WO2002001316A2 - Network system for handling request for proposal relating to the selection of an investment advisor by an institutional investor - Google Patents

Abstract

A system for managing communications between an investment advisor and an institutional investor is realized. The system manages a control unit for receiving a request generated by a prospective institutional investor (20), relating to a desire for investment advisory services, for assisting an institutional investor (20) in formulating a request for proposal to be distributed to advisors (22) throughout the system, for distributing the request for proposal to the advisors and for receiving bids from advisors who receive the request for proposal. The system also includes a central computer server (10) with memory (12) and database (14). Database (14) is a database such as an SQL database which is linked via a global computer network (18) to individual institutional investors (20) who desire to place requests for proposal and to investment advisors and fund managers (22) who desire to respond to the requests for proposal.

Description

NETWORK SYSTEM FOR HANDLING

REQUESTS FOR PROPOSAL RELATING TO THE SELECTION OF AN

INVESTMENT ADVISOR BY AN INSTITUTIONAL INVESTOR

Field of the Invention

The present invention is directed to online computer systems. In particular, the

present invention is specifically directed to online computer systems which can be used to

post requests for proposal relating to the selection of an investment advisor and particularly

an investment advisor by an institutional investor such as a plan sponsor.

Background of the Invention

The Internet or World Wide Web is one of the most critical technological

developments of the 1990's. The Internet has provided vast economic opportunities for

numerous businesses and industries to vastly expand the number and quality of their

services. One of the earliest and fastest emerging areas of Internet activity has been in

providing rapid, up-to-the-minute business information. To date, a number of patents have

issued on Internet related systems which cover a wide array of business information and

electronic commerce (e-commerce) applications.

Heretofore, the Internet has been applied to the on-line auctioning of experts. U.S.

Pat. No. 5,862,223 to Walker discloses an expert matching method and apparatus. This

system matches communications between an expert having particular qualifications and an

end user seeking a solution to an expert request. In a preferred embodiment, the

apparatus includes a controller having a database for storing expert qualifications.

In one embodiment, the controller receives an expert request. A search program

identifies experts qualified to respond to the expert request. The expert request is then transmitted to the expert which results in an expert answer transmitted to and received by

the central controller. After authentication of the expert answer, using a wide range of

security levels from passwords to cryptography, the answer is forwarded to the end user.

U.S. Pat. No. 5,835,896 discloses a system and method for conducting a multi-

person interactive ad auction in a variety of formats without using a human auctioneer to

conduct the auction. This system is preferably implemented in software and allows a group

of bidders to interactively place bids over computer and communications network. Those

bids are recorded by the system and bidders are updated with current auction status

information. When appropriate, the system closes the auction from further bidding and

notifies the winning bidders and losers as to the auction outcome.

Electronic auctions held over the Internet using electronic mail (e-mail) have also

gained wide popularity. A recent innovation applied to e-mail auctions is the use of the

Internet to post descriptions of the merchandise and to show the current high bids.

Security brokerage firms for years have used automated transaction systems for matching

buy and sell orders for securities. For example, the New York Stock Exchange's DOTS

(Direct Order Transmission System) and NASDAQ SOES (Small Order Execution System)

systems offer complete electronic matching of buyers and sellers.

A number of U.S. patents have issued related to various forms of electronic

commerce. These patents fall into three broad categories: (1) patents relating to on-line

networks; (2) patents relating to electronic commerce over on-line networks; and (3)

patents relating to various forms of securities trading via electronic means. U.S. Pat. No.

5,406,475 entitled "Data Processing Network Having a Plurality of Independent Subscribers", U.S. Pat. No. 5,235,680 entitled "Apparatus and Method for Communicating

Textural and Image Information between a Host Computer and a Remote Display

Terminal", and U.S. Pat. No. 5,310,997 entitled "Automated Order and Delivery System"

are representative of the prior art.

A second group of patents relating to electronic commerce, U.S. Pat. No. 5,285,383

entitled "Method for Carrying Out Transactions Using Electronic Title" and U.S. Pat. No.

5,297,031 entitled "Method and Apparatus for Order Management and Market Brokers,"

describe various means for conducting transactions over electronic communications

networks. U.S. Pat. No.4,789,928 discloses a means for soliciting bids over an electronic

network from bidders who are remote to the site of a live auction.

