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Most robo-advisors help with your individual retirement accounts (IRA, Roth IRA, and SEP IRA) but not your 401K.
Blooom works with both your individual and employer-sponsored retirement accounts, but not in the traditional manner that most robo-advisors work.
Blooom is affordable, legitimate, and a great way to stay on top of your retirement funds.
Are you ready to learn more about this unique robo-advisor? Keep reading.
What is Blooom?
Have you ever wondered if your 401K could perform better? Maybe you don’t even know how it performs or what you invest in. Blooom ends those worries and questions by offering 401K and IRA advisory services.
Blooom also oversees your individual retirement accounts. The algorithm makes sure your accounts are on track to meet your retirement goals, whether you’re retiring in 5 years or 30 years. Blooom works with 401K accounts at any employer (as long as you have online access) or IRA providers with Fidelity, Charles Schwab, or Vanguard only.
How does it work?
Blooom only requires access to your online IRA or 401K account. It analyzes your account and tells you where you should make changes. Initially, the service is free, but if you want ongoing management services, there’s a fee, which we discuss in detail below.
There’s no minimum account balance or contributions you must make. You don’t transfer your fund to Blooom – it stays where it is and Blooom implements the changes as it recommends (depending on the program you choose) if you opt for their paid services.
The initial evaluation is free for anyone. You can do what you want with the information. If you don’t want to commit to the service, you can implement the suggested fund allocation yourself. If you want Blooom to manage it for you, sign up for a full account and enjoy hands-off investing.
Blooom’s interface is easy to use. After you answer simple questions about your risk tolerance, age, and retirement goals, Blooom recommends an asset allocation based on diversification, fees, and allocation.
Blooom evaluates your account every 95 days to make sure you’re still on target. If you ‘drift’ away from the target, they’ll reallocate your funds to get you back on track.
Blooom is restricted to the funds in your IRA or 401K lineup. They diversify your assets between stocks and bonds, based on the risk tolerance and retirement goals you stated and what your plan offers.
Blooom works on a fixed-rate program, which works well for some people. If you’re trying to decide if it’s a good fit for you, calculate the fee as a percentage of your assets under management. Most robo-advisors charge anywhere between 0.25% and 0.50% of assets under management.
Compare your Blooom fee to that amount to get a good idea. For example, if you have $10,000 invested and you choose the Essentials plan, it would cost you 0.95% of assets under management. But, if you had $100,000 invested, it would only be 0.095% of assets under management.
Blooom offers the following plans:
- Essentials $95/year – Get a personalized portfolio after evaluating your current investments and available plan funds and minimizing hidden investment fees. This plan doesn’t include automatic optimization.
- Standard $120/year – Get a personalized portfolio, like in the Essentials plan but with automated optimization and access to an advisor (2 – 3 day turnaround time on answers).
- Unlimited $250/year – Provides everything in the Standard plan, plus priority access to a financial advisor.
- Customer service – Blooom offers email and live chat during regular business hours, Monday – Friday 9 AM to 4 PM CT
- Financial advisors – Blooom has human financial advisors on staff. If you sign up for the Standard or Unlimited plan, you may contact them but only via chat or email. Human advisors oversee all accounts, ensuring optimal portfolios periodically as well.
- Automatic optimization – Blooom optimizes your account at least every 95 days. They base it on the amount of ‘drift’ your account makes. This refers to the amount the account moves away from the allocation originally set. If they don’t re-optimize your account within 95 days it means you’re still within means of reaching your goals.
Blooom Pros and Cons
Is Blooom safe?
Blooom protects your security with bank-level security and 256-bit encryption. Since they don’t take possession of your investments or handle your money, they don’t have SIPC coverage, but your plan should offer that.
Blooom protects any information they obtain from you, though, keeping it private and even alerting you of any withdrawals.
Are there other fees besides the management fee?
Blooom only charges its annual management fee, based on the plan you choose. However, there are always other fees, including commissions, transaction fees, and plan fees. Blooom does its best to minimize your costs, which is one of the main reasons to use the service, to decrease the fees eating at your retirement funds.
