Blooom provides online access to financial experts to help you plan and manage an employer-sponsored retirement savings vehicle, such as your 401(k), 403(b), 401(a), 457 accounts or Thrift Savings Plan. It can also manage your individual retirement account (IRA), provided it is with Vanguard or Fidelity. As a robo-advisor, Blooom is entirely online meaning that there are no physical offices to travel to. All communications take place online, but you can contact the company through email, online or phone.
The term robo-advisor refers to online financial advisors who help manage your financial accounts. In the case of Blooom, you give it access to your 401(k) account to make changes as necessary. Blooom is an SEC-registered investment advisory firm. Plus, it is a fiduciary, meaning it must act in your best interests and not its own.
Blooom promises to not only manage your 401(k) but to provide you with financial confidence and the tools you need to get there. The company says its role is to help you and your assets. It doesn’t make more money the more you invest, and it’ll help regardless of your account size.
Bloom is best for people who want to ensure their 401(k) is in good professional hands, without too much hassle on their end.
Blooom runs on a discretionary management agreement which means Blooom advisors can make changes to your account without your approval every time. When you enter into business with Blooom, you agree to allow it to make those changes and trades on your behalf. So if you want more control and approval over changes made to your 401(k), you might want to look for another management company.
Pricing: How Much Does Blooom Cost?
|Option Name||Management Fee||Minimum Balance||Features|
|Blooom 401(k) Monitoring||$120 annual fee||$0||Price remains the same for all account sizes.|
Blooom 401(k) Monitoring
Financial advisors can become a costly expense. Robo-advisors, especially Blooom, provide a more affordable option. No matter the size of your 401(k), whether you have $20 or $1 million, Blooom will take on your account and you pay $120 per year, in advance, under terms of what the company calls its Standard plan. There are also plans that cost $45 per year (the Essentials plan) and $250 per year (the Unlimited plan).
This allows you to stop worrying and fixating on how to optimize your 401(k), leaving it up to the professionals. When it comes to managing your account, Blooom will regularly rebalance it when something changes. Blooom will also provide financial education so you can learn more about the markets, investing and your own accounts. As a Blooom customer, you will have access to financial advisors for market guidance and answers to your financial questions (even if they’re not 401(k) related).
Blooom will also help you avoid thousands of dollars in fees. For one, Blooom itself won’t charge you anything other than the $10 per month. Blooom also knows that each 401(k) account is bound to come with various and different fees. When managing your account, it will make sure it’s making your account as cost effective as possible.
It also provides a hidden fees calculator on its website. This calculator allows you to check out your 401(k) investments, calculating which are the most costly. That way, you can see for yourself which investments are costing you the most in fees and hurting your savings.
Blooom: Investing Strategy
Unlike some other robo-advisors, Blooom offers only employer-sponsored retirement account management at this time. This means they can manage your 401(k), 403(b), 401(a) and 457 accounts. While some people might want an advisor who does it all, this specificity allows Blooom advisors to put all their attention, focus and expertise toward your 401(k).
While you’re placing your 401(k) in the hands of Blooom’s professionals, you also maintain some control over it. If you want to make any changes to your account, all you have to do is contact Blooom or go online to make the change. The changes will be made at the next rebalance date.
You should also remember that Blooom runs on a “discretionary management agreement.” This means that without your input, Blooom professionals will make changes to your accounts. They won’t need your explicit approval on every change they make. You’re trusting in them to make the most beneficial changes to your account. After every change they make, you will receive an email about the change.
In terms of strategy, Blooom doesn’t believe in timing the market or being “tactical” about management. Instead, it focuses on constructing well-balanced portfolios. It does this by getting the most appropriate stock-to-bond ratio, exposing you to every appropriate asset class and selecting the funds with the lowest cost in each asset class. Then when the market acts up causing changes in accounts, it adjusts accordingly.
To determine stock-and-bond ratios, Blooom calculates a few factors. It looks at your current age against your ideal retirement age and uses an “exponential glide path” to get you the best bond exposure.
For those who are far off from retiring, Blooom will mostly consider stocks for your 401(k). Since you won’t need the money immediately, you will be able to adjust with the stock market fluctuations, without taking a huge hit to your savings. Blooom also encourages younger clients to invest more aggressively. That way, your savings can grow faster and you can have more money when it’s time to withdraw.
For older clients, those who are very near to retirement or who are already enjoying it, Blooom recommends investing more in bonds. This will provide some more security than having only stocks, since stocks can disappoint. Unlike younger investors who can be more aggressive, older clients will want to slow down, lest their stocks take a turn for the worse.
