Source: http://www.google.com/patents/US20020138386?dq=7,446,777
Timestamp: 2016-12-11 04:56:55
Document Index: 141667973

Matched Legal Cases: ['art 1200', 'art 1200', 'art 1200', 'art 1200', 'art 1200', 'art 1500', 'art 1500', 'art 1500', 'art 1730', 'art 1730', 'art 1730', 'art 1930']

Patent US20020138386 - User interface for a financial advisory system - Google PatentsSearch Images Maps Play YouTube News Gmail Drive More »Sign inPatentsA method and an apparatus for a user interface for a financial advisory system is provided. According to one embodiment of the invention, a set of one or more input objects and a set of output values are displayed. The input objects include an indication of a target retirement age, an indication of a...http://www.google.com/patents/US20020138386?utm_source=gb-gplus-sharePatent US20020138386 - User interface for a financial advisory systemAdvanced Patent SearchTry the new Google Patents, with machine-classified Google Scholar results, and Japanese and South Korean patents.Publication numberUS20020138386 A1Publication typeApplicationApplication numberUS 09/904,707Publication dateSep 26, 2002Filing dateJul 12, 2001Priority dateDec 2, 1997Also published asUS7016870, US7062458, US7774257, US7788155, US7813989, US7983975, US20060010060, US20080154792, US20080235154, US20090055327Publication number09904707, 904707, US 2002/0138386 A1, US 2002/138386 A1, US 20020138386 A1, US 20020138386A1, US 2002138386 A1, US 2002138386A1, US-A1-20020138386, US-A1-2002138386, US2002/0138386A1, US2002/138386A1, US20020138386 A1, US20020138386A1, US2002138386 A1, US2002138386A1InventorsJeff Maggioncalda, Christopher Jones, William Sharpe, Ken Fine, Ellen TauberOriginal AssigneeMaggioncalda Jeff N., Jones Christopher L., Sharpe William F., Ken Fine, Ellen TauberExport CitationBiBTeX, EndNote, RefManPatent Citations (69), Referenced by (117), Classifications (12), Legal Events (8) External Links: USPTO, USPTO Assignment, EspacenetUser interface for a financial advisory system
V 0(W t,T)=E 0(W t,T 2)−E 0(W t,T)2 [0209] but W t , T 2 = [ exp  { ∑ j = t T - 1  a + bX j + 1 + c   Π j + 1 + d   δ j + 1 + eX j + f   Π j + g   δ j } ] 2 = exp  { ∑ j = t T - 1  2  ( a + bX j + 1 + c   Π j + 1 + d   δ j + 1 + eX j + f   Π j + g   δ j ) } [0210] So the same technique can be used with a simple redefinition of the constants to be twice their original values. Similarly, the covariance between any two core assets can be calculated by simply adding corresponding constants and repeating the same technique. [0211] For the current parameter values, the constants for Bills, Bonds, and Equities are: a b c d e F g Bills 0.0077 0 −1 0 1 0.7731 0 Bonds 0.0642 −2.5725 −3.8523 0 2.5846 2.9031 0 Equities 0.0331 −2.4062 −3.7069 4.4431 2.48 2.79 −3.5487 [0212] Above, a methodology was described for calculating core asset analytic moments for arbitrary horizons. This section describes how these moments are translated into annualized moments. The procedure described in this section essentially calculates successive annual moments for a twenty (20) year horizon and computes the arithmetic average of these moments. These ‘effective’ annual moments may then be used as inputs into the reverse optimization procedure and the individual optimization problem. [0213] For this calculation, first make the following definitions: [0214] Mt j=Expected return for jth asset over the period t,t+1 [0215] Covt i,j=Covariance of returns on asset i with asset j over the period t,t+1 [0216] These expected returns and covariance are calculated using the formulas described above. The effective annual expected return for asset j is then calculated as: M j = ∑ t = 1 T  ω t  M t j [0217] Similarly, the effective annual covariance between returns on asset i and returns on asset j are calculated as: (Note, the weights, ωt, are between zero and one, and sum to one.) Cov i , j = ∑ t = 1 T  ω t  Cov t i , j [0218] In one embodiment, this annualizing technique could be personalized for a given user's situation. For example, the user's horizon could specify T, and their level of current wealth and future contributions could specify the relevant weights. However for purposes of illustration, the relevant ‘effective’ moments for optimization and simulation are computed assuming a horizon of 20 years (T=20), and equal weights (i.e. 1/T). [0219] The techniques described in this section allow for the calculation of the following effective annual moments: Output parameter name Description Units M1 Bills: expected return Return per year M2 Bonds: expected return Return per year M3 Equity: expected return Return per year Cov1,1 Bills: variance of returns (Return per year)2 Cov2,2 Bonds: variance of returns (Return per year)2 Cov3,3 Equity: variance of returns (Return per year)2 Cov1,2 Bills and Bonds: covariance (Return per year)2 Cov1,3 Bills and Equity: covariance (Return per year)2 Cov2,3 Bonds and Equity: covariance (Return per year)2 [0220] Plan Monitoring [0221] Exemplary conditions which may trigger an alert of some sort from the plan monitoring module 350 were described above. At this point, some of the real world events that may lead to those alert conditions will now be described. The real world events include the following: (1) a financial product's style exposure changes, (2) the market value of the user's assets have changed in a significant way, (3) new financial products become available to the user, (4) the risk characteristics of the user's portfolio have deviated from the desired risk exposure, or (5) the currently recommended portfolio no longer has the highest expected return for the current level of portfolio risk (e.g., the portfolio is no longer on the mean-variance efficient frontier). An efficient frontier is the sets of assets (portfolios) that provide the highest level of return over different levels of risk. At each point on the efficient frontier, there is no portfolio that provides a higher expected return for the same or lower level of risk. [0222] When a financial product's exposures change it may pull the user's portfolio off of the efficient frontier. That is, due to a shift in the investment style of a particular financial product, the portfolio as a whole may no longer have the highest expected return for the current level of risk. According to one embodiment of the present invention, if the inefficiency is greater than a predetermined tolerance or if the inefficiency will substantially impact one of the user's financial goals, such as his/her retirement income goal, then