The third group of patents relates to electronic commerce in the field of securities

trading. U.S. Pat. No. 4,412,287 entitled "Automatic Stock Exchange", for example,

discloses means for prospective buyers to post offers to buy a given security at a specific

price and for prospective sellers to post offers to sell a given security at a specific price.

Moreover, the Internet has seen the rise of a number of tools directed to financial

services and planning. Such tools include tools which facilitate a client's ability to track a

portfolio of investments and tools which calculate a client's potential retirement income

based upon a number of investment options. There are also a number of Internet related

products directed to insurance pricing on the market.

The following are examples of U.S. patents directed to financial planning and

financial planning tools and systems. U.S. Patent No. 6,021 ,397, for example, discloses a

financial advisory system. According to one aspect of the invention, return scenarios for optimized portfolio allocations are simulated interactively to facilitate financial product

selection. The return scenarios for each asset class from a plurality of asset classes are

then generated based upon estimated future scenarios of one or more economic factors. A

mapping from each financial product of an available set of financial products onto one or

more asset classes is then created by determining the exposures of the available set of

financial products. In this way, the expected returns and correlations of a plurality of

financial products are generated and used to produce optimized portfolios of financial

products. Return scenarios are then simulated for one or more portfolios including

combinations of financial products from the available set of financial products based upon

the mapping.

U.S. Patent No. 6,012,044 is directed to a user interface for a financial advisory

system. According to one aspect of the invention, a user may interactively explore how

changes in one or more input decisions such as risk tolerance, savings level, and

retirement age affect one or more output values such as a probability of achieving a

financial goal or an indication of short-term risk. These are then visually displayed. The

visual includes input mechanisms, such as slide bars, for receiving the input decisions. The

visual also includes a set of output values that are based upon the input decisions and a

recommended set of financial products. After updated values for the input decisions are

received via the input mechanisms, a new recommended set of financial products and a

new set of output values may be determined based upon the updated values. The second

visual indication may then be updated to reflect the new set of output values. According to

another aspect of the invention, a graphical input mechanism for receiving a desired level of investment risk may be calibrated. A set of available financial products, such as a set of

mutual funds, and a predefined volatility, such as the volatility of the market portfolio are

received. The settings associated with the graphical input mechanism are constrained

based upon the set of available financial products. Additionally, the calibration of the units

of the graphical input mechanism may be expressed as a relationship between the volatility

associated with a setting of the graphical input mechanism and the predefined volatility.

U.S. Patent No. 5,878,405 discloses a pension-based liquidity management data

processing system that supports participant decision making and flexibility with respect to

loans, contribution rates, and retirement spending. The system utilizes a simple index to

communicate the adequacy of current or planned states in the participants separate

pension account. Adequacy is determined relative to actuarial determined estimates

which may be adjusted by the participant. The system is provided with safeguard yet

removes artificial barriers to pension-based liquidity, loans and retiree spending, allowing

each participant the maximum flexibility in optimizing his personal retirement and financial

plan. The system interfaces with unsecured credit cards as a disbursement and payment

mechanism, thereby preventing pension assets from directly securing credit card charges.

Central processing allows multiple credit cards to compete for any participant account. The

system reduces average unsecured interest rate costs without liquidating long term

retirement investments by scrutinizing the promissory note held in the participants

separate. To the extent permissible under the applicable laws, the participant may

electronically elect to classify a disbursement as a periodic rather than a loan consistent with periodic spending of retirement assets to support retirement living. The invention

substantially increases the liquidity of pension accounts while providing the participant with

the knowledge to protect retirement security. Through improved liquidity and related

planning tools, the system enables both employers through matching contributions and

employees through elective contributions to increase net contribution rates, thereby

enhancing retirement security.

Finally, U.S. Patent No. 6,041 ,313 is directed to a computer-based 401 (k) plan

offers unlimited access to virtually all SEC-regulated investment options, with no

restrictions on the number of mutual fund families or their investments that a company can

choose for its plan. The system and method provide an end-user computer-based system

with individualized accountability as opposed to prior art pooled systems.

