Blooom is a robo-advisor that manages employer-sponsored plans such as your 401(k). While they won’t help you with a holistic retirement plan that includes taxable investment accounts, they will give your 401(k) a major facelift, even if you didn’t know you needed it. While you might think your 401(k) is automatically being managed by your employer or plan administrator, this typically isn’t the case. 

Choosing to work with Blooom helps eliminate hidden fees in exchange for an annual flat fee. With automated rebalancing throughout the year, you can continue to contribute to your plan with the confidence that your funds are being invested in accordance with your retirement goals and level of risk tolerance.

Find out how Blooom works, how much it costs, and whether this 401(k)-specific robo-advisor is right for you.

How It Works

Blooom was founded in 2013 as a way to demystify the 401(k) investment process for the average American. If you’re thinking about joining Blooom, first make sure you have the right type of account to take advantage of their services. Blooom currently supports the following types of employer-sponsored plans:

  • 401(k)
  • 403(b)
  • 401(a)
  • 457
  • TSP

Get started with a completely free analysis of your 401(k) plan. To begin, you’ll answer questions online about your current investing habits, which helps Blooom suggest a strategy for you. Once you link your existing account, the automated platform researches the best fund options to diversify your portfolio.

You can also see a personal analysis of your current allocations versus your ideal allocations, in addition to a fee comparison. If you like what you see, you can sign up for Blooom’s services.

Once you do, they’ll start placing trades on your behalf while charging a flat fee. You’re not actually transferring any funds to Blooom or opening an account with them. Instead, you give them online access to your existing 401(k) plan. Adjustments typically happen within seven days of giving Blooom access to your account.

Anytime ongoing adjustments are made to your account, you’ll receive an email notifying you so there’s total transparency on what’s happening with your plan. Typically, rebalancing occurs anywhere between one and four times a year.

Pricing Model

Management Fees

$120 annually

$90 per additional account

Account Minimum

$0 

Blooom charges an annual flat fee with a discount for each subsequent account after your first one. Opt to pay either quarterly or annually depending on your personal preferences. Renewal is automatic and you’ll be charged using the payment method on file if you don’t cancel in advance. Once you register, you can cancel this auto-renewal feature, but if you don’t manually renew then your account will cancel at the end of the billing period. 

While there are no additional fees associated with Blooom, you will have internal expenses from your 401(k). Blooom does, however, try to use the most cost-effective funds available for your allocations to help minimize expenses. 

Additional Features

One of the major perks of considering Blooom is that you get a free analysis of your current 401(k) account. You’ll see any potential hidden investment fees within your current account and the analysis also reveals what you’re actually invested in right now. It also gives you recommendations on changes you can make to maximize your investment strategy. 

You can take these recommendations and make the changes on your own, or you can opt to have Blooom manage your account for you. This helps you minimize hidden fees, get regular adjustments to your portfolio, access expert financial help, and receive suspicious activity alerts.

Another feature offered by Blooom is an add-on for IRA advice. While Blooom won’t manage your IRA for you, you can opt to pay $49 to get a report with recommendations for these tax-advantaged accounts. Answer just a few short questions online, then receive a personalized report that includes a recommendation of stocks and bonds based on your risk tolerance and the number of years until your planned retirement.

Advantages

401(k) plans are often neglected by the account holder. You choose your percentage allocations when you first sign up and they only change if you take the initiative. If you’re not sure of how to invest or what changes to make as you get older and have different life events occur, Blooom gives you ongoing guidance.

Another advantage of using Blooom is that they’re a fiduciary, which means they’re legally bound to act in your best interest. This isn’t true of all advisors. It’s also part of the reason why Blooom’s selection process includes weighing the fund cost to ensure you aren’t paying more fees than you need to. They do this by exposing hidden management fees, eliminating managed account services, and avoiding target-date funds.

Blooom’s allocation strategy is based on market performance. When there’s a downturn, Blooom rebalances your account by shifting some funds from your best-performing funds to those that aren’t as performing as well. Essentially, this enables you to buy low and sell high. 

Although Blooom guides your investments, you still maintain full control of your account and can make adjustments through your 401(k) custodian if you choose to do so. If you ever decide to end your relationship, the service is pay-as-you-go with no long-term commitment whatsoever.

Disadvantages

One of Blooom’s shortcomings is that if you have questions, you can reach out to a registered investment advisor, but only through text, email, or chat. There’s no phone option and you won’t have one specific advisor dedicated to your account. Instead, you fill out a contact form with your question and can expect to receive a response between 8:00 and 5:00 Central time, Monday through Friday. This is much more limited compared to other robo-advisors who allow for more direct forms of contact and extended support hours.

You also can’t approve account changes in advance when you choose Blooom. This is standard for robo-advisors but is still something to be aware of. Rebalancing is automated and happens anywhere between one and four times a year depending on how Blooom views your portfolio’s performance. 

 

There are also limitations for couples and individuals with multiple accounts. If you’re married, you can’t include all of your employer plans under a single-family account. Each person in your family needs their own profile with Blooom, which requires entering in your own personal and retirement information. 

Additionally, if you have multiple accounts with Blooom, they are still managed separately. This differs from some robo-advisors that import all of your financial information under one account for bigger-picture financial planning. 

Currently, Blooom does not manage traditional or Roth IRAs beyond a one-time consultation. If you want holistic retirement planning support, you may need to supplement with additional services to guide you through the process.

Another disadvantage is that you can’t plan the cost of expense ratios since fund options vary depending on what’s offered in your 401(k) plan. Blooom does their best to keep these expenses low, but ultimately there can be a lot of variance from customer to customer. 

Finally, Blooom doesn’t give you access to automated tax-harvesting strategies as you’d find with other robo-advisors.

Who It’s Best For

Blooom is designed for people who don’t currently have a strong grasp on what’s happening with their 401(k) portfolio. You may get regular updates on your account, but you likely don’t actually know what investments you hold and what kind of fees you’re being charged. Blooom can help change that, but there are still a couple of other considerations to make.

One thing to think about before signing up is that if your balance is low, the $120 annual fee translates to a large management fee in relation to your total invested amount. Look at the fee as a percentage of assets to help you compare the costs of other robo-advisors. Typically, you can expect to need at least between $25,000 and $50,000 to make the math work out. If your 401(k) balance is higher than that, you could actually save quite a bit in management fees by opting for Blooom.

Like most other robo-advisors, Blooom is designed for the hands-off investor. If you’re an avid investor and like to control your investment selection, you likely don’t need to open a Blooom account. If you’re curious, simply opt for the free analysis to get recommendations for your individual scenario. 

The Bottom Line

Blooom is a specialty robo-advisor that can be a strong component of your overall long-term financial planning. With a risk-free analysis of your 401(k) you can see exactly what you stand to gain by choosing their paid service. You can also easily determine if the annual flat fee is cost-effective based on your total assets, both current and projected. You may end up saving money in fees and place your 401(k) on a better trajectory to maximize your investment growth in the long run.

Author

Lauren's work has been seen in a variety of news outlets, including the Chicago Tribune, Crediful, Kiplinger, and CBS News. Before her writing career, Lauren worked in community outreach for the Federal Reserve Bank of Richmond as well as in non-profit fundraising. She lives in the Blue Ridge Mountains with her husband and three kids.

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