the user is notified that he/she should rebalance the portfolio. However, if the inefficiency is within the predefined tolerance then the plan monitoring module 350 may not alert the user. In one embodiment, the predefined tolerance depends upon the impact of the inefficiency on expected wealth. In addition, the tolerance could depend upon relevant transaction costs. [0223] A significant change in the market value of the user's assets may affect one or both of the probability of achieving a financial goal and the current risk associated with the portfolio. In the case that the user's portfolio has experienced a large loss, the portfolio may no longer be within a predetermined probability tolerance of achieving one or more financial goals. Further, as is typical in such situations, the risk associated with the portfolio may also have changed significantly. Either of these conditions may cause the user to be notified that changes are required in the portfolio allocation or decision variables to compensate for the reduction in market value of the portfolio. A large increase in the value of the user's portfolio, on the other hand, could trigger an alert due to the increase in the probability of achieving one or more financial goals or due to the altered risk associated with the newly inflated portfolio. [0224] When one or more new financial products become available to the user, the user may be alerted by the plan monitoring module 350 if, for example, a higher expected return may be possible at lower risk as a result of diversifying the current portfolio to include one or more of the newly available financial products. [0225] Having explained the potential effects of some real world events that may trigger alerts, exemplary plan monitoring processing will now be described with respect to FIG. 8. At step 810, the data needed for reevaluating the current portfolio and for determining a current optimal portfolio is retrieved, such as the user profile and portfolio data which may be stored on the AdviceServer 110, for example. Importantly, the user profile may include investment plan profile information stored during a previous session, such as the probability of reaching one or more financial goals, the risk of the portfolio, and the like. As described above, selected user information on the AdviceServer 110 may be kept up to date automatically if the financial advisory system 100 has access to the record-keeping systems of the user's employer. Alternatively, selected user information may be updated manually by the user. [0226] At step 820, a current optimal portfolio is determined, as described above. Importantly, changes to the user database and/or portfolio data are taken into consideration. For example, if one or more new financial products have become available to the user, portfolios including the one or more new financial products are evaluated. [0227] At step 830, the current portfolio is evaluated in a number of different dimensions to determine if any trigger conditions are satisfied. For example, if the increase in expected wealth, or the increase in the probability of reaching one or more investment goals resulting from a reallocation to the current optimal portfolio is above a predetermined tolerance, then processing will continue with step 840. Additionally, if the risk of the current portfolio is substantially different from the investment plan profile or if the probability of achieving one or more financial goals is substantially different from the investment plan profile, then processing continues with step 840. [0228] At step 840, advice processing is performed. According to one embodiment of the present invention, based upon the user's preference among the decision variables, the system may offer advice regarding which decision variable should be modified to bring the portfolio back on track to reach the one or more financial goals with the desired probability. In addition, the system may recommend a reallocation to improve efficiency of the portfolio. An alert may be generated to notify the user of the advice and/or need for affirmative action on his/her part. As described above, the alert may be displayed during a subsequent user session with the financial advisory system 100 and/or the alerts may be transmitted immediately to the user by telephone, fax, email, pager, fax, or similar messaging system. [0229] Advantageously, the plan monitoring module 350 performs ongoing portfolio evaluation to deal with the constantly changing data that may ultimately affect the exposure determination process and the portfolio optimization process. In this manner, the user may receive timely advice instructing him/her how to most efficiently achieve one or more financial goals and/or maintain one or more portfolio characteristics based upon the available set of financial products. [0230] Exemplary Advice Summary Screen [0231] The UI 345 attempts to help the user pick the right financial products to meet his/her needs in a world where the number of financial products and decisions related thereto may be overwhelming. According to one embodiment, the UI 345 helps the user pick the right products by focusing the user on the relevant decisions and showing the user various notions of risk via simulated outcomes that are based upon a set of recommended financial products that satisfy the user's current decision values. [0232] [0232]FIG. 9 illustrates an advice summary screen 900 according to one embodiment of the present invention. According to the embodiment depicted, the advice summary screen 900 includes three separate areas: (1) an area 910 for decisions, (2) an area 920 for depicting output values (also referred to as results), and (3) an area 930 for depicting recommended financial products. [0233] Area 910 organizes all the decisions in one place. While prior art systems, such as retirement calculators, often make the user provide assumptions, data and decisions all in one place, according to the embodiment depicted, the decisions are kept separate. For example, in one embodiment, graphical input mechanisms, such as slider bars are grouped together in a predefined portion of the display that is separate from the output values and the recommended financial products. In this manner, the user will not confuse the things the user can control and change (e.g., savings rate or level of savings) and those things the user cannot change (e.g., inflation, rate of return for a particular financial product). Further, area 910 may present a constrained set