While many robo-advisors aim to work with investors who have taxable investment accounts or retirement accounts for the self-employed, Blooom focuses its efforts on an entirely different segment of the retirement economy — work-sponsored retirement plans and those who work for traditional employers.
Blooom manages defined contribution plans such as 401(k)s, 403(b)s, 457s, 401(a)s, and thrift savings plans to provide much-needed account management to a population who has largely gone without retirement planning services until now.
By overseeing your 401(k), the company says they can help you earn greater returns, find the right asset allocation, and reduce or eliminate fees you may not even know you’re paying.
In this analysis, I’ll go over the company’s strengths, costs involved in letting the company manage your 401(k), and the advantages of signing up.
If you have a work-sponsored retirement plan but feel you could benefit from individualized help and advice, keep reading to learn more.
My Blooom Review
Before we dive into reviewing the service you’ll get with Blooom, here are a few key considerations about working with them:
- Blooom focuses on the management of defined contribution plans such as 401(k)s, 403(b)s, 457s, 401(a)s, and thrift savings plans.
- There’s no account minimum to get started.
- Plans cost a flat fee of $10 per month.
- Your employer doesn’t need to partner with Blooom for you to use the service.
- Anyone can register for a free 401(k) analysis.
How Blooom Helps with Your 401(k)
You may be wondering why you would need help with a 401(k) or defined contribution plan that is already administered by your employer.
After all, it’s easy to assume your workplace retirement plan is already optimized on your behalf. Interestingly, Blooom offers a wide range of services that can help you garner a greater return in your retirement account.
For example, they promise to help you uncover the biggest 401(k) mistakes you could be making — missteps such as not receiving your 401(k) match, having the wrong stock to bond ratio, not having all your 401(k) funds invested, forgetting to rebalance, and not knowing about hidden fees.
Since most financial advisors focus on taxable investment accounts, Blooom steps in to offer help to customers who have largely been ignored until now.
One big benefit of using Blooom is the fact that your employer doesn’t need to get involved for you to use the service.
Once you open an account and begin paying the flat $10 monthly fee, Blooom can begin overseeing your 401(k) or other workplace retirement account on your behalf. Also, note that there are no account minimums to get started.
If you are thinking of using Bloom or want to get an idea of how they operate, you can start by creating an account and registering for a free 401(k) analysis.
With your retirement account linked to Blooom, the company can assess your existing allocation to see if it fits with your retirement goals and timeline.
Benefits of Blooom
Through Blooom’s free analysis, you will receive recommended changes to your retirement account that you can initiate on your own. However, you can also sign up for a monthly plan and let Blooom begin making changes for you.
With a paid account from Blooom, the company goes the extra mile to rebalance your account at least every 90 days.
As the core of its work, the company claims goes above and beyond to make sure your investments are properly allocated according to your goals. Other services Blooom offers with a paid membership include:
- Reducing hidden fees: Blooom claims to have helped its clients save over $600 million in hidden fees until now. They do this by exposing hidden investment management fees, eliminating managed account services, and choosing the lowest cost investments that fit with your desired asset allocation.
- Suspicious activity alerts: Once you open an account with Blooom, the company begins monitoring your account for suspicious activity or large withdrawals. If something wonky is going on with your investments, they will let you know about it right away.
- Market guidance: Blooom wants to be the “Tonto” in your retirement journey — as in, they want to supply you with advice and guidance while you supply the power (money). As a result, they offer market guidance and tools that can help you learn more about your investments.
- Access to financial advisors: Even though Bloom uses technology to rebalance and manage your retirement accounts, you will have access to real, live financial advisors that can help you strategize for retirement. With a paid account, you can speak with a financial advisor almost any time via live chat or email.
When it comes to cost, we already mentioned how Blooom charges a flat $10 monthly fee no matter what. However, you can save 10% off your fees if you pay for an entire year of 401(k) management upfront.
Also note that you can get access to a handful of recommendations for free, including advice on how to reduce or eliminate hidden fees and how to find the right stock and bond mix to meet your unique goals.
Where Blooom Falls Flat
The biggest problem with Blooom is the fact that it is only geared to individuals who invest in workplace retirement accounts. If you invest your money in taxable investment accounts or self-employed retirement accounts, you’ll have to work with a different robo-advisor or financial advisor.
Another potential downside is the notable lack of questions Blooom asks when you sign up for a free 401(k) analysis and open an account. Other than your birthdate and target retirement age, Blooom doesn’t dive very deep.
If you have a wide range of financial goals to achieve such as paying for college tuition, a child’s wedding, or traveling the world, Blooom isn’t set up to think outside of the box to help you come up with a plan.
The company only focuses on helping you use your 401(k) to hit your retirement number. That’s perfectly okay, but investors with broader goals may need more comprehensive advice.
The final downside that comes with using Bloom is the fact that the $10 monthly fee can be high if your retirement account balance is relatively small.
While $10 per month only represents 0.12% of a $100,000 portfolio, it adds up to 1.2% of a $10,000 retirement account balance.
Should You Use Blooom to Manage Your 401(k)?
While Blooom offers free advice you can implement on your own, it could also be worth it to pay the $10 per month to have Blooom oversee your retirement account and make important changes on your behalf.
The reality is, too many people blindly trust their workplace 401(k) without really knowing what they’re invested in or how the fees they’re paying can impact their returns over the long haul.
Further, many people who invest in a 401(k) never take the time to rebalance their accounts or make sure their portfolio of stocks and bonds still aligns with their goals.
If you focus most of your retirement savings in a defined contribution plan through your employer, it never hurts to sign up for a free analysis from Blooom to see how your plan is doing.
After all, you may find that you have hidden fees you don’t know about or an asset allocation that is outdated or out of whack for your goals.
Since finding out is free, you have nothing to lose.
On the flipside, it’s possible you may need more comprehensive financial advice if you have taxable investment accounts, self-employment retirement accounts, or complex goals that require tailored advice.