- Family accounts
Blooom promises its clients the best 401(k) management, from investment diversity to financial education to the best security. Certainly one key feature is that Blooom will only charge you $10 a month for all its services and resources. There are no hidden fees from Blooom. Plus, it can help you identify and avoid the hidden fees that come with 401(k) investments.
Blooom makes it easier for you to understand and manage your 401(k). A common misconception is that when you get a 401(k) from your employer, it manages the account for you. In fact, it’s left up to you to do all that. That’s where Blooom comes in, not only managing the account for you, but choosing the best investments for you and your account.
Blooom regularly monitors your accounts to check for any changes. If something is negatively affecting your savings, it will make the necessary adjustments, making sure your accounts are always balanced. Blooom advisors will also adjust as you move closer and closer to retirement, getting you the best stock-to-bond ratio. The better the ratio, the more protection your savings get.
Speaking of protection, Blooom ensures your money, accounts and information will always be safe. It provides 256-bit encryption on its website, bank-level security for all your personal information, encrypted servers for secure online transactions, 24/7 hacker and virus scans and third-party verification to make sure that you, and only you, are making changes to your accounts.
Not only will Blooom manage and protect your accounts, but it can provide you with education and guidance on the market and other financial aspects. For one, it can guide you through the ins and outs of the market and which investments may or may not be the best for you. That way, you can make more educated decisions regarding your investments, while still having Blooom do the work for you. Even when you’re not sure what to do, especially in times like a market downturn, Blooom advisors will be there to make sure your accounts are doing well.
Plus, once you’re a Blooom client, you’ll have access to a team of financial advisors. When you log in to your Blooom account online, you can ask financial questions. Your questions don’t even have to be limited to 401(k) accounts or even retirement.
Who Blooom Is For
Because Blooom works with employer-sponsored retirement accounts, which many of us have, blooom is almost universally handy. Saving responsibly for retirement cannot be stressed enough. It’s never too early to start saving for retirement, even if you’re 22 years old and new to full-time employment. You won’t want to be short on money when you want to retire since you won’t have an income to rely on.
However, saving for retirement can be a daunting, overwhelming and confusing task at any age, let alone saving enough and saving efficiently. With many investment options out there and the fluctuation of the market, you may not know where to begin. Even if you do have a diverse investment portfolio, there could be better options for you and your goals.
That’s where Blooom comes in. It will choose the best investments for your account based on your finances and financial goals. It’ll also provide advice and education so you’ll also know how to make better financial decisions.
Blooom is a good choice for people who don’t have the time or know-how to efficiently manage their 401(k). It’s an affordable service, too, at $10 per month.
That’s not to say you will completely hands-off, however. You can still make your own changes to your account as you see fit. All you have to do is go to your online account or contact Blooom advisors about the changes you want to make. The change will be made at the next rebalance of your account.
Blooom does work from a “discretionary management agreement,” which means that while you still own the account and can make your own changes through Blooom, you don’t get to approve every change Blooom makes to your account. Blooom will only make changes that are most beneficial to you. But that kind of setup isn’t for you, you might want to look for a different account manager.
Blooom also points out that it does not “time the market,” believing that doing so is basically impossible. So when it works on your account, it won’t be trying to beat the market. If you’d prefer timing your investments with the market, then you may not work well with Blooom.
- Diversified investment selection
- No hidden fees
- Suspicious activity alerts
- Market guidance
- Human financial advisors
- Tax-loss harvesting
- Direct indexing
- Fractional shares
How Blooom Works
So you’ve decided that you and your 401(k) could really use some help. Blooom could be the right option for you. For one, you only pay $10 per month. If you ever decide that you don’t need or want Blooom’s services anymore, you can cancel your subscription, so to speak, 48 hours before the end of any month. With that, your Blooom 401(k) management and payments will end right then and there.
You can become a Blooom client with any size 401(k), so don’t worry if you only have $20 saved up so far. Your 401(k) gets to stay where it is too, avoiding the hassle of moving your assets or opening up an entirely new account. As long as the account can be accessed online, you’re good to go.
It’s important to note here that Blooom manages the portion of your account balance that is not invested in either company stock or self-directed brokerage. But with the help and knowledge of your Blooom advisors, you can work through those parts of your accounts on your own.
When you first hand over the keys of your 401(k) to Blooom, it’ll rebalance your account. It does this by looking at your funds compared to your retirement goals and applying its secret (yes, actually) math formulas. This should get your portfolio into tip-top shape, with a mix of stocks and bonds. The exact mix, or ratio, will depend on your retirement goals and how close you are to retirement.
