Blooom Review: Can You Really Grow Your 401k Faster In A Few Clicks?
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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 employers will provide an employee match, which is basically free money.
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.
Well, there is good news. There are robo advisors that do just that, and in this Blooom review, we’ll dig into how it works.
But that’s not all!
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!
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 fund’s asset allocations 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 are no minimum account balances to take advantage of either. First is an easy-to-use, free 401k analysis tool that provides a snapshot of your retirement account across three criteria: Fees, Risk, and Diversification. They also offer professional 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 markets 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 forecasted targets.
To offset the operational costs of the mutual fund, every time you invest in the fund, a percentage of your investment is allocated towards fees that cover these costs. Those fees are how the fund managers receive compensation for their work.
Fees aren’t inherently bad, they are just a part of doing business. 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. 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’d need to subscribe to their paid service for that…).
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 daisy (aka 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, and diversification), and 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 their assessments.
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, Blooom will monitor your account on an ongoing basis and automatically adjust your 401k to
- Minimize hidden 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 account activity
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 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 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 retirement.
Many fund providers do offer tools and 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
I can’t think of any reason not to give this a whirl. I mean, it’s quick and free, right? If your daisy is in perfect health—great, you get to feel like a financial rockstar. And if it’s a bit wilted, you’ll at least have some recommendations on how to fix it.
- Easy sign-up
- Fun, user-friendly interface
- Easy-to-understand analysis
- 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 others are charging.
- 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)
- 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 a 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 us other services you’d recommend? Tell us your thoughts below!