Many people aren’t given much information about their 401(k) plans. You may have an idea of stocks, bonds, and even particular companies you may be invested in, but that’s about it. For a long time, there was and still is a transparency issue with these plans.
Above all, many people began to figure out that they were getting ripped off through exorbitant management and other fees.
Nowadays, with the rise of new technologies, startups, and general changes in the financial industry, it’s never been easier to have a better sense of what’s going with your 401(k).
With Blooom, you can not only get an analysis of your 401(k), but a personalized portfolio, optimization, and more. So, should you hand over the reins to Blooom? Find out everything you need to know in this ultimate Blooom review.
What Is Blooom?
Blooom is a registered investment advisory and robo-advisor firm focused specifically on retirement accounts. Based out of Kansas, they try to emphasize the differences between themselves and Wall Street through transparency and somewhat affordable fees.
However, Blooom really distinguishes itself from other robo-advisors like Acorns or Wealthsimple in that it has this core focused on employer-sponsored plans—mostly 401(k)s.
Although they aren’t the biggest name out there, Blooom is managing over $3 billion in assets and generally has positive reviews. The biggest advantage of Blooom is that you have an opportunity to get your retirement accounts professionally managed, which is definitely something you don’t want to pass up.
How Does Blooom Work?
Blooom works with any employer-sponsored retirement account—as long as you have online access to it.
Here are a few things to be aware of:
- Your account stays with your current company
- You do not transfer your account to Blooom
- You don’t have to tell your employer you’re using Blooom.
From here, you can start setting up your account. In fact, you can open an account and get access to some of Blooom’s resources like recommended investment strategies, but you won’t be able to really do anything until you link your 401(k).
You begin by choosing your risk preferences or taking a short helpful quiz. Then Blooom will identify the right opportunities for you to get you to your goals.
Next, a Blooom advisor will double-check your recommended portfolio allocation. From here, Blooom goes on autopilot to manage your account, watch for big changes, and rebalance when/if needed.
Blooom generally uses index funds for portfolios. But they may occasionally use an active fund if it’s the right fit for you.
Blooom pricing starts at $95/year for their Essential plan, which includes one account and a personalized portfolio. Blooom’s other two plans are Standard and Unlimited:
- Standard: $120/year – 1 account, personalized portfolio, auto optimization, transaction activity alerts, advisor access
- Unlimited: $250/year – Unlimited accounts, all standard features plus priority advisor access
While these fees may sound like a great deal, you should pause for a minute. You need to consider the fee based on the percentage of managed assets.
If you only have $1,000 in your account, you’re paying 12% annually. Compare this to something like Wealthfront, which charges a flat 0.25%, and you’d pay $2.50 a year.
On the other hand, if your portfolio is over 50K, then this starts to make more sense. So just pay attention. Overall, Blooom’s fees are in the middle-of-the-pack in terms of robo-investors.
1. 401(k) management
Blooom is still effectively the only robo-advisor focused specifically on the employer-sponsored retirement plan niche. Even though this a top investment choice for many people, most robo-advisors exclusively focused on IRAs or taxable accounts.
Blooom manages all 401(k)s regardless of where people work or where the account is held. And you don’t need employer approval or even knowledge. You can also use Blooom for IRA management but only if you have an account at Vanguard, Schwab, or Fidelity.
2. No Account Minimum
You can go with Blooom right from the start to have great management from the beginning of your investments.
3. Free 401(k) Analysis
Even if you’re a DIY investor or want to take your business elsewhere, you can still use Blooom to check your fees and asset allocations as well as take advantage of their recommendations to improve your portfolio.
4. A Robo-Advisor With Some Control
It’s not totally hands-off. You can go with their recommendations or change your allocations directly under the “Adjust Allocation” tab. Move the slider till you find the balance between stock and bonds you’re comfortable with.
5. There Are People Behind The Scenes
Blooom may primarily be a robo-advisor, but you can email, chat, and talk on the phone with real people! You even get a real financial advisor who oversees your account opening and periodically reviews your portfolio to make sure everything is as good as it can be (though the robo-advisor also does a great job of that!)
Who Should Use Blooom?
Blooom is perfect for people who don’t have the time, experience, or desire to manage their own 401(k) plans. The best part about it is you manage all types of plans, including IRAs.
But they really handle everything like allocation, management, rebalancing, and fee minimization. Basically, all you have to do is fund the account and pay your annual fees, and Blooom takes care of the rest.
If you don’t have a 401(k), however, you may want to look elsewhere as Blooom still only handles IRAs from a few of the biggest financial firms. Likewise, Blooom is not for people who want to really be involved with their portfolios. There is no option for self-directed plans so keep this in mind if you’re a big DIY investor.
Still, you can have your cake and eat it too. You can keep your retirement plan safe with Blooom and use other options like Stash to direct your own interests in the market.
Is Blooom Worth It?
Again, it’s all about how much Blooom is managing for you. If you’re under $20-30,000 in contributions, then $95-250 is a pretty high yearly fee. But, Blooom does have an excellent focus on a greatly underserved area. Likewise, you probably already are paying management fees to someone even if you’re just starting out.
To see if Blooom makes sense for you, answer these questions:
- What fees am I paying now?
- How are my contributions being managed?
- What control do I have over my 401(k)?
- Can I get online access to my accounts?
- Will I have to pay other fees in addition to Blooom?
You can always take a hybrid approach and shift to Blooom once you cross a threshold. Or it may be worth it to get set up from the beginning with a solid service like Blooom. While $95-$250 may seem like a lot, that’s just $8-20/month, which isn’t much when you’re talking about your long-term financial stability.
- Specifically focused on the 401(k) niche
- Great free tools
- Doesn’t require employer knowledge
- Is a fund manager, doesn’t take over your accounts
- Low management fee for high balances
- Licensed fiduciary so they must always act in your best interests
- No account minimum
- Can actually connect with real people if you want to discuss your portfolio
- Some control over allocation
- Limited IRA support – currently on Fidelity, Schwab, and Vanguard
- Retirement accounts online, can’t use it for other accounts
- High fees for small balances
- No mobile app
As mentioned, Blooom really is in its own class since many robo-advisors don’t offer 401(k) accounts. One of the only other options out there that does support 401(k)s is Betterment.
What Is Betterment?
Betterment is the largest independent online financial advisor with over $22 billion in managed assets. Betterment also takes care of IRAs and other nontaxable accounts. Overall, it ranks highly in terms of customer satisfaction.
The biggest difference between it and Blooom is the fee structure. Betterment charges a flat 0.25% for accounts under $100,000 and 0.40% for accounts over $100,000. This means for under $50,000; Betterment is less expensive, but it is more expensive as you increase your portfolio size.
Blooom: The Bottom Line
If you’ve been worrying over the fees and direction of your 401(k) and want a better option, then you should definitely consider Blooom. But don’t take our word for it. Use the free 401(k) analyzer to get a picture of what’s going with your retirement plan and where that might be room for a robo-advisor like Blooom to make improvements.