Automatically allocating and rebalancing discretionary portfolios

Abstract

An automated retirement plan manager manages the assets of an employee retirement benefits plan on behalf of an employer. The plan manager executes trades on investment vehicles based on instructions from an automated independent investment advisor. The advisor calculates a human capital for each plan participant based on data derived from the employer and from the participant through an interface, and based on that human capital calculation recommends an allocation of portfolio assets to the participant. This recommendation, once presented for review by and perhaps modified by the participant, becomes an instruction to the plan manager. As the participant ages his or her human capital is recalculated, and this is used to determine whether the participant's present portfolio type should now be switched to a more conservative one.

1 - 29 . (canceled)  
   
   
       30 . A system for allocating assets of each of a plurality of participant portfolios in a benefit plan established on behalf of an employer of the participants, comprising: 
 an automated benefit plan manager configured to buy and sell shares of a plurality of predetermined investment vehicles of varying risk;    a database coupled to the automated benefit plan manager and including a plurality of records each representing the assets of a participant portfolio, each portfolio having assets distributed among the predetermined investment vehicles, the sum of the assets of the participant portfolios constituting the assets of the benefit plan; and    an automated independent investment advisor coupled to the automated benefit plan manager for transmitting investment instructions to the plan manager, the independent investment advisor, for each participant, calculating a human capital of the participant, the independent investment advisor formulating instructions to the plan manager as to the allocation of assets of the portfolio of the last said participant based on the calculation of human capital.    
   
   
       31 . The system of  claim 30 , wherein the automated independent investment advisor is coupled to a record keeper containing data on the participants, the automated independent investment advisor calculating the human capital of a participant as a function of record keeper data concerning the last said participant.  
   
   
       32 . The system of  claim 30 , wherein the automated independent investment advisor includes a participant interface for receiving from each participant respective participant data, the advisor calculating the human capital as a function of the participant data received from the participant.  
   
   
       33 . The system of  claim 30 , wherein the automated investment advisor includes a participant interface, the advisor presenting a recommended allocation of portfolio assets to each participant over the participant interface and accepting modifications of the allocation of portfolio assets from the participant, the automated investment advisor instructing the plan manager to make an allocation of assets of the portfolio of the participant based on the recommendations of the investment advisor as modified, if at all, by the participant.  
   
   
       34 . The system of  claim 30 , wherein the automated investment advisor calculates a first model portfolio based on the human capital of the participant as calculated using the present participant savings rate and retirement age and probable replacement retirement income based on the model portfolio, the advisor further calculating a plurality of alternative cases in which the savings rate is varied from the present savings rate, the investment advisor displaying a plurality of the cases to the participant for the participant to select one of the cases.  
   
   
       35 . (canceled)  
   
   
       36 . The system of  claim 30 , wherein the automated investment advisor calculates a first model portfolio based on the human capital of the participant as a function of the present participant savings rate and a first assumed retirement age and a probable replacement retirement income based on the first model portfolio, the advisor further calculating a plurality of alternative cases in which the retirement age is varied from the first assumed retirement age, the investment advisor displaying a plurality of the cases to the participant to select one of the cases.  
   
   
       37 - 73 . (canceled)  
   
   
       74 . A method for allocating assets of each of a plurality of participant portfolios in a benefit plan established on behalf of an employer of the participants, comprising the steps of: 
 establishing an automated benefit plan manager to buy and sell shares of a plurality of predetermined investment vehicles of varying risk;    maintaining a database to have a plurality of records each representing the assets of a participant portfolio, each portfolio having assets distributed among the predetermined investment vehicles, the sum of the assets of the participant portfolios constituting the assets of tie benefit plan;    using an automated independent investment advisor to calculate, for each participant, a respective human capital;    using the automated independent investment advisor to formulate investment instructions as to the allocation of assets of the portfolio of each participant based on the step of calculating the human capital for that participant; and    using the automated independent investment advisor to transmit the investment instructions to the plan manager.    
   
