MXPA06005624A - Method and system for financial advising. - Google Patents

Abstract

A method of providing financial advice to a client that provides sufficient confidence that their goals will be achieved or exceeded but that avoids excessive sacrifice to the client's current or future lifestyle and avoids investment. risk that is not needed to provide sufficient confidence, of the,goals a client personally values. The method comprises obtaining typical client background information, as well as a list of investment goals, and ideal and acceptable values in dollar amounts and timing for each goal. A recommendation is then created using the portfolio value, and the client goal preferences and the ideal and acceptable values of goals, by simulating models of the relevant capital markets and investing exclusively in passive investment alternatives to avoid the risk of potential material underperformance of active investments under the premise of avoiding investment risk that is not needed to confidently buy the client the goals they personally value.

Description

METHOD AND SYSTEM FOR FINANCIAL ADVICE CROSS REFERENCE TO RELATED REQUESTS This is a non-provisional application of the provisional application of the United States pending serial number 60 / 530,144, filed on December 17, 2003, by David B. Loeper, entitled "Method and System for Providing Investors Financial Planning Advice, Giving Consideration to Individual Values, Without Unnecessary Sacrifice or Undue Investment Risk with Accurate Confidence Levéis, "and is a continuation in part of the US patent application co-pending no. series 09 / 916,358, filed on 7/27/01, by David B. Loeper, entitled "Method, System and Computer Program for Auditing Financial Plans," which is a provisional non-provisional United States application with serial number 60 / 221, 010, filed on 7/27/00, by David B. Loeper, entitled "Method, System and Computer Program for Auditing Financial Plans, and is a continuation in part of the co-pending US patent application with number series 09 / 434,645, filed on 11/5/99, by David B. Loeper, entitled "Method, System, and Computer Program for Auditing Financial Plans," which is a non-provisional application of the US provisional application serial number 60 / 107,245, filed on 11/5/98, the entirety of each of the applications is incorporated herein by reference.

FIELD OF THE INVENTION This invention is related to the field of financial services, and in particular to a new method of financial advice.

BACKGROUND OF THE INVENTION The field of financial advice includes several recommended practices. These recommended practices include identifying a client's financial goals (for example, the desired retirement age, the desired annual retirement income, the desired vacation budget during retirement, the desired value of the estate upon death, etc.). . In some recommended practice applications in general, but not all, customers are also asked to order their goals in relative order of importance. The generally accepted "best practices" also include identifying the risk tolerance of the clients and creating an allocation for investments aimed at producing the highest gain for the client's risk tolerance and then based on that expected profit from the allocation, calculating the savings needed to achieve the client's goals. In a conventional approach, to determine a client's risk tolerance, a financial advisor uses a risk tolerance questionnaire or asks the client about their tolerance for investment risks defined by various mathematical methods such as standard deviation, semi-standard variance, or more commonly the highest level of annual losses in the investment portfolio that the client could tolerate. This questioning of risk tolerance may be more focused, such as trying to determine the amount of assets or the percentage of the value of a retirement plan that the client is willing to put in assets of various risks. Any method that is used to try to identify the risk tolerance of the client, the result of this questioning is then used in recommending an assignment and investments related to an individual. Investors are often advised to accept a risk tolerance that is close to the maximum level of support for losses in the value of their investment portfolio. Assignments are often tested using a Monte Carlo simulation based on stock market assumptions, historical data samples, or both. The results of these simulations are normally used to transmit a level of reliability and / or a percentage of risk or failure to reach a desired level of income, assets at the time of retirement or any other of the goals identified by the client. In other approaches, such as the administration of assets, the client can define their risk tolerance and goals, and the advisor can provide advice related to the assignment of values relative to those risks and goals. Often, the financial advisor has the ability to run Monte Cario simulations of future earnings from various financial plans. These simulations can provide results that include a level of reliability and therefore a percentage of risk whether implicit or explicit failure to reach a desired income level, assets at the time of retirement, final value of the estate, or other goals. As previously, the client can be advised to allocate their assets in the modeled asset classes and invest in a variety of managed or unmanaged investment portfolio options. Advisors can advise the client that actively managed investment alternatives can exceed the performance of the classes themselves by goods (for example, that they may exceed market performance). Often, the fact that such actively managed investment alternatives also carry the risk of materially being below market performance may not be adequately transmitted to the client by advisor, or such risk may simply not be adequately understood by the investor, or the assessor and that uncertainty is not normally considered in the calculation of reliability. The typical resignation clauses used in the industry, which are in part significantly intended to provide the counselor with legal certainty (for example, "past performance is not a guarantee of future results"), may not adequately convey to the client the nature of the risk in actively managed investments. This is because the calculation of reliability was normally based on the uncertainty of the gains of the asset classes; but actively managed investment portfolios can equal, exceed or not reach their respective asset classes, thus introducing additional uncertainty absent from the reliability calculation. Therefore, what the reliability number means may or may not be fully understood by the client, or the financial advisor for that reason. In addition, current approaches often involve periodic reviews of the performance of the client's portfolio. As part of the review, the client can be provided with a graph, diagram or other representation of how their portfolio has behaved relatively to the different capital markets (for example, the optimal allocation of the client to various asset classes for its tolerance to risk). If the performance was less than expected or assumed by the advisor in the original consultation, the client can be advised to change investment managers, wait for a more favorable environment for the "style" of the administrator or perhaps increase the amount contributed to the portfolio. Alternatively, the client can be advised to eliminate one or more of the less important goals. If, on the other hand, the performance was better than expected, the client will typically not be advised to reduce the amount contributed to the portfolio, even if said reduction based on superior performance is possible (for example, maintaining the level of "tolerance"). to the "original" risk. Therefore, there is a need in the industry for a new method of financial advice that eliminates the substantial uncertainties associated with investing the client's assets in actively managed investment alternatives, does not position the client in its maximum risk tolerance if there are more options available. striking that the client could take to allow him to have sufficient reliability to reach the goals that they value and therefore eliminate the aforementioned difficulties associated with transmitting said risks to the client. In addition, there is a need to provide clients with periodic feedback that does not simply plot how their portfolio has behaved relatively to the market, but that it provides clients with a practical understanding of the concrete impact that the performance of their portfolio has had on their desired goals. There is also a need for a more focused approach to assess client goals, which comprises more than a simple linear ordering of goals, but rather interrelates all client goals so that the client can take more informed and satisfying options about the client. your goals in light of the performance of your portfolio. As a result, the system of the invention will be more highly evaluated by the customers, compared to the current approaches.

