1. What is Blooom?
Blooom is a company that manages 401(k)s and other corporate retirement accounts, as well as some IRAs. With no minimum account balance and the ability to pay a lower flat annual rate, the program provides a one-of-a-kind service at an affordable price.
Blooom adds much-needed wealth management to people retirement accounts such as 401(k)s, as well as some IRAs. Investors will have the possibility to try out the program for free using the company's research app.
Blooom stands out in a competitive field of robo-advisors by focusing on a single market; which is solely retirement programs such as 401(k)s and IRAs. Blooom provides management advice to Americans' retirement funds that are often ignored by other advisors.
The firm solely oversees defined-contribution accounts, including 401(k), 403(b), 457, TSPs, and 401(a)s, as well as standard and Roth IRAs.
(At the moment, Blooom's IRA and Roth IRA management is restricted to Vanguard or Fidelity accounts.) Blooom's business model is straightforward: there is no minimum account size, and maintenance charges a flat monthly fee ranging from $45 to $250 per year, based on the quality of service desired and the amount of accounts handled.
Blooom also provides investment advice on other accounts, but only after you choose a kit. Customers with an accountant to handle non-401(k) or non-IRA accounts should look elsewhere.
Blooom is ideally suited for:
- Participants of employer-sponsored plans.
- Individuals that have IRAs at Vanguard or Fidelity.
- Investors that are hands-off.
- Free analysis of 401(k) portfolio
2. Places where Blooom shine
Blooom stands out for its specialized approach to handling employer-sponsored retirement accounts. Despite the fact that 401(k)s are many people's preferred retirement investment vehicle, robo-advisors rarely handle them; instead, they focus on IRAs (individual retirement plans) and taxable accounts.
Blooom will administer any 401(k) plan, regardless of whether the account manager resides or where the plan is stored. It is not necessary for your company to be a partner of the operation.
Blooom also manages IRA and Roth IRA accounts, as long as they are kept at Vanguard or Fidelity.
No minimum account amount: Beginner savers should have Blooom handle their accounts straight away, giving them a great chance of getting off to a good start.
There is no charge for this service. Anyone will sign up for a free account and have their 401(k) analyzed by Blooom.
It's a simple process: build a username and password, provide some personal information, and then safely connect your 401(k) by choosing your provider and logging in to Blooom's web. The firm then compares the fees and asset distribution to its guidelines, offering suggestions on how to change.
Blooom's recommendations about your 401(k) should be equated to how your 401(k) is actually distributed and the reserves available to you. Blooom will share its advice for your 401(k) based on how your 401(k) is currently allocated and the assets available to you. You can adjust the suggested asset mix to take more or less risk, and after you've settled on a balance of stocks and bonds, Blooom will share its recommendation for your 401(k) based on how your 401(k) is currently allocated and the investments available to you.
Without signing up for a paying account with Blooom, do-it-yourselfers could quickly take those tips and adjust their asset allocations on their own.
2.1. Audit of investing expenses
Employer schemes often offer a small number of investment opportunities, some of which will have higher-than-average costs. Blooom manages the account's investments by grouping them into asset categories and then selecting the investment with the lowest internal cost ratio in each bucket.
Since there are times where there is just one investment in each group — and there is no way to reduce expenses — this approach will help investors reduce their total expenses while ensuring sufficient asset distribution and diversification.
2.2. Financial Advisor
Blooom provides financial advisors by email and live online chat, as well as licensed investment advisors who can answer any financial planning questions. This covers issues such as debt restructuring, budgeting, and planning for big life activities that are not related to 401(k) management.
2.3. Cost
Blooom believes that consumers can find the same benefit of outsourcing their 401(k) management as they do in paying for Netflix. There's something to be said about a simple, one-time bill. The fee is paid to a credit or debit card rather than deducted from the account balance, so investors know just how much they're paying.
