Blooom Review: Grow Your 401k Faster In A Few Clicks (2022)
One of the biggest benefits a company can provide is an employer-sponsored retirement plan. It allows you to put part of your retirement planning on cruise control since they manage a lot of the leg work. On top of that, many employer plans will provide an employee match, which is basically free money. In our Blooom review, we’ll go over a 401k optimization tool you might use to get the most from your plan.
But it’s not all sunshine and daisies. Sponsored 401k’s are notorious for having limited selections, and confusing, fee-heavy investment options. One approach is to learn how to optimize your 401k yourself, which can be time-consuming. But what if there was a way to have someone look over your shoulder to provide you some guided help.
We’ll also show you how to step by step how to use their service to get a free analysis done on your current employer-sponsored plan, in less than 5 minutes.
Ready? Let’s get started!
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Contents
What is Blooom?
Blooom is a robo-advisor that helps you get the most out of your company-sponsored retirement plans by minimizing hidden fees and optimizing your portfolio allocation to increase diversification and reduce risk. They provide services for 401k, 403(b), 457, 401(a) and TSP accounts–but for the purposes of this article, I’ll just refer to 401k’s to keep it simple.
Blooom offers two levels of service, and there is no account minimum to take advantage of either. First is an easy-to-use, free 401k analysis tool that provides a snapshot of your workplace retirement account across three criteria: Fees, Risk, and Diversification. They also offer professional retirement account management and monitoring services for $10 per month. We’ll take a closer look at both, so you can see if they’re right for you.
What fees is Blooom helping you reduce?
Most employee-sponsored 401k plans come with a limited selection of actively managed funds that you can pick to allocate your investments into. They typically cover broad categories of asset types and market caps, as well is time-based funds.
Each mutual fund is like a basket of stocks or bonds that the fund’s manager monitors throughout the year. As the market changes, the funds’ manager implements various strategies to keep returns moving towards their investment objective.
Just like all financial products, you pay an annual fee for each mutual fund in your investment portfolio. Those annual fees are how the fund managers receive compensation for their investment management services.
Paying an annual fee for mutual funds isn’t inherently bad, they are just a part of doing business. However, it is in your best interest to pay the lowest reasonable amount for the asset allocation you’ve selected to meet your investment objective.
It’s then up to you to decide how much value you think you are getting for those fees. If you’d like to learn more about how this process works, check out our post on how to optimize your 401k.
How to get started with Blooom
Signing up for Blooom’s free 401k assessment is quick and painless. To get started, just fill in your first name, birth date, and target retirement age. They will also ask for your email address and a password in order to set up your account. Since this is a free analysis, they don’t even ask to hold any credit cards on file.
Next, select your workplace retirement plan provider. Quick links are provided for the most common providers, but you can use their search box if you don’t see yours listed.
Finally, they’ll need access to your account to perform their analysis. You’ll need to provide your login credentials, so some folks find this part scary. Blooom uses bank-level security with 256-bit encryption to protect your personal information. You can always check out Blooom’s security standards if you’re worried.
And remember, at this point, you aren’t giving them access to make any changes to your account. You need to subscribe to their paid service in order for Blooom to make changes to your portfolio.
Now just sit back and relax for a bit! You won’t have to wait long—my assessment was ready in about 30 seconds.
How’s your 401k doing?
When you get your report, the first thing you’ll notice is that the health of your 401k is visually represented by a flower. As you can see below, mine was a daisy with some gnarly looking Venus flytraps and thorns growing out of it.
Still alive and relatively healthy—but definitely in need of some love!
The analysis focuses on three aspects of your account:
- Fees
- Risk tolerance
- Diversification
You’re given a simple thumbs up or thumbs down to show how you’re doing in each area. Just click “Next” to get more in-depth information about what the free analysis tool has to say.
Here’s what they had to say about the risk level in my 401k:
All in all, I’d say their analysis provides just the right level of detail for the average person. It’s not a bunch of charts and spreadsheets that will leave you feeling overwhelmed. But it’s definitely enough information to highlight your plan’s weak areas.
You’ll still need to do your own research to make the right adjustments to your portfolio, but at least this analysis will give you an idea of where to start.
Is Blooom’s management service right for you?