BRIEF DESCRIPTION OF THE INVENTION The method of the invention is directed to apply a new method of financial advice that is more appropriate and more highly valued by individuals. The discipline of counseling includes a new method to identify and evaluate not only the clients' goals, as in traditional services, but also to identify and secure the price that the client is willing to pay in a goal to "buy" another goal (or - a portion of a goal) that is valued more highly. The method also includes a means to model the uncertainty of futures markets so that the levels of reliability represented can be easily and completely understood by the client. The method includes means to use probability analysis to define the balance between too much uncertainty and too much sacrifice. Therefore, the method combines a mathematical market simulation with a profile of the client's goals, and the balance between too much and too little risk, to produce a set of goals and an investment strategy that balances the desire to have enough Reliability, avoid unnecessary risk, however do the best for the client's lifestyle and do it in a way that is easily understood by the individual investor. Therefore, Monte Cario simulation and / or historical market analysis can be used to model market uncertainty in a way that provides the client with a balance of sufficient reliability and also avoids undue sacrifices to their goals. In addition, the method includes investing exclusively in passive investments, for which it is possible to prove mathematically in all respects the risk of having a return below or above the desired asset allocation. This is the opposite of actively managed investments, which carry the risk of a material uncertainty of having a return below or potentially above the asset allocation strategy. The method also includes a periodic review and a reanalysis of the client's goals. A quarterly re-evaluation of the priority of the goals can be done to eliminate the old goals or goals that for some reason have ceased to be important, and add new goals. Periodic review and re-analysis also includes reviewing a value of the client's portfolio to ensure that it remains within the "comfortable zone," for example, the balance between insufficient reliability and too much sacrifice for a lifestyle in particular. Through an adequate evaluation of the client's goals and their relative valuation, unacceptable sacrifice and insufficient reliability can be avoided. The appropriate assignment of assessment relative to the goals, in accordance with the client's subjective evaluation and the interpretation of the evaluation assessor, is important in providing advice that minimizes any sacrifice as perceived by the client. A recommendation must include a value to be reached for each goal no worse than the acceptable value and no better than the ideal value. A recommendation under this method of financial advice will have a rational and sufficient reliability and will even avoid excessive sacrifices to individual goals. Clients are preferably provided with a degree of future portfolio values that can provide an acceptable degree of reliability. The recommendations are reviewed periodically for changes in the client's goals, changes in priorities within the client's goals, and if the risk of unacceptable results has become too high (for example, too much uncertainty that requires new advice about the options that the client has to bring the level of reliability back to the "comfortable zone", or if the performance of the portfolio has taken them to the point of having options to increase the goals or reduce the risk). Due to the wide degree of uncertainty in the capital markets and changes in a client's future goals (in the most reasonable likelihood simulation methods), a customer may have an equal opportunity [eg, 1 in 1000] to be bankrupt in just a few years or to die with a multi-million dollar estate based solely on the uncertainty of the assets of the asset classes, exclusive of the uncertainty of the results of the active investments related to the markets and excluding the possibility of future changes in the client's goals) and therefore the notion of being able to have certainty in avoiding an unsatisfactory result is erroneous. Also, trying to provide the highest level of reliability possible, can only come with the price of compromising the client's goals and / or accepting more investment risk which contradicts the notion of avoiding unnecessary sacrifices to the client's lifestyle. In essence, in the absence of an acceptable and reasonable degree of reliability (for example, trying to obtain the highest level of reliability possible) no level of conservationism (sacrifice) is too much. Therefore, this method adopts and manages the uncertainties of the future to provide ongoing advice on the best options a client can make regarding their lifestyle as well as the optimal acceptance and evasion of investment risks in the light of the uncertainties of the future, (not only in the markets, and not only avoiding the added uncertainty of the active investments, but also the uncertainty of the client's wishes and their willingness to change their goals or priorities throughout their lives as desired , or as necessary to obtain reasonable reliability, based on how the capital markets have performed). This method achieves this balance of the best options based on what is currently known, what is currently planned to be desired, and a reasonable reliability considering the effect of the uncertainties of the profitability of the future asset classes in the lifestyle. of the client and his availability to modify his goals. While traditional best practices try to be "correct" about where a client may end up within the wide range of market uncertainties (assuming they do not change their goals or their active portfolio implementation does not perform below asset classes) ) the reality of the wide potential ends of results faces the financial advisors and their clients with a continuous torrent of surprises without means of taking a certain course of action based on random events of the market. When short-term market environments produce disappointing results in traditional counseling methods, the typical first course of action is inaction (for example, waiting because we expect things to turn out in the long term). If short-term market environments or a successful selection of active management produce unexpected positive results, traditional best practices again recommend inaction, simply by celebrating the fortunate random outcome. By contrast, the present method of financial advice defines specific values in advance where new advice may be required (if the client's goals and priorities remain unchanged), allowing a client to prepare for and know what prudent modifications in terms of reducing or delaying goals (or accepting more investment risk) make sense based on what has happened in extremely poor environments and where the client has the option to increase a goal or obtain a goal sooner, or reduce investment risk where the results are exceptional, in any case requiring determined action of new advice needing to be designed. The creation of a degree of reliability that considers the uncertainties of the markets is critical to this process, and that the "action point" or value (s) of the portfolio (s) that need compromising advice is relatively infrequent (for example, the client would have little confidence in an adviser if half of the time his advice is reduce goals or delay goals and half the time is to increase them). Likewise, before the goals are added, moved to an earlier date or the risk of the portfolio is increased, therefore establishing a new expectation for the client, it is also important that there is a certain high reliability that the addition or increase In the goals you will not need to be committed again at a future date if they are kept unchanged by the client. Therefore depending on the approach used to calculate the probabilities and how well the assumptions are designed to calculate the probabilities, the preferred modality would have more than half of random market environments that do not require changes, less than one in five that require a commitment and the remaining environments requiring a positive change to the goals, or a reduction in the risk of the portfolio, assuming that the client's goals remain unchanged and that the uncertainty of the active investments are avoided. This method achieves this by defining a comfortable zone where normal market environments do not require new advice (unless the client changes his goals or priorities), where particularly poor markets must be probabilistically extreme to require engaging advice, and where Frequent random positive markets result in occasional, but more frequent, opportunities to produce advice about goal improvements (or risk reduction in the portfolio). Such a relationship with a financial advisor, where things are normally "in their course", where poor markets are "still in their course", where extremely poor markets have some prudent advice solutions that are unlikely to be extreme and where Favorable occasional markets have positive improvements in counseling, dramatically improving the comfort and confidence that the client has in their advisor, and advice from the advisor and more importantly about the client's lifestyle. An example of the definition of this degree would be to calculate all future portfolio values through the client's time horizon needed to have a 75% reliability of exceeding the client's current recommended goals (for example, 750 of 1000 results of portfolio potentials statistically) and portfolio values that would have a reliability of 90% (that is, statistically 900 of 1000 potential portfolio results) to exceed all the client's goals.

BRIEF DESCRIPTION OF THE DRAWINGS Figures 1A to 1C constitute a flow chart delineating the method of the present invention; Figure 2 is an exemplary report generated in accordance with the present method; Figure 3 is an exemplary goal prioritization matrix according to the present method; Figure 4 is an exemplary report generated in accordance with the present method; Figure 5 is an exemplary diagram generated in accordance with the present method.

DETAILED DESCRIPTION OF THE INVENTION A new method for financial advice is described in order to find a balance for the client between insufficient reliability (that is, too much uncertainty) and unnecessary sacrifices. Current techniques attempt to identify the client's maximum tolerance for risk, and then optimize the allocation of assets based on that maximum risk, without considering whether said risk is guaranteed. The client is periodically advised on the status of their portfolio based on current market performance. Typically, this state review consists of reciting the performance of the client's portfolio compared to the market. Less often, the client is provided with an updated risk percentage of not reaching their established goals, or the current probability of "reaching" goals (which is currently the possibility of exceeding, but is rarely described as tai). If the current performance of the client's investment portfolio is poor, the client will usually be advised to maintain their long-term plan in the hope that things will work in the long term or less frequently in increasing portfolio contributions or eliminating a or more of your less priority goals. Alternatively, if the performance is better than expected, the client can be advised not to make changes (even if it is possible for the client to contribute less, while maintaining the same risk of exceeding their investment goals).