Customers will select the quality of service that best suits their preferences thanks to Blooom's flat fees. The Essentials kit, which provides the user with a customized portfolio, starts at $45 a year, per account.
The next rate is $120 a year per account for the Standard bundle, which includes auto-optimization, transaction behavior updates, and advisor control in addition to the customized portfolio. The Extended plan, which costs $250 a year for an unlimited number of accounts and includes all of the programs in the Essentials and Standard tiers as well as priority advisor access, is the most robust.
Flat fees, on the other hand, have a disadvantage. It's necessary to analyze the fee as a percentage of the funds under administration when comparing fees with other consulting services, both robo and person.
Here are some pricing explanations for Blooom at different account levels:
In contrast, robo-advisors usually charge 0.25 percent to 0.50 percent of assets under administration, while human advisors typically charge around 1%. We believe Blooom's fees are fair, given that it is one of the few robo-advisors that handles 401(k)s and provides consumers with access to financial advisors.
3. Blooom's shortcomings
3.1. Limited risk tolerance assessment
Investor evaluation is limited: While Blooom's sign-up process is simple — connecting your 401(k) account takes only a few minutes — the questions deciding how Blooom allocates your funds aren't as rigorous in evaluating risk tolerance as we would like to see.
Any of this can be attributed to the company's focus on employer retirement plans: It correctly assumes that any client's target is retirement. However, we believe that investors will benefit from a more thorough evaluation of risk exposure during the onboarding phase.
3.2. There is no phone support
Blooom's customer service and links to financial advisers are only available online through chat and email.
4. Summary of Blooom offers
4.1. Minimum account balance
There is no minimum balance, any amount is accepted.
4.2. Fee for the management of account
- $45/year/account for the Essentials kit (personalized portfolio)
- Standard package: $120 per account per year (personalized portfolio + auto optimization, alerts or updates for transactions, advisor access).
- Package for unlimited use $250/year for unlimited accounts (all of the above plus priority advisor access).
4.3. Ratios of investment cost
It is not scored. Blooom's investment options are limited to plan offerings, but funds with the lowest cost rates would be prioritized.
4.4. Account charges (annual, transfer, closing)
There are no fees.
4.5. Portfolio composition
It is not scored. The investments that are used are restricted to schedule offers. Blooom invests mostly in mutual funds, with few actively managed funds thrown in for good measure. The service begins by reviewing funds that are currently in your possession.
4.6. Tax planning
It is not scored. Typical robo-advisor tax techniques are not applicable in the tax-advantaged retirement accounts managed by Blooom.
4.7. Rebalancing is done automatically
Blooom evaluates accounts 95 days after the most recent revision. Blooom tracks adjustments in the account before another modification is required if the account has not drifted enough to merit an optimization. About one and four times a year, rebalancing takes place.
4.8. Choice for a human counselor
For the Essentials tires, there are no available advisors.
For the Standard and Unlimited tiers, registered investment advisors are available via chat and email.
4.9. Account for a bank or a cash management account
There is no rating for this film. Blooom does not allow customers to spend or save money directly.
4.10. Options for customer service (includes website transparency)
Support is available via live chat and email. 10 a.m. to 5 p.m. Eastern, Monday to Friday. There is no phone service.
5. Advantages and disadvantages
5.1. Advantages
- Management of 401(k) plans.
- There is no minimum amount.
- Analyses are given for free.
- Financial advisors are available.
5.2. The disadvantages
- Assessment of risk tolerance is restricted.
- Asset distribution that is aggressive.
- High fees for low account balances.
6. Is Blooom the best fit for you?
Blooom provides employer-sponsored retirement accounts with much-needed wealth management. This is a major advantage since those programs are typically the preferred investment vehicle for those who have them. Just a few other robo-advisers have entered this market.
However, before you sign up, do the calculations to see what proportion of your assets you'll pay based on your account balance. Check to see if you have access to similar services with your 401(k) or other corporate savings plan; others have free financial advice.
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