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Shop. Save. Invest With iPhone App From Putnam


Putnam Investments has created an application for the iPhone that permits shoppers to find comparable prices to goods at other stores, see the price differential-and immediately direct that savings to their 401(k).

The Putnam PriceCheck & Save iPhone app is available to participants in the 401(k) plans it manages. The application is a result of the $15 million that Putnam has invested over the past three years on new Internet and mobile technologies and is part of the company's "vision for transforming and revolutionizing the participant and plan sponsor experience," said Edmund F. Murphy III, head of defined contribution at Putnam.

Here's how it works. Participants can scan the bar code of most sales items on their iPhone, comparison shop across other retailers to seek a lower cost and see the cost savings. The application then shows participants how much that cost savings could mean in potential monthly income in retirement, and gives them the ability to direct that money to their 401(k) account-or even cancel the purchase and direct the entire sum to their 401(k).

Red Laser developed the bar-code application that scans prices, but Putnam created the application that directs contributions entirely in-house. While the initial application is compatible only with iPhones, Putnam is currently working on similar applications for Android and Windows phones.

It's a revolutionary way for investors to contribute to their 401(k) in that it breaks out from traditional paycheck debits. The contributions are deducted on top of the participant's set contribution rate, and are debited from their next available payroll deduction period.

"Putnam's PriceCheck&Save app is a powerful new way to demonstrate the eye-opening tradeoff between spending today and its future financial impact on an individual's retirement-translated through the critically important language of income," Murphy said. "By using leading mobile technology, we are trying to change behavior from impulse spending to impulse saving-all with a few taps on their iPhone."

Murphy continued: "Putnam is hoping to create greater understanding in the marketplace about the critically important relationship between individuals' spending of current income and saving of current income on their future retirement income. Spending and saving do not need to be mutually exclusive activities. We know that the No. 1 way to help participants be better prepared for a dignified retirement is to save more and spend less."

The application complements the Lifetime Income Analysis Tool that Putnam created for its 401(k) plans in January 2010, designed to show investors how much monthly income their savings could generate in retirement. This is precisely what led to the idea for the Putnam Price Check & Save iPhone app, Murphy said.

Currently, Putnam is also in the process of creating income-oriented mutual funds for varying levels of risk tolerance.

"When we first launched the Lifetime Income Analysis Tool, the premise behind this was to change the lens through which a participant views their 401(k) plan," said David Nguyen, director of mobile technology at Putnam. "Most plan sponsor sites show the 401(k) balance. What we are trying to do is to shift that lens so that participants think about income in retirement, and, more specifically, monthly income in retirement."

Putnam will continue to focus on three key themes for its retirement plan participants, Nguyen said, the first being outcome-oriented results. "You are looking at your monthly retirement income-immediately," he said.

"Second, it's interactive. "There are literally a hundred billion calculations going on as you move the sliders for different contribution rates, retirement dates and asset allocations," Nguyen continued.

And third, it's immediately actionable. "Once you have done your modeling, it takes only one click to change your contribution rate, whereas most other plans require paperwork or, if it's online, there are typically six to seven steps that you have to go through," Nguyen said.

The tradeoff analysis is what really sets Putnam's Price Check & Save and Lifetime Income Analysis Tool apart, Murphy added.

Putnam is promoting its new iPhone application to plan sponsors with information on its website and e-mail blasts. If sponsors want Putnam to then communicate with participants, Putnam will send e-mails directly to them.

Putnam does not expect tremendous participation on the iPhone application at first but expects it will gain traction over time.

To date, Putnam is very pleased with the results of its Lifetime Income Analysis Tool. A study of 3,000 participants in the fourth quarter of 2010 showed that 30% have used the tool, and of them, 80%, or 24% of the total, increased their contribution rate from an average of 7.0% to 8.6.%.

"As an industry, we have struggled with getting people to save more," Murphy said. "While industry studies have recently shown an increase in hardship withdrawals, we find that because of the lens that we are providing to participants, we are making it easy, simple, intuitive and prescriptive for them to save more money."