make a more informed decision relating to the amount to be initially invested. That is, the investor may select an optimal investment amount based on the policies of a particular investment product (e.g., fund share class). Some embodiments may provide other indications that allow an investor to make an informed decision as to how to qualify (or not qualify) for other fund policies.
For example,
Similar to input mechanisms 230A-230E, input mechanisms 230F-230G allow the user to indicate that a particular circumstances under which the investor may qualify for the waiver of a backend load. Specifically, input mechanism 230F allows the user to specify that the investor has died, and input mechanism 230G allows the user to specify that the investor has become disabled. Various other input mechanisms, allowing the user to specify that other circumstances apply, may become visible when the user scrolls down the interface (e.g., using scroll bar 201).
Returning to
In act 170, fees and expenses are calculated for each share class based on input provided in act 160. This may be performed in any of numerous ways. In some embodiments, predefined equations may employ as variables the input provided by the user via any of the input mechanisms described above, such that as the user provides this input fees and expenses are calculated in real time. For example, one or more program modules may include programmed instructions for performing these calculations, and may accept and process user input to calculate fees and expenses. As an example, if the user indicates via input mechanism 225B that the investor will invest an additional $45,000 over a predefined period, the program module(s) may receive and process this information such that the front-end load is calculated at 3.5% instead of 4.5% (i.e. the applicable rate for the investor's specified initial investment of $50,000) for Class A shares.
In act 175, the estimate of fees and expenses for each share class is presented to the user. In the embodiment shown in
Although the example shown in
Returning to
If it is determined in act 180 that a suitable investment product has not been identified for the investor, the process proceeds to act 190, wherein it is determined whether the user wishes to continue evaluating the suitability of investment products. The user may indicate that he or she does not wish to continue by providing input to (e.g., clicking) either of buttons 280 or 285. Specifically, by clicking button 280, the user may indicate that the investment product selection process should be concluded, and by clicking button 285 the user may indicate that the process should be reset (e.g., a new mutual fund and/or associated fund share classes, should be examined), such that process 100 may begin anew at act 110.
If it is determined in act 190 that the user wishes to continue, the process returns to act 160, such that the user may provide further information so that cost information may be recalculated and presented in act 170. However, if it is determined in act 165 that the user does not wish to continue, process 100 completes.
If it is determined in act 180 that a suitable investment product has been identified, the process proceeds to act 195, wherein the identification is finalized. In some embodiments, the user may finalize the identification of a particular investment product by providing input via button 295 which may cause an order for the particular identified investment product to be submitted. For example, information defining the amount invested, rights of accumulation, letter of intent and/or waivers provided via input mechanisms presented with tabs 215, 220, 225 and 230, respectively, may be transmitted to one or more program modules designed to initiate trade processing. For example, this information may define an order submitted by the user to a trade processing system on behalf of the investor.
While a particular example was described above which relates to determining the fees and charges associated with different share classes of a mutual fund, as noted above, embodiments of the invention may be used to evaluate the suitability of any one or more types of investment products for an investor. In this regard,
At the start of process 300, in act 310, information defining one or more investor characteristics is received. Information may be received in any suitable way, as the invention is not limited to any particular implementation. For example, information may be received via a graphical user interface similar in some respects to interface 200, described above with reference to
Process 300 then proceeds with act 320, wherein information defining characteristics of one or more investment products is received. This information may also be received in any suitable fashion. For example, information relating to one or more investment products may be stored in electronic file storage, and queried to discern various characteristics and/or other related information. The information received may define any investment product characteristics, including any charges (e.g., redemption fees and/or surrender charges), attributes (e.g., if the investment product is a variable annuity or other product, the terms, conditions and benefits specified in an underlying contract), exchange conditions (e.g., if an exchange of investment products results in an enhancement or change in terms) and/or any other information considered relevant by a user, investor and/or other party. Any number and type of characteristics useful for evaluating the suitability of an investment product for an investor may be used, as the invention is not limited in this respect.
Process 300 then proceeds with act 330, wherein information received in acts 310 and 320 is processed to evaluate the suitability of one or more investment products for an investor. Information may be processed in any suitable way. For example, various policies, rules or other information relating to the investment products for which information is received in act 320 may be analyzed in relation to any investor characteristic(s) received in act 310. Further, processing may occur in any suitable fashion, as the invention is not limited to being implemented in any particular way. For example, processing may be performed in an automated, semi-automated or other fashion.
At the completion of act 330, process 300 completes.
It should be appreciated that techniques for determining the suitability of one or more investment products for an investor may be performed in any of numerous ways, and that the processes of
Client 410 executes suitability interface 415, which a user of client 410 may employ to provide information relating to one or more investors, and which may present information relating to the investor(s) and/or one or more investment products to the user. In some embodiments, suitability interface 415 is a graphical user interface. Suitability interface 415 communicates via networks 420 with suitability facility 435 executing on server 430. Suitability facility 435 may, for example, receive requests for information from suitability interface 415 via networks 420, and based on this information, execute queries on data stored in electronic file storage on server 430.
Server 430 includes investment product/policy database 440, which includes information on policies, rules, etc. for each of various investment products, and source document database 445, which includes materials providing more detailed information about the information stored in investment product/policy database 440. In some embodiments, when suitability interface 415 requests information on a particular investment product from suitability facility 435, suitability facility 435 queries investment product/policy database 440 and provides query results back to suitability interface 415 via network(s) 420. If a user of client 410 desires more detailed information relating to any investment product, the client may initiate a request for that detailed information via suitability interface 415, which is request received at suitability facility 435. Suitability facility 435 may then construct and execute a query on source document database 445, and provide the results of this query to suitability interface 415.