The present method is intended to help the client to make the best of the only life he has, confidently reaching the goals that the client values only, without unnecessarily sacrificing his current lifestyle and avoiding unnecessary investment risks. Therefore, the method obtains from the clients only the information that is necessary and material for the advisor to understand the client's goals. Identify the ideal dreams of the client, as well as the acceptable commitments, and the priorities and proportion in quantity and time of each of them. It also avoids unnecessary risks, and provides performance tests that are practically understandable to the client (for example, "buy the house on the beach"). It also provides a degree of comfort based on a rational level of reliability of the performance of the investment alternatives, therefore avoiding too much uncertainty as well as too much sacrifice. It provides a method of working with the client to provide solutions based on acceptable commitments to reach the priority goals, and provides the client with an understandable analysis of the progress made towards their goals, while allowing the client to change their goals or priorities whenever they want. Therefore, the method is used to subject the client to no more risk than is necessary to achieve the client's goals (for example, no more investment risk than is necessary to allow the client to live their life the best possible way while reaching the goals that the client values more highly or partially in proportion to other goals). Additionally, the method implements a new notion of how each client's goal is interrelated with the others, and the number of options to achieve the goals that exist depending on the client's wishes. The method includes organizing a range of goals, interrelated their times (for example, when each one is expected to be "reached"), and quantities (for example, the relative "cost" in money of each goal). The method allows the advisor and the client to reorient and reassess the goals in the course as a method of reconfiguring the client's portfolio and the desired goals for the future. Therefore, based on current market performance, the client can be advised (or at least presented with an option) to change their goals or change the priority thereof or reduce or increase their investment risk. For example, the client may be advised that his most highly valued investment goals can be achieved simply by delaying the withdrawal for 1 year (the withdrawal date in this case is not a goal critically valued by the client), or decreasing the number annual vacation travel after the 4 to 1 retirement. Furthermore, the method allows the counselor and the client to make small changes in the priorities of the goals that would allow the client to maintain a low priority goal, even when the performance of the portfolio has been lower than normal. This differs from the present methods in that advisors simply advise the client to "wait for the long term" (eg, no action) save more money or eliminate one or more of the lower priority goals when the portfolio behaves poorly. In one aspect of the invention, an evaluation of an investor's goals is carried out by the financial advisor. The financial advisor may be an individual, an organization, or one or more organizations, and may include the use of programmed computers. The investor can be any natural or legal person or a group of people. Typically, the investor will be an individual or a couple, but it can also be an institution that has an investment portfolio and liabilities for which it wishes to have funds such as donations, pension funds, or foundations. The following example is made for the financial advice of individuals or couples. However, such principles may be applied to investors other than individuals; For example, these principles can be applied to charitable organizations that seek the proper administration of their funds or donations. In this example, a financial advisor will obtain certain information from the individual or partner, who will be referred to as the client. Referring to Figure 1A, the financial advisor may ask the client about certain background information in step 105. This information is typically shorter and easier to obtain than the type of information typically required in the design of a financial plan. Due to the amount of uncertainties in the future, the information collected does not need to be as arduous as it is typical in planning because many details are immaterial in the context of the vast general uncertainty in the future. In general, said information includes extensive but not detailed information about the client and the client's current finances, information about the anticipated future income of the client, and the like. Information about the client includes that such as age (or ages if the "client" is a couple), current assets, current income, current residence, and current expenses. Information about future income will be in the nature of assumptions about future income from sources other than investments, such as earned income, social security, pensions or other sources of resources. Residence is important for calculating the impact of local taxes, including state, municipal or county taxes. The nature of this information will vary if the technique is applied to investors or clients who are not individuals. Having received this relatively direct information in step 110, the financial advisor now asks the client to identify their goals, as in block 112. Goals typically include the availability of resources at different times, such as the annual income grade during the retirement, a desired degree of funds in an estate at a particular point, a degree of wishes for anticipated major expenses, such as educational expenses for a child, larger purchases in the future such as a vacation home, a budget for vacation trips during the withdrawal, the desired value of the estate at the time of death, or any other expense of any description. The goals can be relatively serious or frivolous, and there is no differentiation between the two during the goal identification phase of the method because the traditional method of financial planning has advisors helping clients about being realistic in goal setting. eliminates the potential to achieve "frivolous" goals that this method of financial advice would allow. In addition, the types of goals will vary among customers. For example, a couple without children may not need equity or pay for education. The advisor should be careful to choose all of the client's goals, including both common goals and those that are rare or even unique to the client. The assessor, having obtained the identity of the goals, in block 1 3, can then ask the client to identify an ideal value for each goal, as in step 115. The values of the goals can be in the form of an age ideal retirement, or an ideal number of annual vacation trips during retirement. Other values may be of the nature of one or more planned withdrawals of cash at one or more defined points in the future, or for recurring expenses at a future higher expense (eg "home on the beach"). The value of goals can also include amounts and savings times to be added to the portfolio before retirement. The ideal values are those values that the client prefers more in each category separately, without respect to whether achieving each of those ideal values is realistic. The advisor should communicate that ideal goals do not need to be realistic, taken all together. In general, clients will want to save less, retire early, avoid risk, have a higher income in retirement, or have greater wealth, and the ideal values of the goals will reflect these desires. Any appropriate verbal formulation can be used by the client and advisor to communicate the ideal value of each goal. The ideal value can be expressed variably depending on the nature of the goal, as noted above, in terms of time (ideally as soon as possible) and values (ideally as much as possible). The ideal values of goals are received by the assessor, as indicated in block 120, and are recorded. The assessor can then ask the client to identify "acceptable" values for each goal, as indicated in block 125. An acceptable value of a goal will generally be a lower value in money, such as annual retirement income, equity, funds for the education of children, or a future large purchase or a later date, such as when one retires or a later date for a larger purchase in the future that the client would find acceptable, for example, would be satisfied to compromise the goal (or expand it) to that level if necessary to achieve another goal that personally value more. It should be noted that the acceptable size or time of a goal is not the least or the most bearable or tolerable, but it is the amount that is sufficient for the client to be reasonably pleased. When a value represents time, such as a retirement age or a date of a larger purchase in the future, to be declared as an acceptable value of that goal, the date must be early enough for the client to be reasonably happy. It will be understood that a variety of verbal formulations can be used by the client and the advisor to communicate the acceptable values in each goal. Acceptable goals are received, as indicated in block 127. An exemplary illustration of ideal and acceptable values for a variety of goals is shown in Figure 2, where the "client" has identified an ideal retirement age of 63 years. , and an acceptable retirement age of 68 years. Similarly, the client has identified an ideal travel budget of $ 25,000 and an acceptable value of $ 5,000. Upon receiving these values, the client is required to provide relative values for each of the goals, as indicated in block 128. These must be provided in a numerical form for calculation purposes, but can be obtained verbally from the client and then converted to a numerical form through interpretation by the advisor. The client can be encouraged to provide a relative value, for example, to reach an earlier retirement date, against their lifestyle once withdrawn, to increase the value saved each year before retirement, to reduce their travel budget before or during retirement, to reduce the amount of equity, to reduce the maximum amount available for the education of children, and the like. For example, while it may be acceptable to have a travel budget of $ 5,000, it would be worth delaying the withdrawal by 1 year if it meant you could have a trip budget in the $ 10,000 withdrawal. The set of relative values can involve, if done in other methods without the limitations of the acceptable and ideal profile as in this method, an immense amount of questions, which could be presented in the format of a questionnaire. But this method, having the restriction of acceptable and ideal goals to work from, simplifies the process to merely give a relative value contrast between the goals, acquired by the advisor in a simple conversation or perhaps with the help of a simple matrix. of goals. There are numerous ways to ask about these preferences. For example, the relative valuation can be asked in verbal format, such as "is an early retirement as important as, less important than, much less important than, more important than, or much more important than, having an additional income during retirement?". Questions can be asked with quantitative values, such as "is it to delay the withdrawal for 5 years more or less the same, much more preferable to, somewhat preferable to, somewhat less preferable to, or much less preferable to, having $ 3,000 less in annual expenses during retirement? " Since the goals are generally expressed in terms of monetary times and amounts, the comparisons will involve relative valuations of these types of values. As will be appreciated, this way of asking and weighing the goals relatively can and will be applied for all the goals identified by the client in such a way that a comprehensive interrelation of goals is developed and understood conceptually by the financial advisor so that he or she formulates her recommendations for the client. This conceptual interrelation will allow the client and the financial advisor to gain a deeper understanding of the relative importance of each of the client's goals that is substantially more focused than in the prior techniques that require the client to simply prioritize the goals in order ascending or descending. The interrelationship can provide perceptions to the same client about the relationships of the goals in a way that they may not have considered or understood previously. Finally, a goal matrix is developed, similar to the one illustrated in Figure 3, where the goals are listed vertically and acceptable commitments are listed horizontally. As can be seen, the matrix can provide an easy visual comparison of each individual goal against each of the other goals. In the illustrated modality, the client has identified that in order to reduce the investment risk in the portfolio, they would be willing to retire later and / or reduce the size of their equity. A subsequent analysis shows that, relative to the two subsequent goals, the client would be willing to reduce the size of their assets in order to reach an early retirement age. Accommodating the goals in a matrix allows the financial advisor to determine the relative importance of each goal compared with each other, which then allows the advisor to propose a recommendation that provides sufficient confidence and comfort to meet or exceed these goals that each client values in a unique way, without unnecessary sacrifices to your lifestyle and avoids unnecessary investment risks. Alternatively, the financial advisor can use the matrix to identify the minor (probably frivolous) goals that can be achieved either through a minor change in the client's investment allocation (for example, a smaller increase in the risk of investment) or only minimally reducing or delaying other goals. Providing such additional benefit to the client will result in significant customer satisfaction, compared to traditional practices of profiling the client to be realistic at the beginning which would ignore what would otherwise be considered a frivolous goal, or simply methods of prioritization in where frivolous goals would be completely eliminated due to their low priority. The use of a matrix provides an additional advantage, in that it can point to apparent contradictions in the relative valuations of a client's goals. As can be seen in Figure 3, a contraction appears in the prioritization of the client's retirement age and the size of their patrimony. The client in this example has identified that to reach his early retirement age he would have to be willing to reduce the size of his estate, however, he has also identified that to reach his goal in the estate he must be willing to retire later. The identification of this contradiction highlights the many times in which small differences exist between the values of the goals, and therefore it can be used by the advisor and the client to obtain a deeper understanding of the current relative prioritization of said goals. In the illustrated example, after identifying the conflict, the advisor can ask the client more detailed questions about their relative prioritization of the value of the estate against the retirement age or if there are preferred values for either acceptable and ideal extremes that the advisor could want to consider when you design your recommendation. For example, if delaying retirement for only 1 year reliably "buys" an equity equal to that which the couple inherited from their parents of probably $ 500,000 (well beyond the minimum acceptable value of equity, however much less than the ideal value) the client may be willing to make that change by delaying the 1 year withdrawal. Likewise, the client may be willing to commit this equity below $ 500,000 if many other goals (travel budget, retirement lifestyle, retirement age, etc.) must be committed to only acceptable levels. have sufficient reliability in general. After receiving information on relative goal values, as indicated in block 129, the financial advisor uses the matrix to develop a recommendation, as indicated in block 130. In the analysis, the acceptable and ideal values of the goals they are taken as extremes of each of the goals (for example, they are supports). Each goal has a representative monetary value to be achieved (for example, the cost of "the beach house", the cost of "the child's college tuition), both ideally - the highest, and acceptable, for example, adequate These values collected together with the counselor's understanding of the relative priorities among the goals are used by the advisor to construct a recommendation.