   
       75 . The method of  claim 74 , and further including the steps of: 
 establishing a record keeper to contain data on the plan participants;    coupling the record keeper to the automated independent investment advisor; and    calculating the human capital of each participant as a function of data obtained from the record keeper concerning that participant.    
   
   
       76 . The method of  claim 74 , and further including the step of calculating the human capital of a participant based on participant data received from the participant.  
   
   
       77 . The method of  claim 74 , and further including the steps of: 
 using the automated independent investment advisor to present, over a participant interface, a recommended allocation of assets;    through the participant interface, accepting modifications by the participant of the allocation of portfolio assets; and    using the automated independent investment advisor to instruct the plan manager to make an allocation of assets of the portfolio of the participant based on the recommendation of the investment advisor as modified, if at all, by the participant.    
   
   
       78 . The method of  claim 74 , and further comprising the steps of: 
 using the automated investment advisor to calculate a first model portfolio based on the human capital of the participant as calculated using the present participant savings rate and retirement age and a probable replacement retirement income based on the model portfolio;    using the automated investment advisor to calculate a plurality of alternative cases in which the savings rate is varied from the present participant savings rate; and    displaying a plurality of the cases to the participant so that the participant may select one of the cases.    
   
   
       79 . The method of  claim 74 , and further comprising the steps of: 
 using the automated investment advisor to calculate a first model portfolio based on the human capital of the participant as a function of the present participant savings rate and a first assumed retirement age and a probable replacement retirement income based on the first model portfolio;    using the automated investment advisor to calculate a plurality of alternative cases in which the retirement age is varied from the first assumed retirement age; and    displaying a plurality of the cases to the participant to permit the participant to select one of the cases.    
   
   
       80 . A machine-readable medium on which has been prerecorded a compute program which, when used to program, a processor, creates an automated investment advisor which performs the steps of: 
 calculating, for each of a plurality of participants in an employer benefit plan, a respective human capital;    formulating investment instructions as to the allocation of assets of an investment portfolio of each participant based on the step of calculating the human capital for that participant; and    transmitting the investment instructions to an automated benefit plan manager which buys and sells shares of a plurality of predetermined investment vehicles of varying risk according to the investment instructions, each participant portfolio having assets distributed among the predetermined investment vehicles.    
   
   
       81 . The medium of  claim 80 , wherein the automated investment advisor further performs the steps of: 
 linking to a record keeper which contains data on the plan participants; and    calculating the human capital of each participant as a function of data obtained from the record keeper concerning that participant.    
   
   
       82 . The medium of  claim 80 , wherein the automated investment advisor calculates the human capital of a participant based on participant data received from the participant.  
   
   
       83 . The medium of  claim 80  wherein the automated independent advisor performs the additional steps of: 
 presenting, over a participant interface, a recommended allocation of assets;    through the participant interface, accepting modifications by the participant of the allocation of portfolio assets; and    instructing the plan manager to make an allocation of assets of the portfolio of the participant based on the recommendation of the investment advisor as modified, if at all, by the participant.    
   
   
       84 . The medium of  claim 80 , wherein the automated independent advisor performs the further steps of: 
 calculating a first model portfolio based on the human capital of the participant as calculated using a present participant savings rate and retirement age and a probable replacement retirement income based on the model portfolio;    calculating a plurality of alternative cases in which the savings rate is varied from the present participant savings rate; and    using a display coupled the advisor to display a plurality of the cases to the participant for the participant to select one of the cases.    
   
   
       85 . The medium of  claim 80 , wherein the automated independent advisor further performs the steps of: 
 calculating a first model portfolio based on the human capital of the participant as a function of a present participant savings rate and a first assumed retirement age and a probable replacement retirement income based on the first model portfolio;    calculating a plurality of alternative cases in which the retirement age is varied from the first assumed retirement age; and    using a display coupled to the advisor to display a plurality of the cases to the participant to permit the participant to select one of the cases.    
   
   
       86 - 88 . (canceled)