Finally, a Robo-Advisor to Help You Manage Your 401K [Blooom Review] (2024)

PT’s note: When I started my first big career job (nine months with KPMG out of Shreveport, LA) I never invested with the 401K! I didn’t even get the match! It wasn’t until I was 23 (at my second major employer) that I pulled the trigger and started investing and getting the employer match through the 401K! Agh! To think of all of the lost compound interest and free money.

When you started your first job, were you offered a 401(k) account? And if you were, did you even know what that meant? Many new employees have no idea what their 401K is or how to participate in the company’s program. Employees often receive a packet of information, but probably not an explanation of the company benefits and how to contribute.

More often than not, companies make little to no effort to fully explain their 401K programs to their employees. They don’t address the benefit a 401K could have for their employees’ future. They don’t help educate them on how to choose investment options or the amount they should contribute. For most employees, how to have a balanced and well-funded 401K is a complete mystery.

If you don’t have a financial planner, you may need professional guidance regarding your financial future and your 401(k) account. It is confusing, cumbersome, and challenging to find the appropriate advice for your financial situation. If you can relate to this predicament, you may need a little help. Blooom can help to give you quality advice for your 401(k) program.

What Is Blooom?

Blooom was designed by 3 financial experts. They made a career of managing millionaires’ money, yet they recognized that the average person needed their financial advice even more. They wanted to create a tool that anyone could use, no matter what their net worth is. After all, isn’t that how it should be?

With the flood of Robo Advisors, Blooom sought out a way to stand out from the crowd. Blooom’s niche is to exclusively manage defined contribution plans which include: 401(a)s, 401(k)s, 403(b)s, 457s and thrift savings plans. They charge a standard monthly fee of $10 and don’t require a minimum investment to join. With the distress of America’s financial future, Blooom can help people take back control of their finances.

How Does Blooom Help You Manage Your Retirement Account?

Defined Contribution Management

The majority of defined contribution accounts are not managed by a financial advisor. Most financial advisors focus on other forms of retirement and taxable accounts. Blooom has found a niche that the industry had turned its back on. There are other big financial institutions that offer investment advice for employer-sponsored plans, but they often have a hands-off management approach. They will advise the investor but not manage the account. This makes Blooom stand out.

Blooom has taken ownership of this niche and made it accessible for any investor who participates in one of these plans. The other benefit of Blooom managing your account is they do not need to partner with the financial institution where your plan is held. All they need is your online credentials.

Investment Analysis

Once you sign up for an account and link your 401(k), Blooom will put your investment mix through an analysis. They visualize this by associating the health of your 401(k) with a flower. If the flower is “blooming” you are in good shape. This analysis is free but yet has extremely valuable information about your account. Blooom is banking on you seeing the value of this service and how it could benefit you on a regular basis.

Many plan participants may not be in a plan suitable for their financial needs in retirement. Blooom’s analysis will highlight what the plan lacks and identify where the participant should be based on their time horizon—that is, the amount of time until they plan to retire.

In order to keep you in the correct asset allocation, Blooom will rebalance your account and make adjustments when necessary. When some of your assets perform better than others you need to rebalance your account to make sure you have the same asset mix and risk tolerance. The market is constantly fluctuating, making it challenging to stay in the same asset mix.

Expense Ratio Audit and Customer Support

Many defined contributions plans have limited investment options. This can make internal fees higher because there are minimal options when selecting your investment mix. Blooom will evaluate and compare the most cost-effective asset mix within the constraints of your plan to lower your fees. Though your options may be limited, Blooom will try various combinations to discover the lowest fees possible. Blooom claims that it can save the average participant $249 the first year.

Blooom offers email and chat support to its customers. They are available during normal business hours. They can help you with a wide variety of questions. If you have questions outside the realm of your 401(k) plan they may be a good resource. They offer a wide variety of advice from debt repayment to the financial “what-ifs” of life. This service could be extremely beneficial depending on your financial situation and needs.

Fees They Charge

Blooom will reassess your asset mix to determine the most suitable asset allocation for your time horizon and charge you $10 a month. The fee will not come out of your plan, it will be charged to the credit card you entered when you signed up for the service.

There are no hidden fees, just $10 dollars a month to use the service. In addition, Blooom is a fiduciary, which means that they must keep the investors’ best interests in mind when advising on different asset allocations. This is another benefit to working with a fee-based Robo Advisor.

Though many financial institutions require a minimum investment amount in order to work with them, Blooom has no such minimum requirement, which means it can work for anyone. Blooom’s mission is to help everyone receive beneficial investment advice no matter where they are on the financial journey.

PT’s note: It’s 100% worth it to check out Blooom and run your 401K through their initial check. As to whether the $10/mo is worth it after that, it’s hard to say. When I invested through a company 401K, I chose a target-date fund which keeps my investments in balance for me, automatically. So, I didn’t need re-balancing. If you don’t have access to a low-cost target-date fund or an easy way to keep things in balance in your 401K OR if you simply need more confidence in your investment choices, then I’d say the $10/mo. might be worth it.

Limited Investment Questionnaire and Allocations

When signing up for a Blooom account you will be asked a few questions. These questions include:

What is your date of birth?

When do you want to retire?

The answer to these questions will give Blooom the time horizon you are seeking. It will allow them to determine how aggressive you should be with your asset allocation. However, when creating a strong financial plan, it’s important to remember that not everyone has the same risk tolerance even if they have the same time horizon. They may be more conservative with their investment strategy and not as comfortable with investing a lot of their money instocks.

Blooom indicates that most of their clients have minimal stock exposure and are not as aggressive as they need to be. They are understandably a fan of US Large Cap stocks and would recommend a decent portion for most portfolios.

Blooom is correct in suggesting that their approach will work well for the majority of their clients. However, there are many factors that can play into determining your risk tolerance, and investors who are both more skittish and more willing to do some DIY research into investments may find that they prefer a different approach. For most investors, however, Blooom’s approach is a solid one.

Is Blooom Right For You?

If you are in search of a Robo Advisor to help you with your employer-sponsored plan, Blooom is an excellent option for you and your investment needs. It is easy to access and the fees are reasonable. The company is passionate about helping you achieve your idea of financial success through the tools and resources they provide. Blooom may also be able to save you some money and show you what assets are costing you the most. They have years of experience to guide you to a strong financial future.

At the end of the day, Blooom can help 401(k) plan participants to better understand their investments. The more educated you are when it comes to your financial future, the better–which makes Blooom an important addition to the world of Robo Advisors.