The advisor then uses these values and performs simulations of various allocation models, and makes assumptions about the future performance of the associated capital markets. The advisor uses the results of these simulations in combination with the goal matrix in Figure 3 to determine which allocation model will allow the client to reach their most significant goals, which goals, if any, will need to be adjusted closer to their "acceptable" value. "and which goals can be reached at or near their" ideal "value. Similarly, using this method the advisor can also recommend which lower value goals can be achieved with only minor modifications to the values of other goals (for example, increase the savings before retirement by x amount to reach one more trip to Jamaica). per year in retirement). As can be appreciated by one of average skill in the art, a variety of simulations can be carried out. In a preferred embodiment of the inventive method, the assumptions of the capital market are those based on the assumption that the assets in a portfolio will be passively invested. As discussed previously, investing in actively managed investment alternatives entails a risk of materially lower performance than that of the asset classes to which the investment belongs therefore introducing a risk that is not modeled if one uses only the risk characteristics and utility of asset classes. Although actively managed investments also carry the potential for profit is that they are substantially greater than those of the class or classes of associated assets, it is known that any implementation has the potential of a wide range of possible outcomes (from a performance materially inferior to the market or asset class up to - substantially greater performance to the market, and all the intermediate points) therefore also involving and introducing a level of risk that is difficult, if not impossible, to predict adequately, and therefore can provide widely varying results. year to year Also, in the absence of the possibility of knowing this risk, any reliability number presented to the client can be substantially erroneous if this additional risk beyond the asset class uncertainty was not considered. Saying that a client has 82% confidence if he invests in these asset classes (for example, passively) can be a reasonable and directionally sound representation. However, say that the client has 82% reliability based on modeled asset classes, then invest in a way that introduces an opportunity to exceed market results and a risk of materially obtaining performances below market results. (none of which was modeled) makes this number of reliability of questionable value to the client because it may be substantially erroneous. Therefore, the recommendations should not include investing any assets in an actively managed fund. The fact that a given fund or fund manager performed better than the market in the past is not an indication that the fund will be more successful in the future. The uncertainties involved in investing in any way different from those of fully passive investments create a divergence between the predicted probability. In contrast, the inclusion of actively managed funds in the recommendation creates an additional element of uncertainty. Moreover, there is no reliable model to predict this additional element of uncertainty, although one can model potential impacts of the amount of uncertainty introduced and based on the reliability and comfort desired under this method, even a small amount of active uncertainty (eg , well below current historical levels) introduces an irrational investment risk that could be avoided.

In a managed fund, one can not use statistical techniques to accurately model the risk of obtaining performance below or above the market but the possible risk that it introduces can be conceptually estimated and shown as an irrational risk that this method of advice would avoid based on a fundamental principle of the method of avoiding unnecessary investment risks. By contrast, the use of passive investment alternatives provides a relatively high degree of prediction for prediction simulations. Although such investments essentially have no chance of ever having a significantly higher performance than the class or classes of associated assets, but also never will have a materially lower performance to their classes than their expenses that can be precisely modeled. Therefore, passive investments form the basis to invest using the present method, avoiding the unnecessary risks of potential performance materially below the market. The model used to simulate market results is preferably one that entails a realistic relationship with the current historical market results. However, a well-designed model should not submissively follow the data available from historical markets. Historical market data are only available for a limited period of time, and only represent a portion of the possible future results. A well-designed model is valid regardless of short-term market changes. A model that submissively tracks market utilities, such as modeling based on the last 20 years, changes whenever new data is added. Even for long periods of time, such as 30 years, limited historical data in the industry has shown that for volatile assets such as large-cap stocks, 30-year earnings based on monthly data up to 1926 show average annual profit at 30 years that varies from 7.17% to 14.29%. If one uses any of these 30-year results as input to a simulation engine, they would be simulating a 50% chance of performing better or worse than the market has done, which is statistically wrong. This dependence on historical profits is not appropriate to reliably model market behavior. In fact, depending on the period of time selected, there will be a significant variation when a model based on historical profits is tested against current historical profits. A model with higher reliability levels will not be so dependent on the data. A model using Monte Cario analysis is preferred to model possible future utilities to allow the expansion of the probability that we have not yet seen that the best or the worst markets can produce. A well-designed model will show several defined characteristics when compared to historical results. Of course, in conducting such a comparison, it should be borne in mind that the historical results represent a relatively short period, and a relatively small number of possible outcomes. A well-designed model should include results, in such areas as the average utility and the standard deviation, at the extremes that fall beyond the actual historical results. For example, in the fifth and ninety-fifth percentile, the simulated results should be, respectively, greater and less than the fifth and ninety-fifth percentile for historical results depending on the number of simulations made ... for example, mathematically the major extremes will exist in a greater Number of simulations, although their probability of occurrence once a statistically valid number of simulations has been made will be too remote to a probability to be useful in advising the client about a dynamic and changing set of priorities and goals. The best and worst results should be better and worse than the best and worst historical results. Otherwise, the simulation would indicate that the worst or best possible result has occurred in the relatively short period of time for which the data is accurate. The amount of variation should depend on the volatility of the asset class. For example, the simulated results should be very close to the real results in the 50th percentile for treasury bonds, and will generally be further away from the real results as the market becomes more volatile, such as small cap stocks. The tests should also indicate that the variation between the simulated profits and the real profits, in the extremes, is greater in asset classes with higher volatility. For example, the best and worst results for small cap stocks tend to be significantly better and worse, respectively, than historical results. If it is found that the model does not predict the results along the preceding lines, then the model can be found unrealistic. The modeling assumptions should then be adjusted. Asset classes may include all shares in the United States, capitalization shares in the United States, large capital growth shares in the United States, one or more foreign markets, mid-cap stocks in the United States, stock small capitalization in the United States, treasury bonds, corporate and municipal bonds of various maturities, cash, cash equivalents, and other asset classes.