of decisions. That is, only the relevant decisions upon which the user needs to focus may be presented. Another feature of the present embodiment is the fact that the decisions are always feasible and in some cases are additionally constrained to be optimal. Calibration of input mechanisms is discussed below. [0234] Importantly, decision variables may vary from implementation to implementation. For example, in a retirement planning system, decision variables might include one or more of: risk, level of savings, and retirement age. In contrast, a mortgage analysis package may include decision variables such as cost of house, length of mortgage, and amount of down payment. Exemplary input mechanisms for allowing the user to specify decision variable values are described further below. [0235] Based upon the decisions, the portfolio optimization module 340 produces a recommended set of financial products and the simulation engine projects the outcomes of holding the specific financial products recommended. Area 920 organizes all the output values relating to the recommended set of decisions and financial products in one place. For example, in one embodiment, graphical representations of the output values are grouped together in a predefined portion of the display that is separate from the decisions and the recommended financial products. The output values are made available to users to allow them to arrive at a set of financial products that satisfy their objective functions. For example, some individuals have a need to have a certain amount of money in the future and others may have a need to avoid short-term losses. Generally what is meant by objective function is a criterion that an individual considers important in making a decision. In various embodiments of the present invention, the output values may include: the cumulative probability of reaching a predetermined goal, the most likely value of a given portfolio at some future point in time, the financial loss that might occur with a 5% probability within the next 12 months, and various other statistics based on the probability distribution employed by the simulation engine. [0236] Different output values may be appropriate for different people. Therefore, by presenting a number of different output values in area 920, users are given the ability to focus on whatever output values that may appeal to them. In one embodiment, this section of the advice screen 900 may be adaptive. That is, a user may select to have displayed one or more output values that are relevant to satisfying his/her objective function. Importantly, output values may be displayed in various orders and not all output values need to be displayed concurrently. [0237] It is appreciated that different output values may also be appropriate for different problems. For example, in a retirement planning system, it may be desirable to have output values that depict short- and long-term financial risk and the cumulative probability of reaching a financial goal. While a mortgage analysis package may include output values such as cash flow, the highest a mortgage payment might be within 5 years, the probability of hitting the cap of an adjustable rate mortgage, the probability of paying higher interest costs for a particular fixed cost mortgage than a particular adjustable rate mortgage, etc. [0238] Area 930 presents the user with the actions to be taken to get the results depicted in area 920. For example, an indication of recommended financial products may be provided based upon the user's decisions. Additionally, recommended proportions of a user's wealth that should be allocated to each financial product may be textually and/or graphically communicated. Another function of area 930 is organizing all the actions resulting from the decisions in one place. For example, in one embodiment, graphical representations of the recommended financial products are grouped together in a predefined portion of the display that is separate from the decisions and the output values. [0239] Areas 910, 920, and 930 may be tied together by the simulation engine and the portfolio optimization module 340. For example, the portfolio optimization module 340 may produce an optimal set of financial products for a given set of decisions. Further, the simulation engine may connect the decisions to the results by projecting the outcomes of owning the set of financial products recommended by the portfolio optimization module 340. [0240] In the embodiment depicted, areas 910, 920, and 930 are concurrently displayed. In alternative embodiments, however, two of the areas may be displayed concurrently and the third area may be displayed on another screen or at a later time. For example, a visual indication depicting input mechanisms for receiving input decisions and a visual indication depicting a set of output values based upon the input decisions may be displayed simultaneously thereby allowing the user to observe updates to the output values in response to changes to one or more of the input decisions. Then, when the user is satisfied with the output values, he/she may view the recommended financial products upon which the output values are based. [0241] Exemplary Decision-Related Functionality [0242] A. Slider Calibration [0243] The UI 345 may provide graphical input mechanisms for allowing a user to provide values for one or more decision variable inputs. As discussed earlier, one disadvantage of some prior financial analysis programs is that the user is often presented with future scenarios that are not feasible and is therefore free to choose collections of financial products which are not optimal. That is, the user interfaces do not constrain the user's input to specific available financial products and they do not eliminate combinations of financial products which are dominated. By a dominated decision what is meant is a decision in which the user can absolutely make him/herself better off in one respect without making him/herself worse off in any other respect. In embodiments of the present invention, various dominated decisions may be eliminated. For example, the system may assume that the recommended portfolio should lie on the efficient frontier. [0244] As a feature of the present embodiment, various positions (settings) of a graphical input mechanism relating to investment risk may be constrained based upon a set of available financial products available to the user. [0245] [0245]FIG. 10A illustrates an exemplary set of financial products that may be