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When it comes to your 401(k), the earlier you start investing, the better. If you start early on in your career, you can take advantage of compounding interest. Unfortunately, most people sign up for a 401(k) and don’t actively manage it. The lack of management leads to paying higher fees and investments that aren’t optimized for growth.
Blooom is a robo-advisor that researches, optimizes, and monitors your investment portfolio.
What makes Blooom different from conventional robo advisors? Besides being spelled with three o’s, Blooom is an investment advisory firm that caters specifically to 401(k) plans.
At the time of our initial Blooom review, they only offered 401(k) management. Since then, they have expanded to manage some IRAs and Roth IRAs, making them a more competitive robo-advisor. Blooom can currently manage employer-sponsored accounts and IRAs at Fidelity, Vanguard, and Charles Schwab.
For many people, their employer-sponsored retirement plan is one of their most considerable investment assets. In this review, you’ll find out how they offer an easier way to manage and grow your 401(k) and retirement accounts.
AUM (Assets Under Management)
5325 W 115th Pl Leawood, KS 66211
Live support via phone, email, and chat
Access to Human Advisor
What does Blooom do?
When you sign up for your Blooom account, they will start by reviewing your 401(k) or retirement account. Blooom will create a custom portfolio based on your age, retirement goals, and current investments. They are a fiduciary, which means they need to act in your best interests legally. Your portfolio won’t need to be transferred anywhere, but Blooom will need online access to your account.
Blooom states that they will adjust your account within seven days, and then review your account quarterly to ensure it’s on track.
As a robo-advisor, the algorithms that Blooom has developed do the heavy lifting of making adjustments. They also provide human advisors that perform quality checks and review your account optimization. There is a live chat function to ask any questions available Monday to Friday during regular business hours.
The goal of Blooom is to adjust your 401(k) to meet your goals and reduce the fees you’re paying.
If you have a Blooom account, you can contact their financial advisors and get personal financial advice regarding your HSA (Health Savings Account), employer-sponsored retirement accounts, and 529 plan.
Plans, Fees, and Account Minimums
Before you sign up, Blooom offers a free analysis of your 401(k) account with no obligation to use their paid services. Because Blooom is managing your 401(k) or IRA, there is no minimum account balance.
Blooom offers three plans: Essentials ($95/year), Standard ($120/year), and Unlimited ($250/year). We recommend the Standard plan because it offers more features than the Essentials plan for $25 per year. The Essentials Plan doesn’t include auto-optimization, advisor access, or withdrawal alerts, which are some key features that make Blooom great.
The Unlimited Plan offers a live chat with human advisors and allows you to manage multiple accounts. The Standard Plan includes human financial advice with an expected response of 2–3 days. We recommend the Unlimited Plan if you want Blooom to manage multiple 401(k) and IRA or Roth IRA accounts.
The standard monthly fees make Blooom more beneficial to larger accounts. Managing a 401(k) worth $100,000 for $120 per year equates to an annual fee of 0.12%, Which is among the lowest annual fee you’ll find with a robo-advisor. It’s also many times cheaper than a traditional human advisor.
The table below gives you a quick and easy reference to see what type of fees you’ll be paying depending on your account balance and chosen plan. The Essentials and Standard plans are per account, and Unlimited has, as the name suggests, unlimited accounts it can manage.
Essentials Plan ($95/year)
Standard Plan ($120/year)
Unlimited Plan ($250/year)
As you can see, the sweet spot sits at account balances above $25-35,000 for the first two plans, considering that most competing robo advisors have an annual management fee of around 0.25%. The rates become increasingly affordable if you have a higher account balance above $100,000.
The flat-fee structure may not work to your advantage if you have a smaller balance in your 401(k). That said, optimizing your account early on is also more beneficial. Blooom can help beginner investors get on the right track and reduce fees, which will pay off significantly in the long run.
Is Blooom Right for You?
Blooom is best suited for larger account balances, ideally $50,000 and above, but over $25,000 also makes sense. Typical robo-advisor management fees are between 0.20–0.50%. Managing a $25,000 account with Blooom’s Standard plan would cost 0.48%, and managing a $100,000 account would cost 0.12%.