The model test should take into account variations in historical markets. For example, using historical results selected at random in the generation of results in a Monte Cario simulation may result in obtaining an excessive number of selected results from either high-end markets or downward markets. If the data of these markets appear excessively in the results of the simulation, the simulated results can be excessively inclined in a positive or negative direction. Therefore, the entries for the Monte Cario data should be selected in such a way that unusual results, such as those of unusual upside markets of the 90s, or those of the long down markets from 2000 to 2003, do not They are over-represented. The models that are found to predict that an excessive percentage of results will be worse than the historical ones are inappropriate, since a plan based on such a model is likely to result in an unnecessary sacrifice to the client's lifestyle. Similarly, the models found to result in an inappropriately large percentage of historical results will overvalue the reliability that the client may have in this recommendation. Models that do not take into account fluctuations in markets (for example, assuming a constant annual profit rate) will obviate significant risks associated with market fluctuations and will completely ignore the uncertainty of future markets.

Using these simulated results techniques, the advisor designs an appropriate recommendation for the client. In the process of designing the recommendation, the financial advisor tests the effect and sensitivity of various goals based on the conceptual understanding of relative priorities and iteratively proceeds to find the best solution among the goals, priorities and the desire to avoid or avoid the tolerance to accept the investment risk. The results of the recommendation are minimally fulfilling at least all values and accepted dates of the client's goals while providing as little deviation as possible from the ideal values for those goals that the client has indicated are most important. The goal matrix is used in this process. This can be an iterative process for the advisor, and may involve the creation of a number of test plans that are developed and compared using the goal matrix. While one may be tempted to clarify a test algorithm, the required inputs would not be manageable as previously discussed and the practical reality that the client's priorities and goals will change throughout his life in any way (clients are not clairvoyants) make such effort an unnecessary expenditure of energy and lead to a false sense of precision that is not advisable considering the vast uncertainties in the future. The financial advisor will develop these recommendations using a computer having different background information related to the client stored therein. Therefore, the client's background is typically stored in memory or some other storage medium, and a program running on a computer (or a computer connected through a network connection) will use the background information in conjuction with the market simulation techniques to develop the recommendation. The recommendation will include a current amount of assets, the time and amount of all (currently planned) contributions to the assets of the portfolio, the time and amount of all withdrawals (currently planned) of the assets of the portfolio and the appropriations of assets in one or more classes of passive investments, which assignments may be constant or may vary at different times. The appropriate recommendation will have sufficient but not excessive confidence to exceed a recommended result for each goal, not better than the ideal value and no worse than the acceptable value. As previously noted, a recommendation with a better value than the ideal is considered undesirable, because it would indicate that some other goal has been sacrificed unnecessarily or that the client is sacrificing too much contributing more to the portfolio than is necessary and therefore will have less cash available for current use (for example, before retirement). If the ideal value of the goal has been properly chosen by the customer, a better goal than the ideal value may be of almost no additional value or utility to the customer. It will be understood that a part of the evaluation process under this method is to run a series of simulations using an appropriate model, as discussed above. It will be appreciated that proper modeling provides superior results ... for example, it does not contain non-modeled risks. As explained above, the modeling of capital markets is preferably carried out assuming passive investment alternatives. The advisor may rely on tests of previous capital market models, or may take the additional step of conducting a comparison. As indicated in step 140, ownership of the model for a particular recommendation can be tested by comparison against historical results, using techniques explained in the co-pending patent explanation in the United States with serial number 09 / 434,645, presented on November 5, 1999, entitled "Method, System, and Computer Program for Auditing Financial Plans," by David B. Loeper, the entire contents of which is incorporated herein by reference. As noted above, if the modeled results differ significantly from the historical results at the 50th percentile, or they differ inappropriately at the extremes then the model must be re-evaluated and altered to provide appropriate results. This is indicated in step 145. The recommendation can then be re-evaluated, and may need to be altered by the assessor, as indicated in step 150. The selected recommendation can then be presented to the client (step 155) in a report similar to the one shown. in Figure 2, which can be part of a larger report, in electronic or printed form. The recommendation will include an evaluation of the current level of reliability, the recommended size and times of the goals, recommendations for investment, and a degree of portfolio values within which it is not necessary to reevaluate, if any change is required based on market behavior. (identified by the "comfort level" zone in Figure 2). Portfolio value "zones" will be discussed later in connection with Figure 5. The recommendation includes recommended values for each goal, no better than the ideal value, and no worse than acceptable value. The investment recommendations are preferably asset classes that are passively invested (for example, large capitalization, medium capitalization and small cap stocks, foreign stocks, municipal or corporate treasury bonds and cash equivalents). The client can review the recommendation, and provide feedback or ask the counselor about the recommendations for the impact of alternative assignments, recommended values between the ideal and acceptable for the goals, etc. This may be necessary due to the conceptual nature of the discussion of relative priorities. These reasons may indicate an error in the data obtained for the identity of the goals, the ideal and / or acceptable values of the goals, and / or the relative values modeled in the goal matrix. After the consultation, the advisor can make the appropriate changes, and then repeat the previous steps of designing a recommendation. The revised recommendation is then provided to the client.

