Pensions

Blooom Review: A Robo-Advisor for Managing Your 401k

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Blooom is a robo-advisor which delivers professional assistance for managing workplace retirement plans such as you 401k, helping clients get the most from their money as retirement approaches.

The company was founded on the idea of making professional 401k help simple, available to all, and smart. The goal is to deliver unbiased advice for all Americans, not just those who are rich and can afford to hire private professionals.

The team behind Blooom is made up of experts who are dedicated to helping clients manage their 401k online in an affordable and simple manner. The idea is that with Blooom, people have the confidence they need to make smart decisions using the dollars they worked so hard to earn.

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Simplifying 401ks

Blooom aims to overcome the complicated nature of 401ks. It is a well-accepted fact that these types of savings accounts tend to be very confusing. While most companies offer a 401k, few go into detail when it comes to explaining the plan or giving you advice on managing it. By using Blooom, you get access to unbiased experts who can give you explanations and assist with 401k management, getting your plan on track and ensuring it stays there.

Blooom Website

The Blooom Philosophy

The philosophy behind Blooom is to help its clients. There is no ulterior motive such as helping an institution, a broker, or your company. Instead, Blooom wants to give everyone access to independent financial advice from professionals.

Blooom believes in three main parts of investing: performance, decision-making, and cost. Blooom feels that you can only control decision-making and cost, which is where the company helps its clients.

In terms of performance, Blooom does not claim to be able to predict the market as other companies do. Instead, Blooom focuses on managing risk and other time-tested methods. Blooom takes its time to research managing risk via proper asset allocation to keep you on track.

About Blooom

In terms of cost, Blooom believes that instead of following historical performance, fees linked to investments better predict your ability to reach retirement goals. Part of this is choosing the lowest-cost option within each fund category so that you do not have to worry about fees eating away at your nest egg.

In terms of decision-making, Blooom takes care of managing your account so there is also an expert delivering advice. The Blooom advisors are always there to assist you with your smart decisions and keep your account on track.

How Does Blooom Work?

Blooom works to optimise the 401ks of clients or provide the same optimisation services for any other employer-sponsored retirement account. Blooom can work with a 401k, 401a, 403b, 457, or TSP. There is no minimum account size.

To use Blooom, you start by entering your 401k login information and answering some basic questions. Using this information, Blooom will give you an unbiased analysis of your 401k. There is no commitment to this part, and it is completely free, without any need to enter a credit card. This process checks your investment fees, risk tolerance, and diversification.

From there, you can choose to have Blooom fix it. This requires you to sign up for the affordable paid plan. Blooom will then make the changes suggested in the free check-up, optimising your account and performing the other services explained below.

Personal Analysis

Blooom optimises your fund choices by combining bonds and stocks based on your goals, eliminating investment fees, and regularly adjusting your account as your date of retirement approaches.

From there, you can just sit back and let Blooom take care of your account for you. The company will manage your risk while maximising your earnings. The experts at Blooom will take care of everything, from helping to guide you through the market’s ups and downs to planning. An algorithm takes care of most of the heavy lifting, but the licensed advisors, as well as Blooom account coordinators, will regularly confirm and test that the rebalances are done accurately.

Blooom Fees

There are two options for Blooom, a free version and a paid version. The free version of Blooom is a quick analysis of your 401k that takes less than five minutes. Or you can pay $10 per month for 401k management and monitoring. To make Blooom more affordable, the company offers a 10 percent discount if you pay annually instead of monthly.

Blooom Fees

What Does Blooom Include?

Whether you choose the free or paid version of Blooom, the company will find hidden investment fees in your account that are costing you money. Blooom will also show you your investments and make it possible to quickly understand how diverse your account funds are. Blooom also always includes recommendations. These are expert suggestions for a mix of assets like bonds and stocks to help you reach your retirement goals.

By paying for Blooom, you also get a long list of additional features that add value to the services. Blooom will minimise your hidden fees. Instead of just finding them and letting you know they exist, Blooom will take steps to potentially reduce those fees that are decreasing your 401k.

What's Included

Blooom will also regularly adjust your portfolio. This involves optimising investments so that they always align with your goals and help you stay on track for retiring. In addition to the regular recommendations all Blooom users get, paid clients also receive expert financial help. This includes the ability to ask the advisors any questions related to finances, whether they specifically involve 401ks or not.

