Managing a 401(k) wasnâ€™t in your job description when you started at your company, and chances are, you arenâ€™t thinking much about how itâ€™s performing. But if youâ€™re not paying attention, your employer-sponsored retirement plan could end up underperforming. Thatâ€™s where Blooom comes in.
In a packed pond of robo-advisors, Blooom operates a bit differently: It only manages your 401(k) for you. Thereâ€™s no need to roll your money over or make a transfer to a new account. You give Blooom permission to access your existing 401(k) account and it makes sure youâ€™re maximizing your investmentâ€™s earning potential. It considers factors such as your age, how close you are to retirement and your investment preferences.
Blooom is a great option for young investors who arenâ€™t sure how to maximize employer-sponsored retirement accounts. Even though your employer is offering you a 401(k) plan, they may not be managing it in a way that most benefits you. That means you may need to take your investments into your own hands.
Blooom can help maximize your 401(k) in multiple ways. For example, it scans your account to find hidden fees that youâ€™re paying and will move your investments with the lowest fees possible. Their goal is to put you in low-cost investments with minimal costs to make sure your account is earning the most it can. Any time an investment isnâ€™t performing as well as it should, Blooom can rebalance your portfolio to keep you on track for your retirement goals.
Blooom is like a robo-advisor in that it uses technology to calculate if your 401(k) is earning the most it can for you. However, you can also chat with a human if you have questions or concerns.
|Account fees (annual, transfer, inactivity)||
|Tax loss harvesting|
|Offers fractional shares|
|Customer support||Chat, Email|
Humans are reachable: One of the turn-offs of robo-advisors is the lack of humans to speak to in case you need or want to. With Blooom, you get the chance to chat with financial advisors on any pressing money questions you have. Investing isnâ€™t one-size-fits-all and you may need to talk to a real, live person occasionally.
Acts as a fiduciary: Fiduciaries are legally required to act in the best interest of you, the client and investor, but not all financial advisors are fiduciaries. You can rest assured Blooom will make recommendations based on whatâ€™s right for you.
Flat monthly rate: You pay $10 a month for Blooom to track and manage your 401(k) and ensure youâ€™re investing in the most beneficial way. If you only want an analysis of your employer-sponsored account, you can get one for free. But the bonus of having a company manage it for you could be helpful.
No account minimum: Many investment accounts request a minimum to start investing. Because Blooom is only helping you manage your employer-sponsored retirement account, they donâ€™t need you to have a minimum to invest. That means you can start using Blooom as soon as you have access to your work 401(k).
Limited to 401(k)s: If you donâ€™t have an employer-sponsored plan or you work for yourself, Blooom isnâ€™t going to work for you. They only offer support for 401(k), 403(b), 401(a) and 457 accounts.
You pay for convenience: You can do many of the things Blooom does by yourself, but you may need to dedicate significant time and effort to educate yourself on your investment options. For many, itâ€™s simpler to hire a company like Blooom to manage things for them, but that convenience comes at a price â€” especially for those with lower 401(k) balances.
For example, if you have $5,000 in your 401(k), Blooomâ€™s $10 per month fee (or $120 a year) would cost you 2.4% annually. In comparison, that same $5,000 invested in a retirement account with a robo-advisor like Wealthfront would cost you about $1 a month (or $12 a year) with a 0.25% annual fee.
Skews toward more aggressive investments: Blooom believes that the younger you are, the more you should invest in stocks. The older you get, the more you move towards less-risky bonds. That means if youâ€™re more than 20 years away from retirement, Blooom assumes you can handle the ups and downs of the market. If youâ€™re not comfortable with more aggressive investing choices, you may not always agree with how Blooom manages your money.
All investments carry risk, and your 401(k) is no different. If you feel your investments are too aggressive to your liking, you can always talk to Blooom about adjusting your portfolio.
Blooom discusses their security measures in a way many other robo-advisors donâ€™t. They talk about encryption levels, secure servers, and the multi-level verifications in place to confirm itâ€™s you requesting changes to your account.
Because Blooom is a fiduciary, they are required to act in your best interest. They donâ€™t hide fees and are upfront about their monthly charge. You can speak with experts any time the market fluctuates, and Blooom alerts you any time thereâ€™s suspicious activity on your account. Theyâ€™re also registered with the Securities and Exchange Commission (SEC).
If you have the opportunity to save for retirement through an employer-sponsored plan, using Blooom could help make sure youâ€™re getting every penny you should be. Not all employer plans have advisors that act in your best interest, which is where Blooom comes in. If you donâ€™t like it, you can cancel any time without any fees. As long as itâ€™s 48 hours before the end of the month, Blooom wonâ€™t charge you for the next month.
However, if you donâ€™t have a plan offered through your employer, youâ€™ll likely use an individual retirement account, or IRA, to save for retirement. Blooom doesnâ€™t help with those, so thereâ€™s no use in signing up unless you have a work-sponsored account.
If you meet the requirements, Blooom may help you max out your earning potential, giving you the most money when you retire. If you donâ€™t, there are plenty of robo-advisors available to help you manage an IRA or another investment account.