Using the technique of relative goal assessments, it can often be found that a relatively small change in a goal (for example, increasing the retirement age by one year when the client loves his job and cares to work an additional year), can be enough to get a significant change in another goal (for example, buy the beach house 5 years earlier). In general, by increasing the savings during the years of work, delaying the withdrawal, and reducing expenses during retirement, a higher probability of EXCEEDING all the identified goals of the client exists. However, it is an important feature of the present invention that the assessor and client recognize that such steps involve some certainty of sacrifice for the client, and that a recommendation that reaches too high a certainty of exceeding all or most of one's own goals Other goals may not be desirable because you can unduly sacrifice the current or future enjoyment of the only life the client has. Once again, the importance of investing in passive investment alternatives is considered key to providing the client with a recommendation that includes an accurate estimate of the level of reliability being represented. As stated above, a reasonable estimate of the level of reliability can only be provided when both reasonable capital market assumptions are used and passive investments are assumed. If the advice to be provided was for an investment of one or more assets in managed funds, or in individual shares, individual equity parcels, or other assets that behave differently from the capital markets that were modeled, then the reliability being represented the client will be wrong because the specific uncertainty introduced can not be accurately predicted, was not included in the calculation of reliability and therefore can not be modeled to produce a particular level of reliability that would be representative. A recommendation of managed portfolios, carries a degree of unpredictability that makes them less desirable to be used with the present method due to uncertainty of their future behavior (we can reasonably estimate the potential market uncertainty but not how a money manager can behave) and the importance of the reliability calculation being a reasonable estimate of the value provided in this method (an obvious contradiction exists if one is measuring and advising to have sufficient but not excessive reliability but as one implements it introduces an unknown effect in the reliability that does not is being modeled). Figures 2 and 4 show an exemplary form used to transmit the information related to the recommendation to a client. The method of profiling the client's goals can be understood compared to the resulting recommendation for two clients with identical backgrounds and identical ideal and acceptable goal values, but who have different relative ratings of those goals. In the example of Figure 2, although not shown, the client has prioritized the following goals: (a) retirement income, (b) minimum savings before retirement, (c) the education of their child through the high school, and (d) maximize your travel budget in retirement. The resulting recommendation achieves its desired low level of savings, annual travel budget, and support for your child's education, while other goals are compromised much closer to acceptable value but are importantly not generally eliminated altogether unless the value the value to the client was extraordinarily low in context of other goals. In the example of Figure 4, the recommendation reflects goals that, although not shown, are significantly different from those of the previous client. The goals highly valued by the client of Figure 4 are: (a) early retirement, and (b) a minimum equity value-here, an equity of $ 1, 000,000 dollars (in the case of this client his desire was not to spend the capital and want to maintain the real value to spend from his portfolio). The goals are achieved here by committing the amount of savings before retirement as well as an increase in the risk of the investment. Figures 2 and 4 also place the recommended, ideal and acceptable values of the goals in a continuous comfort assessment space. This combined package of the client's life goals together with the strategy / recommended investment allocation to passive investments and the current approximate values of the portfolio are combined to calculate those future portfolio values needed to have sufficient reliability (ie, avoid too much uncertainty) and those potential future portfolio values that would place them in excessive reliability (ie, too much sacrifice to their lifestyle). In this example, there are three categories: "uncertain" - where reliability is determined too low to have reasonable comfort about one's ability to live as currently planned and recommended and the risk of unwanted material changes is therefore too much high, and is therefore unacceptable; "sacrifice" - where there is a certainty of giving up excessively on time or current or future expenses and leaves one with a very high probability (ie, 90%) of leaving a larger than planned estate at the cost of other goals and / or unnecessary investment risks (volatility of the investment portfolio); and "comfort" - which provides an adequate balance between the risk of too much uncertainty and too much sacrifice to lifestyle. As shown in Figures 2 and 4, the "comfort" degree lies between 75 and 90% reliability. The recommended values of the goals will be somewhere within this degree of "comfort". The acceptable values of the goals will normally fall in the "sacrifice" region, while the ideal values of the goals will normally reside in the region of "uncertainty". While this is not necessarily always the case, sets of ideal and acceptable goals that fall into inappropriate areas offer another opportunity for the advisor to advise the client about the need to be more realistic about their acceptable goals (ie, if acceptable). falls below the comfort zone) or advise the client that they may have higher aspirations (for example, if the ideal goals fall within the sacrifice zone). As shown graphically, there is a degree of potential outcomes and desired potential portfolio values where if personal goals remain unchanged there is no reason to be concerned ... for example, comfort. This grade will of course vary for each particular client. The values of "comfort" or "reliability" represent the results of the historical analysis of markets and Monte Carlo analysis of the relevant capital markets based on the allocations of passive investments recommended by the financial advisor. In one modality, 1000 market environments, both good and bad, are simulated based on carefully analyzed capital market assumptions designed in a way that realistically models the nature of the potential degree of capital market outcomes. The level of "comfort" or "reliability" is the percentage of those 1000 simulations in which the client's goals are exceeded. To implement and properly administer the recommendation created using the method described so far, it is important that the advisor and the client periodically monitor the effects of capital market results on the progress of the recommendation to keep the client reasonably confident about their future financial but avoiding unnecessary sacrifices or capitalize on opportunities to reduce the risk of investment. As part of this monitoring step, the counselor and the client can make the necessary changes to maintain a recommendation within the "comfort zone" throughout their life. This periodic review is important because it allows the advisor and the client to effectively react to make the appropriate changes to the recommendation when the current market performance is outside the performance necessary to maintain reliability, and avoid sacrifice. It also allows the client and the advisor to focus on any changes to the client's goals or relative priorities within the goals that have occurred since the previous review period. Therefore, for example, when the current market performance for the period is worse than that required to maintain sufficient reliability, the advisor may recommend a change in the allocation, an increase in the amount contributed, or a change in values and / or prioritization of goals to keep the client within the "comfort" zone. Corresponding changes can be made when the current market performance for the period was better as well as offering opportunities to increase goals, obtain goals early or reduce portfolio risk. The periodic review will advantageously also capture the changes to the client's goals, or their ideal / acceptable values for those goals. This provides a degree of flexibility to the recommendation that corresponds to the natural changes in the client's life and their financial and other priorities. Therefore, where the client originally identified "paying the child's education expenses" as a high priority goal, this goal could be eliminated where, for example, the child receives a scholarship or decides not to go to college. Similarly, if the client is the beneficiary of a large inheritance payment, the savings before retirement could be changed accordingly. Additionally, even if the client does not add or delete goals, they will be asked to review their existing matrix of goals to incorporate any relative changes to the relative prioritizations of their goals represented in the matrix. Once any / all changes have been identified, a calculation can be made of the portfolio values needed for the client to remain in the "comfort" zone. These results can be provided to the user in the form of a graphic display similar to that shown in Figure 5, in which the value of the portfolio is indicated on the vertical axis and the age of the customer is on the horizontal axis. Again, the degree of "comfort" is identified in the center, with "sacrifice" and "uncertainty" above and below, respectively. It will be understood, referring to Figure 5, that the degree of portfolio values based on the uncertainty of the passive portfolio allocations naturally narrows down while the plan end point, and a certain monetary amount, are reached. Therefore, the intermediate grade in Figure 5 represents the portfolio values that would produce 75% to 90% reliability each year throughout the life of the client. This is in contrast to the current methods of financial advice based on probability, where the degree of risk really expands towards the end point of the plan.