available to a user. The financial products, mutual funds in this example, may be the investments that are available through an employer's 401(k) program, for example. According to one embodiment, the financial products may be listed in order of the volatility of their returns. In this example, the Vanguard Bond Fund is more volatile than the Vanguard Money Market, the Equity Income Fund is more volatile than both the Money Market and the Bond Fund, and the Vanguard Small Cap Fund is the most volatile fund of the set. [0246] Referring now to FIG. 10B, exemplary graphical input mechanisms are depicted. According to one embodiment of the present invention, slider bars are the mechanism by which values regarding decision variables are communicated between the simulator and the user. For example, the user may modify the current value of a particular decision variable by selecting the appropriate slider with an input device and moving the slider to a new position. According to the embodiment depicted, the decision variables upon which the simulator's probability distribution is dependent include the user's risk tolerance, the user's savings rate, and the user's desired retirement age. Therefore, in this example, the UI 345 includes at least three slider bars including a risk slider bar 1000, a savings rate slider bar 1020, and a retirement age slider bar 1030. [0247] The risk slider bar includes a left end point 1005, a right end point 1015, and a slider 1010. The left end point 1005 represents the lowest risk feasible portfolio and the right end point 1015 represents the highest risk feasible portfolio. The user may indicate his/her risk preference to the financial analysis system by positioning the slider 1010 anywhere between the left end point 1005 and the right end point 1015, inclusive. To assure every position of the risk slider 1010 is within the feasible set of risk available to the user, the risk slider bar 1000 is calibrated based upon the set of financial products that are available to the user. Preferably, the simulation module 330 additionally keeps the user on the efficient frontier by recommending only portfolios of financial products that will result in the highest return for a particular level of risk. This means as the user positions the risk slider 1010, the simulation module 330 may construct a portfolio from the available set of financial products which has the highest returns for the specified level of risk. For example, assuming the risk slider bar 1000 were calibrated to the set of mutual funds shown in FIG. 10A, then positioning the risk slider 1010 at the left end point 1005 would correspond to the highest return portfolio having a risk equivalent to or less than that of the Vanguard Money Market Fund. Similarly, positioning the slider 1010 at the right end point 1015 would correspond to the highest return portfolio having a risk equivalent to or less than that of the Vanguard Small Cap Fund. Advantageously, in this manner the UI 345 by way of the risk slider bar 1000 prevents the user from selecting a level of risk outside of the feasible set of risk that is actually available to the user. [0248] It should be appreciated the savings rate slider bar 1020 and the retirement age slider bar 1030 may be similarly constrained to feasible values. For example, the savings rate slider bar 1020 may be constrained to values between zero and the maximum contribution for a particular account type, such as a 401(k). Also, the retirement age slider bar 1030 may be constrained to allow values between the user's current age and an upper bound that may be determined with reference to actuarial data, for example. [0249] B. Relating Settings of a Risk Input Mechanism to a Predefined Volatility [0250] FIGS. 11A-C are helpful for describing the calibration of a risk slider bar 1105 according to one embodiment of the present invention. FIG. 11A depicts a risk slider bar 1105 that may be provided to allow a user to specify a desired level of investment risk, for example. The risk slider bar 1105 includes a slider 1115, and an indication of the current volatility 1110. According to one embodiment, the volatility of the risk slider bar 1105 is expressed as a proportion of a predefined volatility, such as the volatility of the Market Portfolio or the volatility of the average individual investor's portfolio, for example. The Market Portfolio is the portfolio consisting of a value-weighted investment in all available assets. [0251] Returning to the present example, as depicted in FIG. 11A, the risk slider bar 1105 has its slider 1115 positioned in a left most setting 1101. The left most setting 1101 corresponds to the volatility associated with the lowest volatility mix of financial products in the set of available financial products. In this example, the current volatility 1110 of the risk slider 1105 is 0.3×, indicating that the volatility associated with the current setting of the risk slider bar 1115 is 30% of the volatility of the predefined volatility. As discussed below, the volatility of the financial products recommended by the portfolio optimization module 340 corresponds to the current setting of the risk slider 1101. [0252] Referring now to FIG. 11B, the risk slider bar 1105 is shown with the slider 1115 positioned at a midpoint setting 1102. According to this embodiment, the midpoint setting 1102 corresponds to the predefined volatility. Again, the units for risk slider bar 1105 are expressed in terms of the volatility of setting 1102 as a proportion of a predefined volatility, such as the volatility of the Market Portfolio. In this example, the current value 1107 of the setting of the risk slider 1102 is 1.0×, indicating that the volatility associated with the current setting of slider 1102 is equal to the volatility of the predefined volatility. [0253] Referring now to FIG. 11C, the right most setting 1103 of the risk slider bar 1105 reflects the volatility associated with the highest volatility mix of financial products in the set of available financial products. Again, the units for risk slider bar 1105 are expressed in terms of the volatility of setting 1103 as a proportion of a predefined volatility, such as the volatility of the Market Portfolio. In this example, the current value 1108 of the setting of the risk slider 1105 is 2.5×, indicating that the volatility associated with the current setting of slider 1103 is 250% of the volatility of the predefined volatility. [0254] Each setting of slider bar 1105 (e.g., 1101, 1102, 