Solution to nation's saving problem? There's an app for that

If a paralyzed Congress isn't going to fix America's retirement savings problem, then a Silicon Valley digital investment expert will. That's the message from Bill Harris, chief executive of online investment advisory firm Personal Capital Corp., a registered investment adviser that combines an automated model-portfolio platform with guidance from online advisers and certified financial planners. “The looming retirement crisis is huge,” Mr. Harris said in New York while announcing the results of a study that tracked the savings behavior of investors using a Personal Capital mobile application. “There's a lot of consumer education that has to happen, but some of it has to happen from Washington, which is in gridlock.” The study found that after downloading the Personal Capital mobile app that lets them track their spending habits, users spent 15.7% less and decreased spending by 19.2% on discretionary items such as dining out. In addition, users checked their finances an additional 10 times a month. Mr. Harris is ramping up his firm's involvement in Washington. To that end, he said, he has spoken with officials at the U.S. Treasury and Consumer Financial Protection Bureau about more effective ways to promote financial literacy as well as a suitability standard for advisers. In addition, he noted, Personal Capital has just hired Capitol Hill veteran Kate Cichy, former communications director for the Senate Banking Committee, to assist in its public policy efforts. “There are big public policy implications for what Personal Capital is trying to do” to encourage greater 401(k) savings, Mr. Harris said, noting that if a family earning $50,000 annually tracks its expenses and saves 15%, the end result will be $150,000 more over 20 years toward retirement. Shlomo Benartzi, a professor at UCLA's Anderson School of Management and the chief behavioral economist at the Allianz Global Investors Center for Behavioral Finance, who analyzed the study results, said that increasing the U.S. savings rate is the “obvious answer” to the retirement crisis -- and he believes that digital technology combined with behavioral insights will help improve savings behavior. “We know that people check their spending on their mobile apps before they buy something,” Mr. Benartzi said. “If they're checking their phones 150 times a day, there's a real opportunity to change behaviors.”