Does Blooom manage more than 401K and IRAs?
Yes, Blooom manages any type of retirement fund including traditional and Roth IRAs, 401K, 403(b), 457s, and 401(a) accounts. They manage all employer-sponsored accounts and IRAs with Fidelity, Charles Schwab, or Vanguard.
How many times a year does Blooom rebalance my portfolio?
On average, Blooom rebalances portfolios every 95 days, but not always. If your account has a lot of drift, they may rebalance it before 95 days. If it doesn’t drift at all (you’re on plan) and they don’t readjust it at all. They adjust the average account 3 – 4 times a year.
Do I need to move my 401K or IRA for Blooom to manage it?
No, your account stays put. Blooom manages it as a fiduciary. Blooom works with any 401K plan as long as you have online access. They only work with IRAs from Charles Schwab, Fidelity, and Vanguard, though.
How will I know if Blooom made changes to my account?
If Blooom optimizes your account, they will send you a notice that they made changes. Expect the optimizations to occur every 95 days unless your account drifts significantly and they feel it’s necessary to re-optimize it sooner.
Does Blooom support family accounts?
If you and your spouse or other family members each have retirement accounts, you must sign up for individual Blooom accounts. Each membership only manages one family member as each person has different needs based on their age, goals, and risk tolerance.
How does Blooom make money?
Blooom offers a free analysis, but if you want Blooom to do the work for you – implementing the ideal portfolio, there are fees as I discussed above. Most investors sign up for a plan, letting Blooom manage their retirement funds.
Blooom vs Personal Capital
Personal Capital is the closest alternative to Blooom, but they don’t actively manage your funds. They’ll evaluate your 401K and suggest a specific portfolio, but must do the work.
If you want a more hands-on approach to managing your 401K or IRA, Personal Capital offers the best of both worlds.
Bloom vs Wealthfront
Wealthfront doesn’t manage your 401K or provide any advice regarding your 401K. They do offer 401K rollover services, though, if you leave your job and need a place for your retirement funds. Wealthfront has a $500 minimum opening balance requirement and charges 0.25% of assets under management each year.
It’s great for investors with a 401K that don’t know where to invest it without incurring tax penalties.
Blooom vs Betterment
Betterment doesn’t have a minimum balance required. You can open an IRA or taxable brokerage account, but they don’t manage your 401K. However, Betterment offers 401K rollover services either into an IRA or a Betterment 401K if your new employer offers one. Betterment charges 0.25% of assets under management.
They also offer tax-loss harvesting, making it a great option for borrowers with a large amount invested and high tax liabilities.
Blooom vs Target Date Fund
Blooom often gets compared to Target Date Funds, as they are the most common option for 401Ks. It makes sense – you enter your retirement date and choose the fund that allocates your investments to meet your retirement goal.
Blooom, however, allocates your money differently, and re-optimizes it ever 95 days to make sure you’re on target. Target Date Funds are often too conservative and have higher fees. If you’d prefer a customized plan that suits your retirement needs including your targeted retirement date, consider Blooom instead.
Blooom vs Financial Engines
Financial Engines is an advisory service for retirement plans, including 401Ks. They work with larger companies, such as Delta, Ford, Kraft Foods, and Microsoft, to name a few.
Financial Engines either manages your plan for you or evaluates your plan and tells you how to manage it. Financial Engines is only available if your employer offers it as a service.
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Worth It or a Scam?
Blooom is worth it for many investors, especially those with a large 401K balance. While its fees can eat into the accounts of investors with less money invested, it does help you avoid unnecessary fees. If you prefer a hands-off approach to investing, but want to maximize your retirement earnings, Blooom is worth it for most people.
Blooom offers a unique service that most robo-advisors don’t offer. If you are confused about your 401K offerings or you worry that you’re paying high fees that take away from your retirement funds, consider letting Blooom get you back on track.
Michael is a senior writer at The Robo Investor. He earned his master’s at the Craig Newmark School of Journalism at CUNY, and is currently taking CFP courses at the University of Scranton. He has been an avid finance enthusiast ever since he started investing at the age of 23. Meet the Team