Blooom additionally provides a layer of protection by giving you suspicious activity alerts so that you can spot any attempts to steal your hard-earned dollars right away and act.

The biggest feature of Blooom is that you do not have to do anything. Instead, the 401k experts on the team watch your account for you so you know that your hard-earned dollars are working to their best possible abilities and you can focus on something else.

How Does Selection of Investments with Blooom Work?

One of the key elements of Blooom is the way that the company selects the right investments for you to ensure that your 401k does as well as possible. Blooom prides itself on making it easy to understand your 401k so you do not have to be overwhelmed by the various options or worry about whether you made the right 401k selections. Blooom wants people to be aware that their employers just provide the 401k; they do not manage it. Instead, you as an individual are responsible for managing it. Most people simply are not fully confident in their decisions, especially considering the importance of a retirement fund.

Blooom Account

Blooom tailors its suggestions for clients based on their current funds and the amount of time they have left until retirement. For those early in their careers (with more than 20 years before retirement), for example, they suggest putting most of the retirement portfolio into stocks. Since it will be a long-term investment, you can handle ups and downs along the way. The losses will only be felt if you sell. Blooom feels that if you are overly conservative with your investments, you could miss out on potential large returns.

For those who are approaching retirement or already there, Blooom suggests placing a larger emphasis on investing in bonds. The company still recommends a reasonable portion to be invested in stocks so that you keep seeing returns. In this case, however, the security associated with bonds is more important. If you are too aggressive with too many stocks at this stage in your life, Blooom warns that if the market hits a downturn, it could affect your ability to retire on time.

The overall idea is that Blooom works for its clients. Blooom tailors your investment selection to your particular needs, including your retirement horizon and age. Blooom works with clients of all ages, 18 to 76, and across thousands of companies, making the company’s experts very familiar with the various investment options and how those variations appeal to different people.

What Is Blooom’s Market Guidance?

Blooom gives clients market guidance, including the resources, so you can easily work with the company that leads to a successful future. It takes care of the “heavy lifting” and the brunt of the work while you just bring the money and your goals. Blooom also understands that the market has both ups and downs. When it declines and takes your savings with it, Blooom will guide you through this slump, ensuring you are aware of your options. The company will stop you from dropping solid investments just from fear.

It is not possible to continually beat the market every single time. Blooom’s methodology takes this into account and focuses on the long-term, along with strategies to minimise loss in the downturns.

How Does Blooom Save You on Hidden Fees?

As mentioned, one of the services Blooom offers in its free analysis is spotting hidden fees in your 401k investments that you may not be aware of. For paid clients, Blooom works to reduce these hidden fees.

The company even has a counter on its website estimating how much it has saved clients so far. At the time of writing, this counter was at $966.6 million in lifetime investment fees. Blooom translates that figure into 19.476 fewer working years collectively from Blooom clients. These savings can translate into the ability to retire earlier than you would otherwise be able to or the ability to spend retirement travelling or with activities you would not otherwise be able to afford.

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Investment Management Fees

One of the biggest ways that Blooom saves clients from excessive fees from Wall Street is by exposing the hidden investment management fees. An example of the hidden fees would be if your employer offers a 401k, but instead of paying for it themselves, they let you pay the fees. Since the fees get automatically deducted from your balance each quarter of the year, you are unlikely to notice them without taking a closer look. Blooom will examine hidden fees within each fund of your 401k. For those with the paid service, Blooom moves your money to the funds with the lowest cost available within your plan and keeping to your recommended allocations.

Fees for Managed Account Services

Another way that Blooom eliminates excessive fees is by getting rid of the fees for managed account services. This is the very common offering of a major institution investing your 401k for you but doing so for an additional fee. This fee typically comes as a percentage of the 401k balance. While that means the fee stays nice and low when you are just starting to save, it also means that the fee grows as your balance does and you get closer to retirement, despite the financial institution not necessarily giving you any more services. There is also the related issue that a major institution will always have some sort of conflict of interest when choosing the funds to invest your 401k in.

