Automatically allocating and rebalancing discretionary portfolios

A method for automatically rebalancing a portfolio of an investor, comprising the steps of:

• for a first time, determining a human capital of the investor;
• dividing the human capital of the investor into at least first and second investment types according to a predetermined formula, the first and second investment types having different degrees of risk;
• summing a financial worth of the investor and the human capital to derive a total worth of the investor;
• making a target allocation of the total worth of the investor between the first and second investment types according to a predetermined, stored ratio;
• for the first time, recommending an allocation of the assets of the financial worth of the investor between the first and second investment types such that the asset allocation of the total worth of the investor meets or most closely approaches the target allocation;
• and
• for the first time, using the last said recommendation of allocation of assets to determine how assets in an investment portfolio of the investor ought to be allocated among predetermined investment vehicles.

A method for determining at least one savings rate and retirement age of a plan participant, comprising the steps of:

• receiving data concerning the current financial wealth of the plan participant;
• automatically allocating portions of the current financial wealth of the plan participant to one or more asset classes based on the characteristics of investment vehicles making up the financial wealth of the participant;
• receiving at least one currently extant savings rate and a first assumed retirement age about the participant;
• using a predetermined automated algorithm, calculating a first case for a probable retirement income using current financial wealth of the participant as assigned to the asset classes, the currently extant savings rate and the first assumed retirement age;
• calculating additional cases of probable retirement income by varying at least one of the savings rate and the retirement age;
• permitting the selection by the participant of one of the cases;
• and
• making investments in the plan for the investor using the selected savings rate.

A system for the automated allocation of assets to a portfolio of a benefit plan participant, comprising:

• an automated benefit plan manager configured to buy and sell shares of a plurality of predetermined investment vehicles of varying risk and return;
• a database coupled to the benefit plan manager and including a plurality of records each corresponding to a participant plan portfolio, each portfolio containing a distribution of shares in the investment vehicles, the sum of the investment vehicle shares in the portfolios constituting the total assets of a benefit plan;
• and
• an automated independent financial advisor coupled to the automated portfolio manager to transmit investment instructions to the portfolio manager, the independent financial advisor automatically and periodically calculating reallocations of the investment vehicles for selected ones of the participant portfolios and directing the automated portfolio manager to accordingly make reallocations in the selected ones of the participant portfolios.

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.

A system for allocating assets of a portfolio of a plan participant, comprising:

• an automated financial advisor and a participant interface coupled to the advisor, the advisor calculating a first case based on a first model portfolio of assets of the participant apportioned among a plurality of asset classes as a function of the financial wealth, at least one savings rate and a first assumed retirement age of the participant, the financial advisor finding a probable retirement income based on the first case;
• the financial advisor calculating further cases by varying at least one of a savings rate and a retirement age for the participant, the financial advisor displaying data concerning each of the cases to the participant for his or her selection of one of them;
• and
• a plan manager coupled to the financial advisor, the plan manager making investments for the plan based on instructions received from the financial advisor, the instructions formulated by the financial advisor responsive to the selection by the participant of one of the cases as a portfolio of the participant's assets to be managed by the plan manager.

A machine-readable medium on which has been prerecorded a computer program which, when executed by a processor, performs the steps of:

• for a first time, determining a human capital of an investor;
• dividing the human capital of the investor into at least first and second investment types according to a predetermined formula, the first and second investment types having different degrees of risk;
• summing a financial worth of the investor and the human capital to derive a total worth of the investor;
• making a target allocation of the total worth of the investor between the first and second investment types according to a predetermined, stored ratio;
• for the first time, recommending an allocation of the assets of the financial worth of the investor between the first and second investment types such that the asset allocation of the total worth of the investor meets or most closely approaches the target allocation;
• and
• for the first time, using the last said recommendation of allocation of assets to determine how assets in an investment portfolio of the investor ought to be allocated among predetermined investment vehicles.

A machine-readable medium on which has been prerecorded computer program which, when executed by a processor, performs the steps of:

• receiving data concerning the current financial wealth of the plan participant;
• automatically allocating portions of the current financial wealth of the plan participant to one or more asset classes based on the characteristics of investment vehicles making up the financial wealth of the participant;
• receiving at least one currently extant savings rate and a first assumed retirement age about the participant;
• using a predetermined automated algorithm, calculating a first case for a probable retirement income using current financial wealth of the participant as assigned to the asset classes, the currently extant savings rate and the first assumed retirement age;
• calculating additional cases of probable retirement income by varying at least one of the savings rate and the retirement age;
• permitting the selection by the participant of one of the cases;
• and
• making investments in the plan for the investor using the selected savings rate.