Vanguard says the average 401(k) balance is $92,148. With Blooom, this would add up to a management fee of only 0.13%. Blooom also claims they’ve saved 79% of users an average of $91 in hidden fees.
Blooom is also an excellent service because you aren’t obligated to keep Blooom forever. Blooom can optimize your account, reduce the fees you’re paying, and then discontinue your service.
Blooom works with any 401(k) plan accessible online. Blooom may only work with plans that select employers provide. However, the service is designed to work with many different plan providers.
There aren’t many other robo-advisors that manage your 401(k), Some offer financial advice that includes your 401(k) investments, but Blooom is one of the few to manage it and make adjustments on your behalf.
According to this research from The National Institute on Retirement Security, around 75% of Americans are concerned about retirement. Blooom can help give you the much-needed assurance about reaching your retirement goals.
Ease of Use
Blooom is easy to use, even for a newbie investor. The free portfolio analysis lets you see where your 401(k) has room for improvement. The analysis will let you know when you’re overpaying for fees and if your current portfolio doesn’t match your financial goals.
After completing the signup process, the Blooom robo-advisor will analyze your 401(k) or IRA within a few days. It factors your current and expected retirement age to create a personalized financial plan. Algorithms will handle the rest. Blooom then places the trades on your behalf, making the necessary adjustments.
The service automatically leans towards a more aggressive investment plan and progresses towards a more conservative portfolio as you approach retirement. You can change your retirement date and risk tolerance manually.
Blooom membership comes with chat access to financial advisors to answer all of your questions, making it a hybrid robo-advisor similar to what Vanguard PAS or Personal Capital offers, with a low management fee.
Suitability for Different Investment Budgets
The $120 annual fee makes Blooom better suited for portfolios over $25,000. The fee is payable via debit or credit card, so Blooom doesn’t withdraw any money from your retirement account.
As we mentioned above, Blooom is ideal for investors with portfolio balances over $25,000. Any lower than that, though, and you might be better off waiting until your balance gets a bit higher, as the fees are likely to eat away at your gains. In the meantime, you can check out the free robo-advisors we’ve reviewed.
Blooom offers a less expensive and easier way to manage your 401(k) and retirement account. Blooom offers management services while allowing you to maintain control over your portfolio and skipping the need to transfer it. Instead, they will review your current asset allocation, move your funds to stocks and bonds with fewer fees, and align with your goals.
This robo advisor is not the best choice for lower portfolio balances, specifically $25,000 and below. If this is the case, you might end up paying larger fees in the long run. We still recommend using Blooom’s free analysis to see potential improvements.
Which retirement accounts does Bloom support?
Blooom supports most employer-sponsored retirement plans. That includes 401(k)s, 401(a)s for government and public school workers, 403(b)s for non-profit employees, and most 457 plans.
Blooom also manages existing accounts at Fidelity, Charles Schwab, and Vanguard, including Traditional IRAs, Roth IRAs, SEP IRAs, nondeductible IRAs, Spousal IRAs, Simple IRAs or Self-directed IRAs.
Can you cancel your Blooom account?
Yes. You will need to pay for the 12-month subscription when you sign up. From there, you can choose to auto-renew your plan or not. If you want to cancel your account after six months, Blooom will refund you for the unused time.
What is the expected return on investment?
Unlike some other robo-advisors where they put your money into new ETFs, Bloom adjusts your current portfolio based on your situation and financial goals. Your returns will depend mainly upon how your existing 401(k) or IRA is setup. If you’re paying higher fees, or signed up for a 401(k) and haven’t touched it since the optimization that Blooom provides can be significant.
Can my family use one Blooom account?
No. Blooom optimizes your account based on factors specific to you: your age, retirement goal, and risk tolerance. Blooom can manage more than one account, and you can switch which account they’re managing, but it will need to be for the same person.
Is Blooom safe & secure?
Blooom uses the same level of security as online banks, and their website is secured with TLS 256-Bit encryption. Currently, Blooom doesn’t offer a mobile app.