Using the method of the invention, the financial advisor and the client are able to make periodic adjustments to the recommendations to the client to ensure that it remains within the "comfort" zone. The financial advisor will advise the client to review and change the portfolio if the value approaches the limit of, or falls outside of, the comfort zone. If markets have unexpectedly high profits, such as those from an extraordinarily unusual upside market, for a period of time near the beginning of the recommendation, the assets of the planning or portfolio assets will most likely exceed the upper limit for that. year (or other period of time). Therefore, the assessor can recommend a change to the recommendation that would move the plan from the "sacrifice" zone back to the "comfort zone". Such changes could, for example, include a reduction in annual savings (Figures 2, 4), a reduction in portfolio risk, an increase in planned retirement income, etc. Alternatively, if the markets have profits that produce portfolio values lower than the lower limit in the comfort zone, the advisor may recommend changes similar to the plan (for example, a change in goals or values of the goals, increase the risk of investment or change the times of the goals) to place it back inside the "comfort" zone. As mentioned above, each time such events occur is controlled by the desired degree of reliability. If the grade were in the middle, say a comfort degree of 43 to 57%, many market environments would require significant reductions in goals (close to half). While if the degree is too small, say 80 to 82%, while negative adjustments would be less frequent, positive changes would occur too frequently only with a frequent probability of needing to be reduced once again in the future. While the specific values of 75 to 90% are not rigidly required (obviously these depend on how the assumptions of the capital market are constructed as well) the notion is that changes induced by market behavior are not frequent and are unlikely to be very extreme measuring the reliability towards the end of the distribution with the possibility inclined in favor of exceeding the client's goals (clients can change their goals and priorities at any time and obviously it is always better to obtain a better understanding of how they would like to live their lives ), and positive changes to the recommendations of the goals are more frequent than the reductions and expansions in the goals, and that the positive improvements to the recommendations (to improve the recommended goals) are not possibly so necessary to be reduced once again in the future than a previously made recommendation (again, controlled by measuring the reliability towards the end of the distribution that favors possibility inclined towards exceeding the results). Likewise, if there is a bias in the assumptions of the capital market that cause the model to be imprecise, the review of the value of the portfolio will tend to reveal these assumptions. For example, if the assumptions were extremely pessimistic, the portfolio value could tend towards the higher value of the comfort zone. If the assumptions were too optimistic the value of the portfolio could tend toward the lower limit of the comfort zone. Appropriate changes to the assumptions can then be implemented. Referring to Figure 1B, the step of monitoring the current status of the recommendation and making the appropriate changes is indicated in step 160, while the step of reevaluating the client's goals is indicated in step 165, and the step of preparing new ones recommendations based on those goals and the client's current situation and evaluate the model used to generate said recommendation is indicated in steps 130-150. It is noted that the times of this periodic review are not critical, although in a preferred modality the review would occur quarterly. When an alteration occurs in the client's goals or their relative importance, as noted in block 175, the financial advisor must obtain the new client's goals and / or their new relative valuation, as indicated in step 180. The financial advisor then prepare a new recommendation for consideration, incorporating the client's current goals, and develop a proposed recommendation based on the modified goal information, as indicated in block 130. A revised recommendation is then presented to the client (step 155), along with a degree of portfolio values within which the client would remain in the comfort zone and therefore would not require a reassessment if the goals and priorities have not changed. If the performance of the markets (and therefore also of the passively invested portfolios that can not materially perform below the market) is within the appropriate degree, and the client's goals have not changed, then the current recommendation, with the current passive investments, is used, as indicated in step 190. Provide the client with an evaluation similar to that of the Figure 5 is highly advantageous to the client because it provides a clear and easily understandable indication of progress towards the goals around which his life, and clearly places this progress within the context of the balance between undue sacrifice and excessive uncertainty previously discussed. Using the present method, the client will be able to easily discern, based on what has happened to portfolio performance, when a change in the recommendation is required to maintain this balance. The present method significantly differs from the conventional methods of the prior art in that prior art methods often attempt to assess risk based solely on what the client has said he is willing to bear in losses in his portfolio or some other method mathematical. This willingness to bear risk involves little or no relationship to whether accepting such risks makes sense for what the client wants to achieve when he considers acceptable commitments to goals that would allow him to accept a lower investment risk. Also, using said risk assessment of the prior techniques, the client has no way of knowing if or when the losses incurred over time are sufficient to trigger a revision of the traditional financial plan. The present method also differs from the prior art in that it employs passive inversions whose broad degree of potential behavior can be estimated with relative certainty. This is in contrast to typical financial planning systems that lead to the use of actively managed investment alternatives, which introduce a risk that the client's portfolio may materially perform less than the associated asset classes, and whose future behavior can not be estimated accurately. It should be noted that the client should be advised that a reassessment of the recommendation is advisable when a goal is added / discarded, the ideal or acceptable values of an existing goal have changed, or the relative priorities of any existing goals have changed (step 175). The same is true for changes in background information, such as when a client receives a significant inheritance, thereby increasing the present portfolio balance. Previously acceptable goals for savings can become unattainable, such as when the client loses the job and is therefore forced to save less or when the client receives an increase that can lighten the burden of greater savings and therefore enable the modification of goals, or greater, or earlier goals to be modified, or reduce the risk of the portfolio being reduced. Additionally, the acceptable and ideal values of the goals for expenses after retirement can change if the client is promoted and accustoms to a more expensive lifestyle; A child who was expected to require substantial payments in college tuition can choose not to go to college or obtain a scholarship, thereby eliminating a goal of providing for the child's education. Similarly, a client can change career work and decide that an early retirement is less valuable than other goals. It will be understood that the process of monitoring the status of the recommendation and the client's goals and their relative importance will preferably continue throughout the duration of the financial advisory relationship with the client. The method of providing advice in accordance with the invention may be generalized. In a generalized form, a method of the invention is used to provide investment advice as well as advice about the best options about life goals given at least two goals (one being a desired final value or a series of goals of expenses or liabilities, and the other being the desire to avoid unnecessary investment risks). In this generalized method, a client can be an individual, a corporation or an instion. The background information can include a current portfolio value, a current spending program, and current development expenses, for example. The client is then asked to identify a final goal of expenditures or goals, their tolerance of investment risk and their desire to avoid investment risks, and to identify both ideal and acceptable values for each one. Goals may vary depending on the nature of the client. For example, for a charitable instion in the investment planning activity of a recently or existing donated sum, the goals may include investment risk levels, a desired annual income for the programs, an annual budget for development and a desired portfolio value at a certain date in the future. The client is then asked to identify the relative values of said goals. A charitable instion may weigh the desire to engage in present expenses against a desire to have a large sum of money for a future capital project. A recommendation under this method appropriate for the client, the goals, the acceptable ideal values of each goal, the relative values of all the goals, can then be developed. As with other recommendations, the investments must be passive, so that the reliability evaluations are directionally accurate. A degree of values based on an annual basis (or any other period of time) can be provided within which the client's goals can be reliably and reasonably exceeded, but avoiding undue sacrifices or excessive commitments to the goals can be calculated. If the value of the portfolio falls outside this grade, then the recommendation should be revised. Similarly, if the background information changes, if goals are added or goals are discarded, or if the acceptable or ideal values of the goals change or their relative assessment changes, then the recommendation should be revised.

The method of providing advice, including the steps of obtaining the client's background information, identifying a set of client goals, identifying the ideal values acceptable for each goal, and identifying the relative ratings of the various goals, and designing a recommendation with Results for each goal not better than ideal values and not worse than acceptable values, can be applied using a variety of techniques to measure the reliability and / or probability of various outcomes. In a preferred modality, the technique of using a Monte Cario-based model of capital markets, properly considering uncertainty and market behavior in random periods of time and specifically not ignoring the risk of active investments of potentially having a material performance. Below the market is evaluated and can be used in the development, and in a future evaluation of the reliability of a recommendation, even if the recommendation is not developed and revised using the methods based on previously established goals. The present invention can be modeled in the form of methods and apparatus for practicing these methods. The present invention can also be modeled in the form of a program code in the form of a tangible medium, such as flexible magnetic disks, compact disks, hard disks, or any other storage means that is accessible by a machine, wherein , the program code is loaded and then executed by the machine, such as a computer, the machine becomes an apparatus for practicing the invention. The present invention may also be in the form of a form of a program code, for example, either stored in a storage medium, loaded in and / or executed by a machine, or transmitted through a transmission medium, such as electrical wiring, through optical fiber, or via electromagnetic radiation, wherein, when the program code is loaded into and executed by the machine, such as a computer, the machine becomes an apparatus for practicing the invention. When implemented in a general purpose processor, the program code segments are combined with the processor to provide a single device that operates analogously to specific logic circuits. Since the invention has been described with reference to modality is preferred, the invention should not be referred to as being limited to the preferred embodiments, but including variations within the spirit and scope of the invention.

