1. An interactive virtual agent (avatar) system, comprising: a plurality of databases configured to store at least one of client specific information and non-client specific information; internal resources configured to provide access to information sources; a character interface configured to receive information from a user, and respond to the user with information based on the received information; a processing engine coupled with the client knowledge database, the basic knowledge database, the internal resources, and the character interface, the processing engine configured to: receive input from the character interface; parse the input using a knowledge model to determine the content of the input; determine relations that apply to the parsed content; perform at least one of deduction, generalization, context expansion and synonym finding on the content using the determined relations; using a knowledge model, and at least one of the plurality of databases, the internal resources, and external resources, determine an appropriate response to the input; and provide the response to the character input to be output to the user.