Getting your portfolio fixed will usually take about 10 days. Of course that will vary from account to account, but Blooom states it won’t ever take over 30 days. You might think that once your portfolio is fixed, you can quit working with Blooom and your 401(k) will be good forever. However, due to market fluctuations, changes with your employer, changes in your retirement goals and more, your 401(k) will need to change accordingly. Even without those life changes, you move closer and closer to retirement every day, something that will require some adjustments. Working with Blooom can help you do that, with less hassle and stress on your end.
Blooom cannot control the withdrawals or contributions made from and to your accounts. To make a withdrawal or a loan, you will still have to call the account custodian. Only you can decide how much you want to contribute to your 401(k), as well. Blooom does advise that you contribute as much as you can, though.
Once you’re a Blooom client, its professionals will do constant checks on your account. If something in the account needs to be changed, they’ll do it. Automatic and constant rebalances mean your 401(k) will always be at its healthiest.
Again, Blooom is a robo-advisor, meaning it’s entirely online. To contact an advisor, you can go online to your account. Even if you don’t have an account and have questions, you can head to the website and use its live chat feature. The chat line is open from 8 a.m. to 5 p.m. CST, Monday through Friday, except major holidays. Even if you contact them outside of those hours, you can expect an email the next business day regarding your questions or concerns. You can also send an email or give the team a call.
What’s the Catch?
Blooom is the best service for people who have no idea where to begin when it comes to 401(k) accounts and want to just leave it to the professionals. That approach isn’t everyone’s cup of tea, though. Many people would rather manage their 401(k) more actively than what Blooom allows.
If you’re one of these people, Blooom may not be for you. Again, Blooom works from a “discretionary management agreement.” This means that when you enter into business with Blooom, you agree to let it handle your account. So while Blooom will be making changes that are the most beneficial, it will not run each change by you for approval. This is largely because doing so would require many more employees and much more time. This, in turn, would make Blooom charge you more for its services. Blooom wants to focus on keeping professional and reliable services open to everyone over the long-term. Using Blooom will require trust that as a fiduciary, it will indeed be making choices with your best interests in mind.
Competition: How Blooom Stacks Up
Of course Blooom isn’t the only robo-advisor or retirement account manager out there. However, Blooom is the only one that offers sole focus on your 401(k) and other employer-sponsored retirement accounts. Many other investing companies and robo-advisors don’t even offer 401(k) management. Instead, you have to rollover your 401(k) into an IRA for them to handle it or open an IRA with them.
One investment management company that does help with 401(k) accounts directly is Vanguard. However, your investment choices are limited to Vanguard mutual funds and there are contribution limits, unlike Blooom who will manage your 401(k) no matter the size. In terms of pricing, Vanguard charges $20 per year for each Vanguard fund you have. If you qualify for certain services, it may waive the fee. This is cheaper than Blooom’s $10 per month charge, but only if you want just one account managed.
Another option you have is FutureAdvisor, a company that provides 401(k)-specific services. For one, you don’t have to transfer your funds to a FutureAdvisor account. They do have to be held at Fidelity or TD Ameritrade, though. If your accounts are already there, you won’t have to take that extra step.
For FutureAdvisor to actually manage your 401(k), you will also have to have access to Fidelity’s BrokerageLink. This means FutureAdvisor can make its own changes to your account, just as Blooom does. FutureAdvisor charges a yearly management fee of 0.5% of the assets it’s managing for you. Depending on how much money you have in your accounts, this could cost much more than Blooom. While FutureAdvisor will make sure to minimize trading and 401(k) fees where it can, you will still have to pay some of those costs. You may also have to pay a commission fee for trading, but FutureAdvisor maintains that over 90% of the funds it uses are commission-free.
If FutureAdvisor’s direct management system isn’t for you, you can always still get 401(k) investing advice and suggestions. There is no cost for this service, except you will have to make sure FutureAdvisor can have access to your account. Then, it can give you free recommendations for your account. This includes changes you might want to make or possible beneficial investments. It’s entirely up to you to actually implement its suggestions into your investments. So if you don’t quite like that Blooom can make changes without your express approval, you might like this free service from FutureAdvisor.
Bottom Line: Should You Use Blooom?
Considering that Blooom’s main drawback comes down to personal preference, Blooom looks like a solid option for most people with a 401(k). As a fiduciary, you’re guaranteed that Blooom will take the best care of you and your 401(k). Plus, its inexpensive cost at $10 per month makes it a more affordable option. Using Blooom allows you to both relax and take control of your retirement savings, proving especially beneficial for those who don’t know where to begin with their accounts.