1103) corresponds to a unique volatility, and a recommended set of financial products whose volatility is equal to that volatility. Advantageously, in the manner described above, the user may choose the desired volatility of his/her portfolio of financial products relative to the predefined volatility. A portfolio having a volatility equal to the predefined volatility may be chosen by positioning the slider 1115 at the midpoint 1102. If the user would like the recommended portfolio to be less volatile than the predefined volatility, then the user may position the slider 1115 to the left of the midpoint 1102. Similarly, if the user would like the recommended portfolio to be more volatile than the predefined volatility, then the user may move the slider 1115 to a position right of the midpoint 1102. Further, it should be appreciated, the volatility associated with the midpoint 1102 will remain the same regardless of the composition of the available set of financial products. [0255] While only three different positions of the slider 1115 have been described, it should be appreciated any number of positions may be located along the risk slider bar 1105 and each position may be associated with a volatility measure defined by a constant times the portfolio volatility divided by the predefined volatility. [0256] Exemplary Mechanisms for Communicating Output Values (Results) [0257] A. Exemplary Manner of Communicating Probabilities from a Probability Distribution [0258] The chart 1200 of FIG. 12A represents a range of possible values of a portfolio of financial products over time. Starting with a set of financial products that have a current value today, a number of scenarios of how those financial products might grow taking into account contributions and withdrawals may be run by simulation module 330. The process that generates the probability distribution for each time period may be a simulation engine, a lookup table that was populated by a simulation engine, or an analytic approximation of the probability distribution that would be generated by the simulation engine. Those of ordinary skill in the art will appreciate that various other mechanisms may be employed to produce such a probability distribution. [0259] The vertical axis of the chart 1200 represents dollars and the horizontal axis represents time, in terms of the user's age, for example. The chart 1200 further includes an upper line 1205, a lower line 1215, and a median line 1210. For every point in time, there is a probability that the value, dollars in this example, will be as high as the goal 1220. [0260] In this example, the median line 1210 represents a 50% chance of the corresponding dollar value being achieved at a particular point in time. The upper line 1205 may represent an upside 5% tail. The lower line 1215 may represent a downside 5% tail. Each slice in time represents a cross section of the probability distribution. FIG. 12B is a cross section of the chart 1200 which illustrates the probability distribution at a particular slice of time, a1. [0261] Returning again to FIG. 12A, there is a higher probability in the middle range of a particular cross section and a lower probability at the tails. Ninety percent of the outcomes at a particular time will fall between the upper line 1205 and the lower line 1215, inclusive. Exemplary probabilities associated with points x1 through x4 at time a1 are as follows: (1) there is a 5% chance of the dollar value being equal to or greater than x1; (2) there is between a 5% and a 50% chance of the dollar value being equal to or greater than x2; (3) there is a 50% chance that the dollar value will be equal to or greater than x3; and (4) there is a 95% chance that the dollar value will be equal to or greater than x4. [0262] As one advantage of the present embodiment, rather than presenting a misleading binary result or showing the user a depiction of the underlying probability 1240, the user interface may communicate the cumulative probability that the user will attain a financial goal in a pictorial fashion using certain icons to represent certain levels of probability, for example. A one-to-one correspondence may be established between predetermined levels of probabilities and icons that are used to represent the predetermined levels of probabilities. [0263] An exemplary set of icons 1250 is shown in FIG. 12C. A weather theme is employed by the set of icons 1250 to communicate the likelihood of achieving the goal 1220. It is appreciated various other themes may be employed. At any rate, according to this embodiment, icons 1260-1269 each include one or more of five basic elements: sky, clouds, sun, sun rays, and a numeric forecast. In one embodiment, the display of the basic elements may each depend on the likelihood of achieving the goal 1220. For example, at certain predefined threshold values various elements may be included or excluded from the icon to be displayed. In the example depicted, the set of icons 1250 range from graphical depictions of dark clouds with a dark sky to a bright sun and sun rays with a bright sky. As the likelihood of achieving the goal 1220 increases the weather outlook becomes brighter. In this example, the lowest probability is represented by icon 1260. Icon 1260 includes a dark storm cloud and represents less than a 5% chance of the goal being achieved. Until the probability of achieving the goal reaches 50%, the cloud completely hides the sun. However, the cloud becomes lighter as the probability increases. Icon 1261 represents that the user has a 10% chance of achieving his/her goal. Icon 1262 represents a 20% chance. Icon 1263 represents a 30% chance of achieving the goal. Icon 1264 represents a 40% chance of achieving the goal. Finally, the sun begins to peek out from behind the cloud in icon 1265 which represents a 50% chance of achieving the goal. Icon 1266 represents a 60% chance of achieving the goal. Icon 1267 represents a 70% chance of achieving the goal. Referring to icons 1268 and 1269, once there is an 80% chance or better of the goal being achieved, the cloud is no longer present and the sun's rays become visible. While in this example a weather theme is employed to communicate probabilities to a user, it is appreciated various other metaphors could be used. [0264] According to one embodiment of the present invention, as the user modifies decision variables, such as retirement age, the probability distribution is evaluated and the appropriate icon is displayed to the user, as described further