There is a long felt need for a system which facilitates the joinder of institutional

investors, such as plan sponsors, and investment advisors, and specifically pursuant to an

RFP process. To date, there has not been a system which effectively matches investment

advisors with prospective institutional investors and one in which advisors may quickly and

efficiently respond to a request for proposal from prospective investment clients. Such a

system would be desirable because there is a need in whereby institutional investors such

as institutional investors, and investment advisors can be quickly and efficiently matched.

It is therefore an object of the present invention to provide a system, accessible via

a computer network, for providing means to access an investment advisor. It is another object of the present invention to provide a networked computer system

whereby information RFPs (Requests For Proposal) and associated responses can be

_* instantaneously accessed regarding the obtainment of an investment advisor by an

institutional investor.

It is a further object of the present invention to provide a system in which users

subscribers access the system via the Internet or World Wide Web and with a user

interface which assists them in formulating bids and RFPs relating to the retention of an

investment advisor.

It is still a further object of the present invention to provide a system by which

investment advisors may respond to requests for proposals from institutional investors.

These and other objects and features of the present invention will become apparent from

the detailed description and from the following summary, detailed description and claims.

Summary of the Invention

In accordance with the present invention, an apparatus for managing

communications between an investment advisor and institutional investor comprising: a

control unit for establish a request generated by a institutional investor, relating to a desire

for investment and advisory services; means for assisting said institutional investor in

formulating a request for proposal to be distributed to investment advisors throughout the

system; means for distributing the request for proposal to said investment advisors; and

means for receiving bids from investment advisors who receive the request for proposal. In a further embodiment, the present invention is an apparatus for managing

communications between a prospective institutional investor seeking the services of a

investment advisor, comprising: a control unit for receiving a request from a prospective

institutional investor relating to desired investment advisory services; means for assisting

the institutional investor in formulating a request for proposal to be formatted and

distributed throughout a network; means for distributing the request for proposal throughout

a network to a plurality of investment advisors; means for investment advisors to respond

to the request for proposal with a bid; and means for the institutional investor to request

additional information from the advisor.

In a further embodiment, the present invention is a method for electronically

managing communications between an investment advisor having particular qualifications

and a institutional investor seeking an investment advisor, comprising the steps of:

providing a control unit having a database for storing therein a plurality of each e-mail

address corresponding to an investment advisor; providing an interface to a institutional

investor to the system to formulate a request for proposal in conjunction with a request for

investment advisory services; sending out the request for proposal to a plurality of

investment advisors who may respond with bids.

Brief Description of the Figures

Figure 1 is a block diagram of the request for proposal generation system of the

present invention. Figure 2 is still a distributed embodiment of the request for proposal generation

system of the present invention.

Figures 3 - 11 illustrate a series of user to be used by institutional investors and

investment advisors in conjunction with a request for proposal generation system in

accordance with the present invention.

Figures 12-15 comprise operational flow diagrams of the present invention.

Detailed Description of the Preferred Embodiment

The present invention is directed to a system for placing requests for proposal for

investment advisors over communication networks using, for example, personal

computers. In a most preferred embodiment, the present invention is directed to a system

for placing requests for proposal and bids relating to investment advisors, and the provision

of investment advisory services.

Over the past fifteen (15) years, personal computers have become relatively

powerful and inexpensive and have gained widespread use in a significant number of

homes and businesses. With a modem, personal computers can communicate with other

computers through communication networks and access many resources on the so-called

"Information Super Highway." Companies such as America Online, CompuServe, and

Prodigy, which traditionally provided so-called "content" over proprietary networks, have

begun to provide access by personal computer users to an expansive international network

of computer networks known as the Internet. As is well known by those skilled in the art, the World Wide Web is a graphical sub¬

network of the Internet. With common "Web Browser" software such as Mosaic, Netscape

Navigator, or Microsoft Explorer, end users may easily access Internet information and

services on the World Wide Web. A web browser handles the functions of locating and

targeting information on the Internet and displaying the information provided by the Web

Server. The World Wide Web utilizes technology called "Hyper-Text" to organize, search

and present information on the Internet. Using a web browser, the end user can select a

word ("Hyper-Text word") from a view document and be linked to another document

featuring information related to the word.