Claims (1)

1. NOVELTY OF THE INVENTION CLAIMS 1. - A method of financial advice, which includes: determining an initial value of a client's investment portfolio; obtain a list of client investment goals, the list that includes ideal and acceptable values for each investment goal, where the ideal and acceptable values for each goal correspond to at least a monetary amount and a time to reach the goal; obtain a comparison of relative values between pairs of investment goals within the list of goals, the comparison of relative values is represented in terms of price, in money or time, that the client is willing to pay in a goal within each pair of investment goals to reach the other goal in the same pair of investment goals in the list; electronically simulate a plurality of models of investment portfolio assignments a! use a modeling technique of capital markets; using the comparison of relative values within the goals and the simulation of the plurality of portfolio allocations to obtain a recommendation that includes an investment allocation and a recommended value for each investment goal, where the recommended value for each goal is not better than the ideal value and is not worse than the acceptable value; and where the recommendation has a measured reliability of exceeding the recommended values for each goal; and communicate the recommendation to the client. 2. The method according to claim 1, further characterized because the portfolio allocations include only passive investments in order to avoid the possibility that the client's investment portfolio may have a performance materially below the asset allocation Recommended from the portfolio. 3. The method according to claim 1, further characterized in that the market modeling technique comprises a Cario Monte analysis of potential performance. 4. The method according to claim 1, - further characterized because the ideal value of each goal is expressed either in terms of a minimum time to reach the goal or a maximum monetary value of the goal; and the acceptable value of each goal is a lower monetary value or a later date to reach that goal compared to the ideal value, and that is still acceptable to the client. 5. The method according to claim 1, further characterized in that the step of using the comparison of relative values within the goals further comprises determining whether the relatively low valued goals can be achieved only with minor modifications to the values of other goals. on the list. 6. The method according to claim 1, further characterized in that the step of obtaining the comparison of relative values within the goals further comprises developing a matrix of the goals that represents the relative comparison between the pairs of investment goals and The step of using the comparison of relative values involves using the goal matrix to develop a recommendation. 7 - The method according to claim 1, further characterized by additionally comprising: periodically monitoring the recommendation to determine whether, based on a current value of the client's investment portfolio, the recommendation still has sufficient reliability to achieve the recommended set of goals or if a new board is needed; determine if the client would like to add new goals or remove goals from the list of investment goals, or make changes to the contrast of the relative values of contrast between the goals; and carry out again the steps of simulation, use or communication if the recommendation does not provide sufficient reliability or has excessive reliability that is therefore subjecting the client to undue sacrifices to their lifestyle, planned lifestyle or excessive risk of investment, or if the client has made changes to the relative comparison of values within the goals. 8.- A method of financial advice, which includes: determining an initial value of the client's investment portfolio; obtain a list of client investment goals, the list that includes ideal and acceptable values for each of the investment goals, where the ideal and acceptable values for each goal correspond to at least a monetary amount and a time to reach the goal; obtain a comparison of the relative values between pairs of investment goals within the list of goals, the comparison of the relative values is represented in terms of price, in time or money, that the client is willing to pay in a goal within each pair of investment goals to reach the other goal in the same pair of investment goals in the list; develop a matrix of goals that represent the relative comparison between pairs of investment goals, electronically simulate a plurality of models of investment portfolio allocations by using a capital markets modeling technique; use the goal matrix and the simulation of the plurality of portfolio allocations to obtain a recommendation that includes an investment allocation and a recommended value for each investment goal, where the recommended value for each goal is not better than the ideal value and it is not worse than the acceptable value; and where the recommendation has a measured reliability of exceeding the recommended value for each goal; and communicate the recommendation to the client. 9. The method according to claim 8, further characterized in that portfolio allocations include only passive investments only for the purpose of avoiding the possibility that the client's investment portfolio may materially perform below the market in the Recommended allocation of portfolio assets. 10. - The method according to claim 8, further characterized in that the market modeling technique comprises a Monte Cario analysis of the potential performance. 11. The method according to claim 8, further characterized in that the ideal value of each goal is expressed either in terms of a minimum time to reach the goal or the maximum monetary value of the goal; and the acceptable value of each goal is a minimum monetary value or a later date to reach that goal compared with the ideal value, and that is still acceptable to the client. 12. The method according to claim 8, further characterized in that the step of using a comparison of relative values within the goals further comprises determining whether the relatively low valued goals can be achieved with only minor modifications to the values of other goals on the list. 13. The method according to claim 8, further characterized by additionally comprising: periodically monitoring the recommendation to determine whether, based on a current value of the client's investment portfolio, the recommendation still has sufficient reliability to achieve the recommended set of goals or if a new recommendation is necessary; and carry out again the steps of simulation, use and communication if the recommendation does not provide sufficient reliability, or has excessive reliability that is therefore subjecting the client to undue sacrifices to their lifestyle, planned lifestyle or a risk excessive investment. 14. The method according to claim 13, further characterized in that the step of periodically monitoring further comprises determining whether the client wishes to add new goals or remove goals from the list of investment goals, or make changes to the contrast of the values relative within the goals; and the steps of simulating, using and communicating are carried out again if the client has made changes to the relative values of comparison within the goals. 15.- A method of financial advice, which includes: determining an initial value of the client's investment portfolio; obtain a list of the client's investment goals, the list including ideal and acceptable values for each of the investment goals, where the ideal and acceptable values for each goal correspond to at least a monetary value and a time to reach the goal; obtain a comparison of relative values between pairs of investment goals within the list of goals, the comparison of relative values being represented in terms of price, in time or money, that the client is willing to pay in a goal within each pair of investment goals to reach the other goal in the same pair of investment goals in the list; develop a matrix of goals that represents the relative comparison between pairs of investment goals; electronically simulate a plurality of investment portfolio allocation models by using a capital markets modeling technique; and use the goal matrix and the simulation of the "plurality of portfolio allocations to obtain a recommendation that includes an investment allocation and a recommended value for each investment goal, where the recommended value for each goal is not better than ideal value and is not worse than the acceptable value, and where the recommendation has a reliability measured to exceed the recommended value for each goal 16. The method according to claim 15, further characterized by additionally communicating the recommendation to 17. The method according to claim 16, further characterized because portfolio allocations include only passive investments only for the purpose of avoiding the possibility that the client's investment portfolio may materially perform below the Recommended allocation of portfolio assets 18. The method of compliance with claim 16, also characterized because the modeling technique of the market includes a Monte Cario analysis of potential performance. 19. The method according to claim 16, further characterized in that the ideal value of each goal is expressed either in terms of a minimum time to reach the goal or a maximum monetary value of the goal.; and the acceptable value of each goal is a lower monetary value or a later date to reach that goal compared with the ideal value, and that is still acceptable to the client. 20. The method according to claim 16, further characterized in that the step of using the comparison of relative values within the goals also comprises determining whether the relatively low valued goals can be achieved with only minor modifications to the values of other goals on the list. 21. The method according to claim 16, further characterized by additionally comprising: periodically monitoring the recommendation to determine whether, based on the current value of the portfolio of the client's investment portfolio, the recommendation still has sufficient reliability to reach the recommended set of goals or if a new advice is needed; and carry out again the steps of simulation, use and communication if the recommendation does not provide enough confidence, or has excessive reliability that is therefore subjecting the client to unnecessary sacrifices to their lifestyle, planned lifestyle or excessive risk investment. 22. The method according to claim 21, further characterized in that the step of periodically monitoring also comprises determining whether the client would like to add new goals or remove goals from his list of investment goals; or make changes to the contrast of relative values within the goals; and the steps of simulating, using and communicating are carried out again if the client has made changes to the relative comparison of values within the goals.