Blooom Review – Low Cost 401(k) Robo-Advisor

The Bottom Line: Bloom is a robo-advisor that primary focuses on workplace retirement plans like 401(k)s. For a low fee, they manage your account, so you can enjoy your nest egg when you retire.

Pros & Cons

Now that you know what Blooom offers, let’s take a look at the pros and cons of this robo advisor.

Many people who have retirement accounts have them through their employer — typically a 401(k).

Considering many investing services don’t touch these types of accounts, it’s nice to know that there are firms that do and won’t charge you an arm and a leg.That’s where Blooom comes in. 

Founded in 2013, Blooom is a registered advisory firm that provides automated investment services to help you manage your 401(k) account.

It doesn’t offer management for taxable accounts or other types of retirement accounts, only 401(k)s. 

However, what the company has going for it is that it’s a fiduciary, meaning that Blooom is legally obligated to act on your best interest.

The company can also manage any 401(k) plan — it doesn’t matter who your employer is or where the plan is held. 

For $10 a month, you can outsource the management of your 401(k) account and get a bit of financial advice.

While that sounds like a great deal, learn what Blooom is all about below before making a decision.

How Does Blooom Work?

Blooom is a robo advisor for your employer-sponsored workplace retirement accounts —- 401(k), TSP, 403(b), 401(a) and 457 accounts — as long as it can have online access.

There’s no need to transfer your 401(k) account or open up a new one. 

Signing up for the service is pretty straightforward. Once you link your account, you’ll answer a few simple questions, such as your personal details, risk tolerance and projected retirement age.

Then Blooom will factor in your current age against what you indicated as your expected retirement age and adjust your 401(k) accordingly within 30 days. 

What Blooom will do is help you with an asset allocation that will weigh more heavily towards stocks the younger you are, and move towards a heavier allocation of bonds as you are closer to your expected retirement age.

Before making changes, Blooom will analzye your 401(k) by first looking at all the options available to you in your 401(k) account and opts out of any funds that don’t align with your goals.

Blooom typically favors index funds but it could choose more actively managed funds if it makes sense.

Once the robo advisor has found funds that will help get you to your goals, the algorithm will select investments based on your target allocation, manager experience and expense.

Then a human advisor on the Blooom team will double check the recommended 401(k) allocation to make sure it’s a good fit.

Just because Blooom recommends a certain asset allocation, doesn’t mean you need to need to agree. You can ask for a different percentage of stocks and bonds, but you can’t opt for diversification on other types of investments or asset class allocations.

For example, Blooom will vary between different international stock and domestic stock funds but you can’t select alternative investments or more or less small cap stocks.

The algorithm will try to choose low-cost index funds which could net you some hefty savings if you’ve been choosing higher cost mutual funds.

Every 90 days, Blooom will rebalance your portfolio based on any changes you’ve made in your percentages to stocks and bonds and their algorithm. Whenever changes are made, Blooom will send you an email about the changes.

Aside from 401(k) management services, you can also ask Blooom questions related to your finances. You’ll receive questions from human advisors.

If you try their service, give this feature a go — you should be able to ask questions on matters such as budgeting for a new house or how to make a debt payoff plan that works for your current financial situation.

Blooom is best for those who want a more hands-off approach to their 401(k) investing and want the occasional personal finance advice.

Blooom Features

Minimum investment amount - $0

Sign-up process - Blooom has a large number of questions it’ll ask you in order to customize your asset allocations and financial advice.

Gift Blooom — you can gift a year of this service to a family member or friend.

Helps lower expenses — although there are expenses with the funds you have within your 401(k), Blooom works to reduce those as much as possible through your asset allocation.

Asset allocation — Blooom will use investment options available to you in your 401(k) plan and chooses ETFs and mutual funds.

Customer service options — Although you cannot call customer service on the phone, email, text and live chat support Monday to Friday, from 10 a.m. to 6 p.m. EST.

Fees

You can get a free analysis of your 401(k) when you link your account. To manage your account, it’ll cost you a flat $10 a month.

Yes, you read that right, it doesn’t charge you a percentage of your assets under their management, unlike many other robo advisor companies.

That way you know exactly how much to pay each month no matter how much you have under management.

In addition, Blooom charges the fee on your credit card instead of taking money out of your 401(k) account.

Blooom Alternatives

Is Blooom The Right Choice For You?

If you’re wondering whether Blooom is worth trying out, the answer is yes. Since you’ll only need to pay a flat fee of $10 a month, you can sign up for the service and cancel anytime if you don’t like what you see. 

You can always do a calculation to see the percentage you’ll pay for Blooom to manage your 401(k) account to see if it’s worth it if you want to stick with the robo advisor for the long term. 

In any case, Blooom is offer a much-needed service — helping you manage your employer sponsored retirement accounts.

Like mentioned before, for many people a 401(k) account is their main retirement account and there doesn’t seem to be any robo advisors that have entered the market right now.

If you’re a more hands-on investor, you may not like what Blooom has to offer since there isn’t as much diversification in asset classes and the ability to customize holdings.

There are any socially responsible investing options either, so if that’s important to you, you’ll need to look elsewhere. Since Blooom doesnt’ offer support for other accounts, you need to sign up for another robo advisor. 

Otherwise, it’s great that Blooom is a fiduciary, and it offers a simple sign-up process and a hands-off approach to investing.