below. [0265] [0265]FIG. 13 is a flow diagram illustrating a method indicating the probability of achieving a financial goal according to one embodiment of the present invention. At step 1305, a goal is received. The goal may be received from the user or it may be retrieved from a user profile established during a prior session with the system, for example. The goal may represent a financial goal such as a retirement income goal or some other intermediate goal like saving for a down payment on a home, or a child's college education. In the context of investing, typically a probability distribution represents the probabilities over time that the portfolio will be worth certain amounts of money. [0266] At step 1310, values upon which the probability distribution depend are received. In the context of financial planning software, for example, these values may include the particular recommended financial products, current and projected economic conditions, and user inputs about the user's level of savings and a time horizon. [0267] At step 1315, the simulation engine generates a distribution of future values for future points in time based upon the values received at step 1310. According to one embodiment, evaluating the probability distribution may comprise using an analytic approximation of a distribution of simulated values. Alternatively, a table of values may be generated in advance by a simulation engine, in which case evaluation comprises retrieving data from the lookup table corresponding to the values received at step 1310. [0268] In this manner, a range of outcomes for a particular time horizon is determined. For example, in the case of evaluating a retirement goal, the time horizon represents the user's stated desired retirement age. Referring again to FIG. 12A, the range of outcomes for a particular time horizon would represent a cross section of the two-dimensional chart 1200, e.g., the values between the lower line 1215 and the upper line 1205, inclusive. [0269] At step 1325, the likelihood of the user achieving the goal is determined based on the cumulative probability that meets or exceeds the user's goal. For example, if the user's goal is to have a specific annual retirement income, then the cumulative probability of achieving greater than or equal to the specified income is determined. [0270] At step 1330, an indication is provided to the user of the likelihood of achieving the goal. According to one embodiment, an icon, corresponding to the likelihood determined at step 1325, is displayed. In this manner, the forecast is summarized in an easily understood graphic picture. [0271] It should be appreciated the feedback mechanism described above is also useful in an interactive environment. For example, the visual indication may be changed in real-time as the user manipulates a user interface mechanism such as a slider bar. By activating an input device (e.g., a mouse, trackball, light pen, or the like), the slider may be moved to new positions by the user. While the input device is engaged steps 1310 through 1330 may be repeated for each new position of the slider bar. In this manner, the forecast icon will reflect the forecast at the current position of the slider bar and the user receives feedback in the form of a changing forecast icon as the slider bar is moved to various positions. In an embodiment employing the weather forecast icons of FIG. 12B, for example, as the slider is moved by the user, the weather changes. When the input device is disengaged, the last displayed icon remains on the display. [0272] While the embodiment above describes altering the user's probability of achieving a goal by changing the time horizon, it should be appreciated there are many other ways of altering the probability. For example, the goal may be raised or lowered, the level of savings may be increased or decreased, and the investment risk may be modified. [0273] B. Depiction of Long-Term Risk [0274] [0274]FIG. 14 illustrates a graphical device 1400 which may be employed to communicate long-term financial risk according to one embodiment of the present invention. In the embodiment depicted, the graphical device 1400 comprises a diamond 1430 having indications of a financial goal 1410, an upside retirement income 1420, a projected retirement income 1450, and a foundation value 1440. In this example, the financial goal 1410 represents a retirement income goal. It should be appreciated that various other financial goals may also be represented such as savings goals and other intermediate goals. In this embodiment, the upside retirement income 1420 represents a 5% chance that the user will have the retirement income indicated at the retirement age specified. The projected retirement income 1450 represents the expected retirement income based upon the current decision variables. The foundation value 1440 represents the 5% worst case retirement income. It is appreciated that various other probabilities may be used and that such probabilities may also be user configurable. [0275] In alternative embodiments, the indication of long-term risk maybe conveyed by various other graphical devices such as the forecast icons described above or the long-term risk may simply be indicated by a number and described by accompanying text. Other examples of long-term risk include, for example, the probability of not achieving a financial goal, the size of a loss that could happen at some probability or alternatively, the probability of realizing some type of loss. Further, the long-term risk indication may include various value at risk measures. [0276] C. Depiction of Short-Term Risk [0277] [0277]FIG. 15 illustrates a graphical device 1500 that may be used to communicate short-term financial risk according to one embodiment of the present invention. According to the embodiment depicted, the graphical device comprises a pie chart 1500. In this embodiment, the pie chart 1500 represents the user's total wealth and shows the user how much of it might be lost in a relatively short time period. Pie chart 1500 includes two slices, a first slice 1510 and a second slice 1520. The first slice 1510 graphically illustrates the 5% downside chance of losing the amount corresponding to the size of the first slice 1510. The second slice 1520 graphically illustrates the amount of wealth that would remain after such a loss. Again, various other probability values may be employed. [0278] In alternative embodiments, the indication of short-term risk may be communicated by various other graphical