For many working Americans, a 401(k) is often the single largest asset they have. Unfortunately, managing a 401(k) can be extremely complicated, resulting in the poor management or complete negligence of this very important savings account. Fortunately for most Americans thought, they have some time to plan.
As one of my favorite retirement quotes says,
“Hang in there, retirement is only about 30 years away” – My jerk Uncle Dave.
This is why Blooom aims to make managing a 401(k) simple, easy and accessible — no matter how much money is in your account.
Blooom is a fiduciary, meaning the company is required by law to act in your best interest and does not invest your funds based on conflicts of interest or additional revenue for the firm.
For only $10 per month,
Its direct management approach makes it, unlike other robo-advisors that merely analyze your 401(k) and send advice on how to manage your investments on your own. Once
A considerable benefit of the
All you need is to provide some personal information and the login information you use to access your online 401(k) account — and
Founded in 2013,
One of the founding principles of the company was to provide day-to-day management of retirement funds to the overlooked Americans who may not qualify for additional investment assistance.
While this tool is great for individuals who need more assistance in managing their 401(k), it may not be the best option for those who have multiple types of investments, such as IRAs. It is also designed to execute more high-risk investments, although this feature can be altered by the user.
If you are interested in
Blooom quick view: Pros and cons
Blooom Quick Review
|Free portfolio analysis||No support for other investment accounts|
|Simple and easy to use||Aggressive fund allocation|
|Professional portfolio management||No socially responsible investing|
|Inexpensive monthly flat fee|
|Works with all online 401(k) accounts|
Users start with
Blooom simply manages and allocates your funds for you.
Once you’ve created an account,
Then, based on your age and target retirement age,
For younger users,
Once you’ve reviewed the free assessment, you can choose to enroll in
If you decide to enroll,
This isn’t where
Blooom’s investment selection
To allocate your retirement funds,
Blooom tends to lean toward index funds but will occasionally select actively managed funds (if necessary) based on expenses, past performance, and management experience. This strategy is designed to diversify your funds and lower hidden fees.
Because this is your account,
It’s very important to remember that
In addition to selecting and managing your 401(k) investment funds,
- Selecting investments for you:
Blooomworks with the investment options available in your 401(k) plan to diversify your funds and allocate them appropriately. Younger users will receive recommendations for higher stock investments, while users closer to retirement will have funds allocated to more bonds. The best part about this feature if that it is all automatic — you simply set your allocation preference and let Blooomtake care of the management for you.
- Rebalancing: Please note that 401(k) allocation is not going to be one-size-fits-all, and it certainly shouldn’t stay the same forever. Every 90 days,
Blooomwill rebalance your retirement funds to keep up with your retirement goals. If any changes need to be made, they will happen automatically, and you will be notified via email.
- Reducing hidden fees: By combing through your available investment options,
Blooomwill uncover hidden investment management fees you’re currently paying and switch you to funds with lower costs as often as possible. This includes a shift away from “managed” account services and Target Date Funds and toward more cost-effective options. Blooom saves its users a median amount of $166 in their first year.
- Suspicious activity alerts: Blooom closely monitors your account and will let you know if there are any withdrawals or other suspicious activity. You can set these alerts to come in via text or email.
- Financial advisors: Blooom also provides users with the opportunity to speak with one of its certified financial advisors about their 401(k) or other money-related matters, including debt repayment and budgeting. These advisors are available via email and online chat, and can also be contacted by phone during standard business hours. The best part is that this financial advice does not come with additional fees — it’s all wrapped into that $10 monthly fee.
Blooom’s greatest strengths
Robo-Advisor specialized for 401(k) accounts. For one, very few other robo-advisors deal with workplace-sponsored retirements funds at all.
None handle the direct management of these funds. Backed by its founders’ decades of financial experience,
|Simple - Bloom uses the depiction of a flower — rather than confusing charts — to display the health of each users’ portfolio, in addition to plain language and additional customer support from financial advisors.||Limited investment accounts - Blooom is limited to managing 401(k), 403(b), 401(a), TSP and 457 accounts|
|Flat fee - Most users cannot argue that the flat $10-per-month fee is worth the security and hands-off management Blooom provides.||Aggressive - With its algorithm set to emphasize stock investments for younger users and more bond investments for users closer to retirement, some individuals may find Blooom aggressive.|
|Stay put - Blooom works with almost all online 401(k) accounts. There’s no need to open a new account or go through the hassle of moving your 401(k) account.||No socially responsible investing: At this time, Blooom does not allow for socially responsible investment.|
Here are some other areas where
- Simple and easy to use: Blooom aims to help average people understand their finances. The service uses the depiction of a flower — rather than confusing charts — to display the health of each users’ portfolio, in addition to plain language and additional customer support from financial advisors.
- Flat fee: Most users cannot argue that the flat $10-per-month fee is worth the security and hands-off management
Blooomprovides. Even better, users can cancel at any time with no penalties — a rarity in today’s world of subscription hoops. Most human advisors charge approximately 1 percent of your assets under management, and for most users, Blooom’s fee falls far below that percentage. On the other hand, users with lower account balances may be better off using a comparable service offered by their 401(k) provider.
- Works with almost all online 401(k) accounts: There’s no need to go through the hassle of moving your 401(k) account over to
Blooom. They operate with your own 401(k) account information and merely manages the funds on your behalf. Blooom it is compatible with just about every 401(k) account that has online access.
Blooom falls short
Despite its many strengths, this would not be a comprehensive
- No support for other investment accounts: Although
Blooomexcels in managing employer-sponsored retirement investments, that’s all it does. Blooomis limited to managing 401(k), 403(b), 401(a), TSP and 457 accounts. It does not provide services for other taxable investment accounts or IRAs. This might be an issue for more investment-savvy individuals because the service is unable to consider external investments into an overall portfolio.
- Aggressive fund allocation: With its algorithm set to emphasize stock investments for younger users and more bond investments for users closer to retirement, some individuals may be wary of
Blooom’s somewhat aggressive or high-risk approach. Those concerned about market downturns or heavy stock investment still have the option to move away from this, however, by changing their preferences using the Allocation Preference slider.
- No socially responsible investing: At this time,
Blooomdoes not allow for socially responsible investment, which may turn off some users.
Blooom right for you?
In all, Blooom is a great service to try if you’re an individual who has very little idea of what is happening with your 401(k) or is new to investing. Its low cost, simple interface, direct management allows you to put your money in the hands of certified financial advisors and potentially see a higher return by the time you retire. All for $10 a month!
On the other hand,