In recent years, the rise of robo-advisors has made investing accessible to more people.
Having one can help you open taxable investment accounts and IRAs without too much trouble. And just about anyone with $25 and the will to invest can take advantage of today’s technology.
One area that has been neglected, though, is 401k management. Many of us sign up for a company’s plan (if we get one) and then promptly forget about it. We don’t pay attention to the investments available, or the fees potentially attached to them.
And, we certainly don’t adjust our portfolio once it’s been set.
aims to change all of that. This robo-advisor makes it a point to focus on 401k and 403b management.
So if you aren’t sure what to do with your employer-sponsored retirement plan, this tool might be just the thing for you.
First off, Blooom focuses exclusively on managing the assets in your 401k or 403b.
So when you first sign up with them, you can receive a free analysis of your account. No matter the size of it.
Blooom will also take a look at your retirement account and make suggestions for saving money on costs, based on the funds offered in your company’s plan. Additionally, you can receive recommendations for adjusting your asset allocation.
If you decide to stick with Blooom to manage your retirement account, your monthly fee is based on the assets you have under management.
Essentially, Blooom uses its algorithms to move your investments around to help you earn more for retirement while reducing your fees. Blooom also rebalances your retirement portfolio every 90 days.
A few pros and cons with Blooom
It’s important to note that Blooom only deals with 401k and 403b accounts. You can’t open IRAs or taxable investment accounts.
On top of that, you are limited to the investments available in your company’s plan. If your employer has poor offerings, there’s not much Blooom can do beyond limit the damage.
The good news is Blooom offers progress reports on your portfolio to help you see whether or not you’re building a healthy retirement nest egg.
Then, you can determine whether you need to contribute more each month. You’ll also receive suggestions about where that money should go.
Another perk offered by Blooom is a “translation” service. If you have confusing plan correspondence, email it to Blooom.
The experts at Blooom will review it and then tell you what it means in plain English. This is a nice bonus if you aren’t sure what different terms mean. Or, if it’s difficult to read the details of your plan.
Using the Blooom online platform
Blooom’s platform is very easy to use. All you need to do is answer a couple basic questions, provide your email, and create a password. Once that’s done, you can choose where your 401k is held.
After that, simply enter your username and password to connect your retirement account to Blooom.
Luckily, your employer doesn’t need to be a Blooom partner for this to work. And if you don’t see your 401k plan provider listed, you can search for it and still enter your username and password.
Once Blooom has access to your plan, it can analyze your holdings and figure out where you are paying too much. Plus, you’ll find out if your asset allocation matches your retirement target date.
One of the advantages of Blooom is that it can work with any plan, as long as you can access it online. What’s more, if you don’t have access to your company’s plan online, you can talk to your administrator to help you set up that access.
Keep in mind that you won’t be able to use Blooom unless you know your online username and password to access your company’s retirement plan.
How Blooom looks at your overall portfolio
Blooom will look at the fees and expense ratios associated with the funds you are investing in. If there are options with lower fees, Blooom will help you move your money into more cost-efficient funds.
One warning to note: Blooom doesn’t use your risk profile or future goals, other than your desired retirement date, to create an asset allocation. For the most part, Blooom will put your funds mainly into stocks until you get closer to retirement.
However, you can change your mix if you want. But if you let Blooom decide, it’s very stock-heavy to start. This isn’t a bad thing if you have the risk tolerance for it.
It should be noted that Blooom uses Modern Portfolio Theory to determine your mix. That means you will have more stocks when you are younger and your allocation will shift to favor bond funds as retirement approaches.
Once you get your account set up, and your retirement plan connects, the dashboard is intuitive and easy to use.
Blooom also uses an image of a flower to illustrate the health of your portfolio. It’s a fun visual that allows you to quickly and easily see where you stand.
You can use Blooom to change your asset allocation, review your fees, and get a top-level view of your retirement portfolio.
Blooom interest rates and fees
Blooom offers a very straightforward fee of $10 per month, no matter the account size. There is no account minimum and no account fees for transfers or closing.
However, Blooom is offering the first month free to Student Loan Hero readers!
Just keep in mind you’ll also have to pay the internal fund fees that come with your retirement funds.
Additionally, most retirement plans offer a mix of index funds and actively managed funds. These all come with expense ratios.
Blooom will help you find the least expensive funds for your needs. But, sometimes there’s no avoiding the costs.
Blooom’s management fee is on top of the fees that already come with your plan. It can be worth it if Blooom can help you find better ways to grow your wealth and reduce your costs in other ways, though.
However, overall the fees charged by Blooom can be a little steep, depending on your account balance.
If you are just starting out, and have a relatively small balance, that $10 a month is fairly hefty. And with a $2,000 balance, that’d be like having a management fee of about 6% per year.
When you consider that many retirement plan administrators charge between one and two percent annually, that seems a little more expensive than it should.
A higher balance with the flat fee structure can allow you to come out ahead in the long-run. But to start, you’ll be disappointed with the management fee charged by Blooom.
Blooom eligibility requirements
In order to use Blooom, you need to have an employer-sponsored plan. The types of plans eligible include:
In order to use Blooom, you need to have a retirement plan already that meets the requirements set forth by your company and by U.S. law.
As long as you have an employer-sponsored retirement plan, you can use Blooom to analyze and manage it.
Blooom customer service
It’s possible to contact Blooom’s customer service through email and live chat. In general, the company appears reasonably responsive.
Blooom also uses humans to review your portfolio and asset allocation. After the algorithm has provided you with an asset allocation, it’s reviewed by an actual person.
One of the bonuses of Blooom is that it is a Registered Investment Advisor. This means the company uses a fiduciary standard, and their financial suggestions have to be in your best interest.
However, because Blooom is limited to the funds offered by your employer’s plan, there is only so much that can be done. Their financial advice is limited to what’s available to you.
More about Blooom
Blooom is headquartered in Leawood, Kansas. It is one of the fastest-growing robo-advisors in history, reaching $300 million assets under management in about 20 months.
The company was created to fill the gap in account management for employer-sponsored plans. As of this writing, Blooom has about $464 million in assets under management.
Blooom is best for those who aren’t sure what to do with their retirement assets. It works well for consumers who are hands-off with their investing and hope to get a little more from their retirement accounts.
Blooom contact info
has two office addresses listed online.
5325 W 115th Place
Leawood, KS 66211
Kansas City Office
1712 Main Street
Kansas City, MO 64108
They can also be reached by phone at 888-446-8416, or through their online contact form.
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