devices such as the forecast icons described above or the short-term risk may simply be indicated by a number and described by accompanying text. [0279] Importantly, while exemplary graphical devices for conveying short- and long-term financial risk have been illustrated and discussed separately in FIGS. 14 and 15, area 920 may display multiple aspects of financial risk and various other output values concurrently on the same screen as well as individually. [0280] Area 920 of the advice screen 900 and the UI 345, in general, may include various other output values. For example, a user may find it helpful to know what the probability of being able to retire during a particular age range or at a particular age is with a certain retirement income. Additionally, some users may wish to know what the expected amount of time to a particular financial goal is or what the worst loss possible is (e.g., the maximum draw down). [0281] Exemplary Functionality Related to Recommended Financial Products [0282] A. Real-Time Depiction of Recommended Financial Product Portfolios [0283] [0283]FIG. 16 is a flow diagram illustrating a method of depicting recommended financial product portfolios according to one embodiment of the present invention. At step 1610, a combination of financial products that maximizes the user's utility is determined. This recommended set of financial products is the set that provides the highest investment return given one or more decision variables specified by the user which may include one or more of risk preference, level of savings, and a time horizon. According to one embodiment, the recommended set of financial products is located on an efficient frontier comprising the set of available financial products. An efficient frontier is the space of recommended portfolios of financial products that is indexed by one or more of the decision variables and that is constrained to maximize the user's utility. Preferably, the efficient frontier determination takes into account one or more of the level of savings and a time horizon. [0284] At step 1620, an updated decision variable value is received. According to one embodiment, the user may modify risk, savings, and/or retirement age decision variables by adjusting the position of a corresponding slider. Various other input mechanisms, graphical and/or textual, may be used, however, to receive decision variable values. For example, in alternative embodiments, text entry fields may be provided for entry of decision variables. [0285] At step 1630, the simulation module 330 determines the optimal allocation of wealth among the financial products available to the user based upon the current values for the decision variables. [0286] At step 1640, the optimal allocation determined in step 1630 is presented to the user in a graphical form. As above, the graphical feedback presented to the user may be provided in real-time as the user manipulates a graphical input mechanism (e.g., slider bar). For example, while an input device, such as cursor control device 223, is engaged steps 1620 through 1640 may be repeated for each new position of the selected slider bar. In this manner, the graphical depiction of the optimal allocation of wealth among the financial products will reflect the recommendation at the current position of the slider bar and the user receives feedback in the form of a dynamic graph as the slider bar is moved to various positions without deactivating the input device. [0287] According to one embodiment, the graphical form in which the optimal financial product allocation is depicted comprises a bar chart as illustrated in FIGS. 17A and 17B. FIG. 17A depicts an exemplary state of a screen 1700 prior to receipt of an updated decision variable value. According to the embodiment depicted, the screen 1700 includes a bar chart 1730 and one or more slider bars such as risk slider bar 1710 for receiving input decision values. The bar chart 1730 includes a list of available financial products 1720-1727. Each of the financial products 1720-1727 are displayed adjacent to a corresponding graphical segment, in this example a bar, having a size (length) representing the percentage of wealth allocated to that particular financial product according to the current recommendation. For example, the current recommended allocation of wealth suggests 31% be allocated to financial product 1721, 50% to financial product 1722, 7% to financial product 1723, and 5% to financial product 1724. In the present example, the available financial products 1720-1727 are additionally organized from top to bottom in order of increasing volatility of the financial product returns. Of course, alternative ordering and allocation units, such as dollar amounts, may be called for depending upon the implementation. The risk slider bar 1710 includes an indication of the current volatility 1715 and a slider 1711. In the present state, the risk slider bar 1710 has a volatility measure of 0.75×. [0288] Assuming the user increases the risk, FIG. 17B represents an exemplary state of screen 1700 subsequent to receipt of a new decision variable value from the risk slider bar 1710 and after the screen 1700 has been updated with the new optimal allocation provided by the portfolio optimization module 340. The risk slider bar 1710 now has a volatility measure of 1.25× and the bar chart 1730 indicates the recommended financial product allocation corresponding to the updated risk tolerance value. The new allocation suggests 38% of the user's contributions be allocated to financial product 1724, 25% to financial product 1725, and 37% to financial product 1726. [0289] While FIG. 17 was described with reference to a specific decision variable, risk tolerance, it should be appreciated that the receipt of new values of various other decision variables may be handled in a similar manner. [0290] B. Modification of the Set of Recommended Financial Products [0291] It may be the case that the user wants to modify the set of recommended financial products. For instance, desiring to hold more or less of a financial product than was recommended. In this event, the user may modify the recommendation thereby causing the system to update the recommended financial products taking into account the user's modification. Another mechanism, referred to as a user constraint, is provided by the UI 345 to allow the user to express his/her utility function by modifying the recommended allocation provided by the system. Generally, a user constraint acts as another decision