Asset and liability modeling tool

Abstract

A method for modeling financial variables describing a client over a time period. The method may comprise the step of generating a first simulation of the time period. Generating the first simulation may comprise the steps of assigning the client to a first health-related state and advancing the first simulation from a first interval of the time period to a second interval of the time period. A probability that the client will transition from the first health-related state to a second health-related state may be calculated, the client may be randomly assigned to either the first health-related state or the second health-related state considering the probability. According to various embodiments, the methods may also comprise the steps of calculating a client income for the second interval; and calculating a plurality of client expenses for the second interval. Also, the various health-related states may include one or more of a healthy state, a long term care (LTC) state, a disabled state and a dead state.

We claim: 
     
         1 . A method of graphically representing the consequences that different financial choices have on financial outcomes, using a graphical user interface generated by a computing device, the method including the following processor-implemented steps:
 (a) representing multiple goals as graphical icons in a 2D or 3D environment;   (b) graphically representing various choices or decisions that affect the likelihood of one or more user-selected or defined goals being realized or not realized, where a choice or a decision relating to one such goal affects the likelihood of realizing or not realizing one or more other such goals;   (c) enabling a user to input a choice relating to one or more user-selected or defined goals;   (d) using a simulation or calculation tool to calculate the likelihood of each user-selected or defined goal being realized or not realized, given the choice input by the user;   (e) graphically representing in the 2D or 3D environment the likelihood of each user-selected or defined goal being realized or not realized.   
     
     
         2 . The method of  claim 1  including the following processor-implemented steps:
 (a) graphically enabling a user to input a new choice relating to one or more goals; 
 (b) using the simulation or calculation tool to calculate the likelihood of each goal being realized or not realized, given the new choice input by the user; 
 (c) graphically representing in the 2D or 3D environment the likelihood of each goal being realized or not realized. 
 
     
     
         3 . The method of  claim 1  including the following processor-implemented steps:
 (a) enabling a user to select a specific graphical icon and to drag the icon on a chart with time as an x-axis at the date when the goal is to be realised; 
 (b) using a simulation or calculation tool to calculate the likelihood of that goal being realized at the specified time. 
 
     
     
         4 . The method of  claim 1  including the following processor-implemented steps:
 (a) displaying a financial goal as a graphical icon in a menu or array of graphical icons, each representing a different goal; 
 (b) enabling a user to add additional goals, or modify details and/or the time horizon of the selected goal, in order to cause a simulation or calculation engine to regenerate simulations based on the modified goal, and hence enable a dynamic graphical representation of the consequences of different financial choices. 
 
     
     
         5 . The method of  claim 1  including the following processor-implemented steps:
 (a) enabling a user to define or position a goal on a chart with time as an x-axis at the date when the goal is to be realised; 
 (b) using a simulation or calculation tool to calculate the likelihood of that goal being realised; 
 (c) graphically representing the likelihood of that goal being realized; 
 (d) enabling a user to alter a variable, such as the date when the goal is to be realized, or its priority, or alter any other parameter impacting that affects the likelihood of that goal being realised; 
 (e) using the simulation or calculation tool to re-calculate the likelihood of that goal being realized; 
 (f) graphically representing the new likelihood of that goal being realized. 
 
     
     
         6 . The method of  claim 1  including the following processor-implemented steps:
 (a) displaying a financial goal as a graphical icon in a menu or array of graphical icons, each representing a different goal; 
 (b) displaying a menu of different risk-related options that relate to the risk of realizing that goal; 
 (c) using a simulation or calculation tool to calculate the likelihood of that goal being realised, taking into account the risk-related options; 
 (d) graphically representing the likelihood of that goal being realized. 
 
     
     
         7 . The method of  claim 1  including the following processor-implemented steps:
 (a) displaying a financial goal as a graphical icon; 
 (b) using a simulation or calculation tool to calculate the likelihood of that goal being realized; 
 (c) colour-coding the graphical icon depending on that likelihood. 
 
     
     
         8 . The method of  claim 1  including the following processor-implemented steps:
 (a) displaying a financial goal as a graphical icon; 
 (b) using a simulation or calculation tool to calculate the likelihood of that goal being realized; 
 (c) graphically representing the likelihood of that goal being realized by setting the height of the icon above a time axis on a graph. 
 
     
     
         9 . The method of  claim 1  including the following processor-implemented steps:
 (a) displaying a financial goal as a graphical icon; 
 (b) using a simulation or calculation tool to calculate the likelihood of that goal being realized; 
 (c) superimposing each over a graphical representation of the user's net worth, each goal graphically representing the likelihood of it being realized. 
 
     
     
         10 . The method of  claim 1  including the following processor-implemented steps:
 (a) graphically representing factors, risks or conditions which are likely to cause the goal to be missed, such as disability, long term illness, long term care, death, macro-economic factors such as financial shocks. 
 
     
     
         11 . The method of  claim 1  including the following processor-implemented steps:
 enabling the user to model assets and liabilities of a household or an individual or a group of individuals and to graphically represent that model in a GUI shown on a single page or display screen. 
 
     
     
         12 . The method of  claim 1  including the following processor-implemented steps:
 (a) graphically enabling the user to understand the actions needed to increase the chance of realizing a goal by presenting different selectable options that, if selected, lead to the simulation or calculation tool to re-calculate the likelihood of that goal being realized. 
 
     
     
         13 . The method of  claim 1  including the following processor-implemented steps:
 (a) graphically enabling the user to understand why the chance of realizing a goal is low by including a graphical explanation that can be opened by the user. 
 
     
     
         14 . The method of  claim 1  including the following processor-implemented step:
 (a) when the user selects an icon representing a goal, then the step of graphically displaying information about the goal. 
 
     
     
         15 . The method of  claim 1  in which the simulation tool uses a Monte Carlo simulation. 
     
     
         16 . The method of  claim 1  where the goal is selected from the list of the following goals: retirement; a major holiday; buying a house; financing college education; getting married.