The present invention is broadly directed to a computer network for distributing

information regarding requests for proposal from prospective institutional investors, such as

a plan sponsor, and responses from investment advisors in particular. The present

invention is designed, in one embodiment, to be utilized on the World Wide Web or

Internet, although the present invention is equally applicable to other network

environments. In addition, the investment is directed to both wireless and non-wireless

embodiments and environments.

Referring now to Figure 1 , the present invention is directed to a system for placing

requests for proposal by institutional investor to be responded to by investment advisors

who desire to participate in the system. These investment advisors can then respond to

requests for proposal from individual institutional investor inquiries and enter into binding

contractual relationships. The present invention is directed to a system by which a institutional investor can contact and request the services of advisors based upon price,

level of expertise and other desired professional and experience criteria.

As shown in Figure 1 , the present invention, in a simplest embodiment, comprises a

network system including a central computer server 10 with memory 12 and database 14.

The central computer server 10 may run on an operating system such as the Windows NT

based operating system or, alternatively, a more powerful system such as the Solaris

operating system by Sun Microsystems. It is to be noted that the nature of the operating

system for use with the present invention is not critical to the operation of the present

invention.

Database 14 is preferably a database such as SQL database or, alternatively, the

Oracle 7 or 8 database system, manufactured by Oracle Corporation. The system is linked

via a global computer network 18 to individual institutional investors 20 who desire to place

requests for proposal and to investment advisors and fund managers 22 who desire to

respond to the requests for proposal. For the purposes of this application, the term

investment advisor refers to and includes fund managers.

While the above embodiment describes a single computer acting as a central

processor, those skilled in the art will realize that the functionality can be distributed over a

plurality of computers. Thus, in another embodiment, central computer 10 may be

configured as a distributed architecture, as shown in Figure 2, wherein the databases and

processors are housed in separate units or locations. As shown in Figure 2, in a distributed computer system, the central computer

system 10 performs primary processing functions and contains at a minimum RAM 34 ,

ROM 36 and a general processor 38. Each of these controllers is attached to WAN hub 40

which serves as the primary communication link with the other devices. WAN hub 40 may

have minimal processing capability itself, serving primarily as a communications router.

Although only three controllers are shown in the embodiment, those skilled in the art will

appreciate that an almost unlimited number of controllers may be supported. In such a

configuration, each controller is in communication with its constituent parts, but the

processor and/or data storage functions are performed by stand alone units.

Referring now to Figures 3-11 , in a preferred embodiment, the central processor 10

hosts a web site comprising a plurality of user screens and back-end database applications

which are accessed via a web browser residing on the institutional investor 20 and the

investment advisor 22. The Figures also illustrate a so-called front end of the system and

are shown in the context of a commercial website under the commercial name and URL

(universal resource locator) INVESTORFORCE.COM.

Referring to Figures 3-11 , the front end of the system is shown in detail. As shown

in Figure 3, a user screen 23 which is accessible via the web browser of the institutional

investor comprises an introductory text 24 which will introduce the service to the

institutional investor. This page will preferably include FAQ (Frequently Asked Questions)

26 and a bulletin board 28. Figure 4 illustrates a terms of service 30 page to which the

institutional investor must agree in order to access the service. Figure 5 comprises the input screen where the institutional investor inputs a user

name and password 42. If the institutional investor is a new institutional investor and has

no user name and password, he or she is then taken to the screen shown in Figure 6

which comprises a institutional investor intake form or screen 44. The intake screen 44

comprises a plurality of user data fields 46 in which the client inputs individual information.

After inputting the requisite client information, as shown in Figure 7, the institutional

investor is then provided with his user name and password 50 and may access further

features of the system. The client is then introduced to a series of screens for formulating

an RFP which will be discussed below. These screens, which begin at Figure 8 may

include links 53 to basic financial information.

Referring now to Figure 9, an investment advisor front 25 end is shown and

described. Figure 9 is analogous to Figure 3 and provides a basic text introduction to the

service. An investment advisor (FAQ) frequently asked question 51 and bulletin board 52

is also provided. The investment advisor will also be provided with a terms of service page

54.

As shown in Figure 10, if the advisor is registered, the advisor is asked to place his

name and password into the system 56. If the advisor has no password, he is taken to a

screen illustrated at Figure 11 , where he is provided with an intake or registration form 58.