Target Date Funds

Finally, Blooom keeps you away from Target Date Funds. Blooom acknowledges that they seem great in theory since you can choose a fund that is closest to when you plan to retire. The company points out, however, that the annual fee is typically half a percentage higher than those funds that Blooom would select for you. In many cases, the financial institution will also be the owner of the Target Date Fund, meaning that they recommend their own services to earn a profit.

No Conflicts of Interest

Since Blooom is an outsider, it does not have any of its own funds or related conflicts of interest. This means that Blooom will suggest the funds that are best for you instead of those that can make them money. The fee with Blooom is also transparent and flat, so you do not have to worry about paying more for the same services as you get closer to when you actually plan to use the money in your 401k.

Blooom’s Rebalancing

One of the features that Blooom advertises is rebalancing, which helps keep clients’ 401ks in check without the account holder having to put in any effort. The first rebalancing can be particularly complicated since this is when Blooom will examine your funds and your retirement goals, then use its professional experience to put your 401k on track. Blooom prides itself on going above and beyond to ensure you have the lowest fees and ideal mix of bonds and stocks for your funds.

Blooom Charts

From there, Blooom automatically rebalances portfolios regularly. This means that if your employer no longer offers a specific fund or your goals for retirement change, Blooom will be able to take action and ensure your 401k remains on track.

The methodology that Blooom uses is evidence-based and relies on decades of market data.

Blooom’s Financial Advisor Service

As mentioned, Blooom gives clients access to a financial advisor who is ready to answer any of your questions. Most of the questions that clients ask tend to be related to retirement or 401ks, but the financial advisors can cover anything related to your finances.

This means that Blooom clients can get financial advice for things like buying a new car or getting a puppy. Advisors are there to answer your questions, big or small, so you can figure out how your choices impact your financial situation. Because Blooom is not a financial institution or bank, you can count on the information being unbiased without any conflict of interest.

You can get financial advice via live chat or via email for convenience.

Suspicious Activity Alerts

Blooom constantly monitors the activity of its clients’ accounts for suspicious activity as well as large withdrawals. In addition to the various protections that most major financial institutions have in place to protect 401ks and other retirement funds, Blooom adds an extra layer. If Blooom detects a loan or withdrawal (which is unlikely), you will receive a text alert.

Account Security

Blooom provides protection to clients in three main ways. This includes protection from the hidden fees that are associated with most Wall Street 401k accounts, protection from unpleasant surprises due to fraudulent activity, and protection from your instinct to react to any swings in the market since experts control your portfolio and are there to answer questions right away.

There is also additional security of a traditional sense via 256-bit encryption of data, bank-level security, third-party verification, and secure servers.

Conclusion

Blooom is a new breed of advisor that works to manage 401ks for anyone. Their goal is to make it possible for the average person to get professional financial advice and management for their 401ks and other retirement plans.

The company conducts a completely free analysis and then gives you the option to sign up so that its team can manage your 401k.

This service is a flat fee of just $10 per month which includes rebalancing based on your goals and time left until retirement, access to financial advisors, and more.

Blooom only works with employer-sponsored plans such as 401(k), 401(a), 403(b), 457 and TSP Plans and is ideal for investors who prefer to take a hands-off approach to their 401ks and let the experts take control. It should be noted that Blooom does not work with IRA or taxable accounts.

The fact that there is no minimum account size helps Blooom attract the widest range of customers possible.

Blooom’s offering brings needed investment management for your retirement planning and considering their low fees seems like a great deal and you are free to cancel at any time so we recommend you try them out.

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Blooom

9.2

Ease of Use

9.0/10

Fees

10.0/10

Reputation

9.0/10

Customer Support

9.0/10

Design

9.0/10

Pros

  • No Account Minimum
  • Low Fees
  • Professional Account Management
  • Automatic Rebalancing

Cons

  • 401(k), 401(a), 403(b), 457 and TSP Plans Only
  • No IRA or taxable accounts
Avatar

Oliver Dale is Editor-in-Chief of MoneyCheck and founder of Kooc Media Ltd, A UK-Based Online Publishing company. A Technology Entrepreneur with over 15 years of professional experience in Investing and UK Business.His writing has been quoted by Nasdaq, Dow Jones, Investopedia, The New Yorker, Forbes, Techcrunch & More.He built Money Check to bring the highest level of education about personal finance to the general public with clear and unbiased reporting.oliver@moneycheck.com

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