Not a do-it-yourselfer when it comes to financial management? Get antsy every time the market takes a swing? Blooom’s 401k management and monitoring service might be right for you.
Once you sign up for Blooom’s standard plan, Blooom will monitor your account on an ongoing basis and automatically adjust your 401k to
- Minimize hidden investment fees
- Diversify your portfolio to have different assets under management
- Rebalance your stock-to-bond ratio to maintain an appropriate mix based on your risk tolerance as you near retirement
- Address any suspicious activity in your account
Basically, they will apply the free analysis you received in assessment and do the legwork to make changes as necessary.
This premium service is $10 a month, regardless of the size of your account. Whether this monthly fee seems reasonable or not will probably depend on how much you have in your 401k, to begin with.
Blooom is definitely filling a well-needed niche
It hasn’t always been so easy for the average person to get professional financial advice. Minimum account balance requirements and management fees have traditionally meant that many consumers get little guidance when it comes to how to invest their money.
As a result, most people wait until it’s time to roll over a 401k into individual retirement accounts before reviewing their selections. And that’s not great, because even if you made good decisions in the beginning, the funds your plan offers can change. And your investment strategy should change, too, as you get closer to reaching your retirement goals.
Many fund providers do offer tools and investment recommendations to help consumers make smart choices about how they allocate funds within their 401k. And for those of us who have an interest (and the time) to do a little research, they can be quite useful. But in my experience, they aren’t always user-friendly and the information they provide can be overwhelming. Charts and graphs aren’t for everyone.
Robo-advisors like Blooom make professional financial advice more accessible by reducing or eliminating minimum balance requirements and fees. Their tools and services are designed to be easy to follow, allowing users of all kinds to make smarter, better-informed decisions about their retirement savings.
Blooom’s Pros and Cons
Life can get busy. With work, family, and day-to-day finances to juggle, it’s no wonder so many of us ignore our 401k’s. But you want to make sure your money is working for you, or else you’ll run the risk of not being able to cover your expenses during retirement. Blooom promises the best of both worlds: a well-managed retirement account little-to-no work on your part.
Blooom’s free 401k analysis tool
I can’t think of any reason not to give this a whirl. I mean, it’s quick and free, right? If your 401(k) is in perfect health—great, you get to feel like a financial rockstar.
And if it needs some adjustment, you’ll at least have some recommendations on how to fix it.
Pros
- Easy sign-up
- Fun, user-friendly interface
- Easy-to-understand analysis
Cons
- The analysis is only based on employer retirement accounts, so other investments are not taken into consideration.
401k account management
Whether or not this is a good product for you really depends on your financial management style. If you like to be hands-on with your investments, you might not see much benefit (and it might drive you bonkers knowing you’re not in the driver’s seat). On the other hand, if you’re the “set it and forget it” type, this would guarantee that your 401k is getting regular attention.
While I do love a simple pricing plan, $10 a month might be a bit steep for those with smaller 401k balances. Let’s say your balance is currently $5,000; that’s equivalent to a 2.4% annual management fee. That’s significantly higher than you’ll see from other robo-advisors (like Personal Capital or Betterment who charges 0.25%).
Of course, as your balance climbs, the fee becomes more in line with what other robo-advisors are charging.
Pros
- Frequent account optimization and portfolio balancing
- Access to professional financial advisors (they’ll even answer questions about other account types)
- Low fees (if you have a large account)
Cons
- High fees (if you have a smaller account)
- The analysis is only based on employer retirement accounts, so other investments are not taken into consideration.
Blooom’s website says that their goal is to “to bring simplified financial services to neglected savers.” All in all, I’d say they achieved that goal with these offerings.
Wrapping up our Blooom Review
While not for everyone, Blooom fills a much-needed gap in the marketplace. There is no question that learning about the basics of personal finances is important, but not everyone has the time or interest to understand how to analyze 401k’s for fees. That’s where services like Blooom can provide a ton of value by saving you money in places you wouldn’t think to look.
With their free 401k analysis tool, there really isn’t any reason not to try them a test run. Worst case scenario they tell you that your 401k is perfectly optimized, which is great peace of mind for 5 minutes of your time. So now that you have the right knowledge and tools to grow your 401k, what’s stopping you?
Have you tried Blooom? Are there other services you’d recommend? Tell us your thoughts below!