Data processing: financial – business practice – management – or co – Automated electrical financial or business practice or... – Finance
Reexamination Certificate
1999-06-04
2001-06-26
Cosimano, Edward R. (Department: 2761)
Data processing: financial, business practice, management, or co
Automated electrical financial or business practice or...
Finance
C705S035000
Reexamination Certificate
active
06253192
ABSTRACT:
BACKGROUND OF THE INVENTION
THIS invention relates to a method of personal financial planning.
Current methods of financial and retirement planning commonly take into account a subject's assets, liabilities, income and expenditure in order to establish the subject's current financial position. An attempt is then made to project the subject's future financial requirements, and if sufficient capital is not available to accommodate these requirements, suggestions are made as to how the necessary capital can be provided.
There are, however, a multiplicity of variables which influence such projections, including variations in the inflation rate, applicable tax rates, and variations in income and expenditure, inter alia, as well as the great number of possible choices which the subject can make in terms of his or her lifestyle and likely future expenses (for example, the purchase of a holiday home or a new vehicle). If an attempt is made to take all of these variables into account, the projection quickly becomes unwieldy, and conventional approaches therefore tend to rely on a simplified, broad-based approach.
It is an object of the invention to provide a method of financial planning which can give a subject a relatively detailed and in-depth assessment of his or her financial future, and which allows the effect of various alternatives to be considered.
SUMMARY OF THE INVENTION
According to the invention there is provided a method of financial planning, the method comprising:
creating a financial model from data relating to income, expenses, assets and liabilities of a subject;
creating a planning rules database from data relating to a preferred financial strategy of the subject;
projecting an unplanned future financial situation of the subject by applying predicted future circumstances to the data of the financial model;
applying a plurality of planning rules derived from the planning rules database to data representing the subject's unplanned future financial situation, thereby to calculate a planned future financial situation; and
generating displays of data representing the planned and unplanned future financial situations for comparison.
For purposes of projecting the subject's future financial situation, the financial model may further be compiled from data relating to applicable tax rates, estate duty rates, annual inflation rates, rates of appreciation or depreciation/increase or decrease of assets, liabilities, income and expenditure, and predicted future values thereof.
The financial model may additionally include data relating to costs associated with the management of assets and liabilities, such as commissions, finance charges, administration fees, transfer costs and the like.
The financial model may further include the subject's actual or anticipated retirement date, and estimated date of death.
In addition, the financial model may include similar information for the subject's spouse, family trusts or any other person or entity who should be considered when planning the subject's finances.
The planning rules database may be compiled by recording data corresponding to the subject's preferences relating to the investment of cash surpluses and the funding of cash deficits.
The planning rules database may further include data relating to predicted future income and expenses of the subject.
Preferably, the data relates to priorities set by the subject for allocating cash surpluses to liquidate debts or fund investments, and liquidating assets or increasing liabilities to fund cash deficits.
The planning rules derived from the planning rules database are preferably applied automatically to the data representing the client's unplanned future financial situation by an allocation and funding routine, thereby to generate a suggested future financial situation usable in calculating the subject's planned future financial situation.
The method may include, on an iterative basis, selectively altering data representing the subject's planned future financial situation and recalculating the planned future financial situation by applying the planning rules to the altered data.
The method is preferably carried out using a computer which generates the financial model and the planning rules database and applies the planning rules automatically to the relevant data after entry of the data.
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Moen: “The priority pyramid”, Jan.-Feb. 1997 Saakatchenwan Business, v18, n1, p. 12.
Corlett John Broughton
Corlett Peter Garth
MacDougall Basil Hugh
Maree Johann Wilhelm
Cosimano Edward R.
Jacobson Price Holman & Stern PLLC
The Quantam Consultancy Group (Proprietary) Limited
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