In example system 400, client 410 communicates with order management system 450 and enables a user of client 410 to initiate an order of one or more investment products deemed suitable for an investor. For example, after employing suitability interface 415 to evaluate different investment products, the user of client 410 may determine that one or more products is suitable for the investor, and may place an order (e.g., to initiate a purchase of the investment product, or to provide the investor with certain information, such as compliance information, about the product so that the investor may decide whether a purchase is appropriate).
Although order management system 450 is depicted in
Various aspects of the systems and methods for practicing features of the invention may be implemented on one or more computer systems, such as the exemplary computer system 500 shown in
The processor 503 may also execute one or more computer programs to implement various functions. These computer programs may be written in any type of computer program language, including a procedural programming language, object-oriented programming language, macro language, or combination thereof. These computer programs may be stored in storage system 506. Storage system 506 may hold information on a volatile or non-volatile medium, and may be fixed or removable. Storage system 506 is shown in greater detail in
Storage system 506 typically includes a computer-readable and writable nonvolatile recording medium 601, on which signals are stored that define a computer program or information to be used by the program. A medium may, for example, be a disk or flash memory. Typically, an operation, the processor 503 causes data to be read from the nonvolatile recording medium 601 into a volatile memory 602 (e.g., a random access memory, or RAM) that allows for faster access to the information by the processor 503 than does the medium 601. The memory 602 may be located in the storage system 506, as shown in
Having thus described several aspects of at least one embodiment of this invention, it is to be appreciated that various alterations, modifications, and improvements will readily occur to those skilled in the art. Such alterations, modifications and improvements are intended to be part of this disclosure, and are intended to be within the spirit and scope of the invention. Accordingly, the forgoing description and drawings are by way of example only.
Further, it should be appreciated that a (client or server) computer may be embodied in any of a number of forms, such as a rack-mounted computer, a desktop computer, a laptop computer, or a tablet computer. Additionally, a (client or server) computer may be embedded in a device not generally regarded as a computer but with suitable processing capabilities, including a Personal Digital Assistant (PDA), a smart phone or any other suitable portable or fixed electronic device.
Also, a (client or server) computer may have one or more input and output devices. These devices can be used, among other things, to present a user interface. Examples of output devices that can be used to provide a user interface include printers or display screens for visual presentation of output and speakers or other sound generating devices for audible presentation of output. Examples of input devices that can be used for a user interface including keyboards, and pointing devices, such as mice, touch pads, and digitizing tables. As another example, a computer may receive input information through speech recognition or in other audible format.
Such computers may be interconnected by one or more networks in any suitable form, including as a local area network or a wide area network, such as an enterprise network or the Internet. Such networks may be based on any suitable technology and may operate according to any suitable protocol and may include wireless networks, wired networks or fiber optic networks. Also, the various methods or processes outlined herein may be coded as software that is executable on one or more processors that employ any one of a variety of operating systems or platforms.
Additionally, such software may be written using any of a number of suitable programming languages and/or conventional programming or scripting tools, and also may be compiled as executable machine language code or intermediate code that is executed on a framework or virtual machine.
In this respect, the invention may be embodied as a computer-readable medium (or multiple computer readable media) (e.g., a computer memory, one or more floppy disks, compact disks, optical disks, magnetic tapes, flash memories, circuit configurations in Field Programmable Gate Arrays or other semiconductor devices, or other computer storage media) encoded with one or more programs that, when executed on one or more computers or other processors, perform methods that implement the various embodiments of the invention discussed above. The computer-readable medium or media can be transportable, such that the program or programs stored thereon can be loaded onto one or more different computers or other processors to implement various aspects of the present invention as discussed above.
The terms “program” or “software” are used herein in a generic sense to refer to any type of computer code or set of computer-executable instructions that can be employed to program a computer or other processor to implement various aspects of the present invention as discussed above. Additionally, it should be appreciated that according to one aspect of this embodiment, one or more computer programs that when executed perform methods of the present invention need not reside on a single computer or processor, but may be distributed in a modular fashion amongst a number of different computers or processors to implement various aspects of the present invention.
Computer-executable instructions may be provided in many forms, such as program modules, executed by one or more computers or other devices. Generally, program modules include routines, programs, objects, components, data structures, etc. that perform particular tasks or implement particular abstract data types. Typically the functionality of the program modules may be combined or distributed as desired in various embodiments.
Various aspects of the present invention may be used alone, in combination, or in a variety of arrangements not specifically discussed in the embodiments described in the foregoing and is therefore not limited in its application to the details and arrangement of components set forth in the foregoing description or illustrated in the drawings. For example, aspects described in one embodiment may be combined in any manner with aspects described in other embodiments.
Use of ordinal terms such as “first,” “second,” “third,” etc., in the claims to modify a claim element does not by itself connote any priority, precedence, or order of one claim element over another or the temporal order in which acts of a method are performed, but are used merely as labels to distinguish one claim element having a certain name from another element having a same name (but for use of the ordinal term) to distinguish the claim elements.
Also, the phraseology and terminology used herein is for the purpose of description and should not be regarded as limiting. The use of “including,” “comprising,” or “having,” “containing,” “involving,” and variations thereof herein, is meant to encompass the items listed thereafter and equivalents thereof as well as additional items.
This application is a continuation of U.S. patent application Ser. No. 11/999,750, filed on Dec. 7, 2007, which claims priority under 35 U.S.C. § 119(e) to U.S. Provisional Application Ser. No. 60/873,750, filed on Dec. 8, 2006, which is herein incorporated by reference in its entirety.
| Number | Date | Country | |
|---|---|---|---|
| 60873750 | Dec 2006 | US |
| Number | Date | Country | |
|---|---|---|---|
| Parent | 11999750 | Dec 2007 | US |
| Child | 12148983 | US |