The intake form will request such information as the advisor's level of education 60,

experience 62 and areas of special financial expertise 63. The intake form will preferably

include a field 64 at the bottom of the screen whereby the advisor can place narrative information about himself and his practice.

Referring to Figure 12-15, a series of flow chart diagrams now illustrate the

operation of present system whereby a institutional investors conduct searches and post

RFP's for investment advisors. The invention thus provides institutional investors with

online access to an impartial database of information concerning managers and various

tools that enable them to do research and communicate with managers.

As noted above, prior to initiating a search, the institutional investor must agree to

the user agreement that is posted on the website as shown in Figure 4. The specific

investment selection sequence and manager RFP system is now described. As shown in

Figures 12-15, the institutional investor begins the search sequence, conducting a search

of advisors and saving the result. The institutional investor then selects from a group of

qualifying investment advisors (semi-finalists). If the institutional investor wants to prepare

an RFP, he or she downloads a RFP template and fills out an RFP. He or she then moves

in sequence to a point on the principal website. After engaging a "my search page," the

institutional investor selects a specific search and uploads a completed RFP. In the event

that he has completed no RFP, he then goes to the notify button and an e-mail is sent to

selected fund managers. The institutional investor clicks the notify button and an e-mail is

sent to selected manager.

The investment advisor logs into the site and goes to a "my candidate's searches"

page. The advisor then selects search from the list. The advisor alternatively can follow

an e-mail link. The advisor is then given or provided the terms and conditions of the service if he accepts, the investment advisor downloads the RFP, and sends the

institutional investor notification. If the advisor declines, the institutional investor receives

notification and the advisor receives confirmation of the denial.

If the parties agree on the RFP, the institutional investor logs back into the site.

The institutional investor goes to "my searches page.," The institutional investor selects a

specific search and a specific RFP. The institutional investor then downloads the

completed RFP. The institutional investor then logs into the site. From the "Manager

Research" page, the institutional investor goes to "my searches" page. The institutional

investor then selects the specific search and further selects the qualifying advisors.

The institutional investor clicks the notify button which is then sent to the selected

advisor. The institutional investor then logs back into the site from the "Manager Research"

section, and then goes to the searches page. The institutional investor selects his specific

search, selects the specific RFP and the institutional investor indicates his final fund

manager selection.

The present system incorporates an administrative back end which controls the

system and which can be used to make administrative changes to the system. An

administrative server is preferably also provided. The administrative server provides

standard administrative features such as traffic monitoring, providing a log of those who

access the site, the identity of institutional investors and advisors who register with the site,

and database parameters. The present invention is described with reference to the above-discussed preferred

embodiments. It is to be recognized that other embodiments fulfill the spirit and scope of

the present invention and that the true nature and scope of the present invention is to be

determined with reference to the claims attached hereto.

Claims

Claims

1. An apparatus for managing communications between an investment advisor

and institutional investor comprising:

a control unit for establish a request generated by an institutional investor,

relating to a desire for investment and advisory services;

means for assisting the institutional investor in formulating a request for

proposal to be distributed to investment advisors throughout the system;

means for distributing the request for proposal to said investment advisors;

and

means for receiving bids from investment advisors who receive the request

for proposal.

2. An apparatus for managing communications between a prospective

institutional investor seeking the services of an investment advisor, comprising:

a control unit for receiving a request from a prospective institutional investor

relating to desired investment advisory services;

means for assisting the institutional investor in formulating a request for

proposal to be formatted and distributed throughout a network; means for distributing the request for proposal throughout a network to a

plurality of investment advisors;

means for investment advisors to respond to the request for proposal with a

bid; and

means for the prospective client to request additional information from the

advisor.

3. A method for electronically managing communications between an

investment advisor having particular qualifications and a institutional investor seeking an

investment advisor, comprising the steps of:

providing a control unit having a database for storing therein a plurality of e-

mail address, each corresponding to an investment advisor;

providing an interface to a institutional investor to the system to formulate a

request for proposal in conjunction with a request for investment advisory services;

sending out the request for proposal to a plurality of investment advisors who

may respond with bids.