input. More particularly, a user constraint provides the user with the ability to constrain the holdings of one or more financial products by manipulating the recommended financial products. In one embodiment, responsive to receiving the constraint, the portfolio optimization module 340 optimizes the remaining unconstrained financial products such that the portfolio as a whole accommodates the user's constraint(s) and is optimal for the user's level of risk tolerance. For example, the user may express his/her desire to hold a certain percentage of a particular financial product in his/her portfolio or the user may express his/her preference that a particular financial product not be held in his/her portfolio. Upon receiving the constraint, the portfolio optimization module 340 determines the allocation among the unconstrained financial products such that the recommended portfolio as a whole has the highest utility. Advantageously, in this manner, individuals with utility functions that are different than mean-variant efficient are provided with a mechanism to directly manipulate the recommended financial products to communicate their utility functions. [0292] [0292]FIG. 18 is a flow diagram illustrating a method of updating a recommended portfolio based on a user specified constraint according to one embodiment of the present invention. At step 1810, selection of a financial product's graphical segment is detected. At step 1820, the selected segment may be resized according to cursor control movement. At step 1830, when the resizing is complete, the value associated with the graphical segment is locked. At step 1840, a new set of financial products are recommended. For example, the unconstrained financial products may be reoptimized conditional upon user constraints by determining an optimal allocation of wealth among the remaining financial products. At step 1850, the recommended optimal allocation for the unconstrained financial products is graphically depicted. It is appreciated that numerous other ways of selecting and manipulating a graphical segment are possible. For example, certain keystrokes on a keyboard such as alphanumeric input device 222 may be employed to activate various graphical segments and other keys may be used to increase or decrease the current allocation. [0293] Again, as above, the graphical feedback presented to the user may be provided in real-time as the user manipulates the size of the graphic segment. [0294] [0294]FIG. 19A depicts an exemplary state of a screen 1900 prior to receipt of a constraint. In this example, screen 1900 includes a bar chart 1930 depicting the current allocation of wealth among a set of financial products 1720-1727. FIG. 19B illustrates an exemplary state of screen 1900 after the user has imposed a constraint upon one of the financial products and after the screen 1900 has been updated with the new optimal allocation provided by the portfolio optimization module 340. In this example, the user has constrained the allocation of wealth to financial product 1723 to 18%. According to the embodiment depicted, after the graphical segment is locked (step 1830), a lock 1950 is displayed to remind the user of the constraint. [0295] C. Self Explication of Preferences [0296] By employing the UI components described above, a user may manipulate decision variables and/or the recommended portfolio and simultaneously see the impact on the set of outcomes. This process of self explication of preferences will now briefly be described. According to one embodiment of the present invention, during an initial session with the financial advisory system 100, the user may provide information regarding risk preferences, savings preferences, current age, gender, income, expected income growth, current account balances, current financial product holdings, current savings rate, retirement age goal, retirement income goals, available financial products, intermediate and long-term goals, constraints on fund holdings, liabilities, expected contributions, state and federal tax bracket (marginal and average). The user may provide information for themselves and each profiled person in their household. This information may be saved in one or more files in the financial advisory system 100, preferably on one of the servers to allow ongoing plan monitoring to be performed. In other embodiments of the present invention additional information may be provided by the user, for example, estimates of future social security benefits or anticipated inheritances. [0297] In any event, based on the user's current holdings and the other data input by the user, the financial advisory system 100 may provide various output values. The simulation module 330 may provide a probability distribution of future portfolio values based on a set of recommended financial products and current decisions including, for example, risk preference, savings rate, and desired retirement age. Additionally, in view of the user's financial goals, the current decision variables, and the probability distribution, the simulation module 330 may provide an initial diagnosis which may result in a series of suggested actions to the user regarding a recommended portfolio that maximizes utility conditional upon the current decision variables. [0298] Once the user has provided the financial advisory system with any necessary information, an interactive process of modifying the value of a decision variable, observing the change in one or more output values associated with the current decision variable values, and seeing the recommended financial products that created that particular change may begin. This process of the system providing feedback and the user adjusting decisions may continue until the user has achieved a desired set of decision values and financial products that produce a desired set of results. Advantageously, using this interactive approach, the user is never asked to predict the future with regard to interest rates, inflation, expected portfolio returns, or other difficult to estimate economic variables and parameters. [0299] In the foregoing specification, the invention has been described with reference to specific embodiments thereof. It will, however, be evident that various modifications and changes may be made thereto without departing from the broader spirit and scope of the invention. The specification and drawings are, accordingly, to be regarded in an illustrative rather than a restrictive sense. 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