Updated July 7, 2018

Blooom Review: Is It Good?

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Blooom is an affordable robo-advisor for your 401k. But is it safe and legit? Read this in-depth review for the pros and cons.

Blooom
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Overall Score

4.5

Annual Fee

4.5

Minimum Deposit

5.0

Customer Service

4.0
5-point scale (the higher, the better)

Pros and Cons

  • Unique 401k management service
  • No account minimum
  • Low monthly fee
  • No IRA or taxable accounts

Bottom Line

Unique 401k auto-advisor service for a low monthly fee

What is Blooom

Blooom is a service that automatically manages your 401k for you. This is a unique service in the world of robo-advisors.

If you work in a company, chances are you signed up for your employer's retirement plan. For many people, they start work in their 20s and don't actually understand how to invest or manage a 401k plan.

This means your 401k plan could be not allocated properly to your retirement goals. Your money may not be gaining as much as they could be.

Blooom is an auto-advisor that analyzes your existing 401k and optimizes it for you. It automatically manages it for you so that you stay on track to your goals.

To get started, get a free 401k checkup here.

Did you know: Most people think their company is managing their 401k. But in fact, the plan administrators only do what you tell them to. So if you're not monitoring it yourself and requesting changes, then no one is. They may also be charging high fees you're not aware of. High fees can significantly reduce your retirement returns. Even a 1% fee can add up to hundreds of thousands of dollars lost by the time your retirement comes.

Blooom's algorithm uses your age and targeted retirement date to create the ideal asset allocation with minimal fees. Despite it being a robo-advisor, there is a human element to the service as well, giving investors the best of both worlds for a fee of $10 a month.

Keep reading to learn if Blooom is right for you.

Note: Blooom is for employer-sponsored plans only (401k, 401a, 403b, or 457). They do not offer their service for individual retirement accounts (like IRAs) or any other taxable account yet.

As of July 2018, Blooom manages more than $2 billion in assets.

Who Is Blooom Best For?

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  • If you don't understand your employer 401k plan. Like many young people, maybe you signed up for a plan and just randomly made an investment selection. But you don't actually understand it and you're not even aware you need to manage it. Blooom will help analyze your plan for you and invest it to its full potential.

    Is Blooom a scam? No, Blooom provides genuine 401k management services. Blooom is dedicated in their mission to help people make the most of their 401k. You don't have to worry about security either. All your information is protected with 256-bit encryption and bank-level security.

  • If you don't have the time to handle your own investments. Investing is time consuming and emotional. Both of these can be obstacles to reaching your financial goals.

    Blooom helps by managing your account for you and removing the emotional aspect of investing.

    You still have a say in what happens - you can always say "no." But you have the benefit of professional and "robo" advice should you want it.

  • If you pay individual advisors for 401k advice. If you are lucky enough to have found a financial advisor who will offer advice on your 401k - and many won't - you are likely paying an hourly fee for it. Blooom charges just $10 per month, which is likely a very small fraction of the hefty fees you pay now.

    How to cancel Blooom: If you no longer want the service, just simply cancel it anytime. This is a month-to-month service and there are no penalties for cancelling. Your 401k remains with your employer so canceling is easy and hassle-free.

How Blooom Works

Blooom can work with any employer-sponsored retirement account as long as you have online access. Your account will remain at your company. You are not transferring your account to Blooom. Your employer doesn't even have to know you signed up for Blooom.

Blooom helps you get the right mix of stocks and bonds for your goals. According to Blooom, 45% of their clients weren't aggressive enough with their 401k portfolio and 8% were too aggressive with it prior to using Blooom.

Once you have signed up and linked your account, Blooom takes these steps:

  • Blooom looks at what's in your current 401k and gets rid of the funds that don't make sense for your goals.
  • Next, Blooom will identify the right funds that will get you closest to your target allocation. Their algorithm will select the ideal investments for you.
  • A Blooom advisor will double-check and cross reference with your recommended 401k allocation.
  • Blooom will automatically manage your account for you, watch for changes to your fund line-up, and rebalance as needed.

Blooom uses mostly index funds. Sometimes, it may use an actively managed fund if it makes sense for you to own.

Does Blooom handle IRAs? No, at this time Blooom does not manage IRAs or Roth IRAs. Blooom only manages employer-sponsored retirement accounts, like 401k, 403b, 401a and 457. However, if you sign up for Blooom's service, their financial advisors can answer your questions, including giving general advice on how to invest your IRA.

Fees: How Much Does It Cost to Use Blooom?

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Blooom costs just $10 a month. Now before you jump on board because that sounds like peanuts for what they offer, put it into perspective. Consider the fee based on its percentage of your assets.

The more you have invested, the lower the percentage and the better the deal. For comparison purposes, let's look at Wealthfront. Its annual fee is 0.25% of your assets under management. Now let's say you have $1,000 in your 401k, Blooom (at $120/year) would cost you 12% annually. Compared to Wealthfront's 0.25%, that's a big difference and it might not make sense.

If you have $50,000 invested in your 401k, though, that $120/year would only be 0.24%. This is comparable to the fees other robo-advisors charge.

Is Blooom safe? Blooom goes to great lengths to protect your private information. They use 256-bit encryption and bank-level security. They also use various methods to protect you from fraudulent activity and/or hacks and enforce third-party authentication whenever changes to your account are requested.

Of course, you need to do your part to keep your information safe as well by continually changing your password and refraining from sharing your log in information with anyone else to continue to keep your account safe.

Why We Like Blooom

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  • They offer a unique service with great benefits. Blooom offers just one service - managing your 401k investments. But it's a service you'll be hard pressed to find elsewhere. In fact, it's often difficult to find a personal advisor who will manage your 401k investments because they know they can't skim their fee off the top of your account. In other words, Blooom offers investment management services for an account that would otherwise be left to your handling.

  • They will analyze your 401k for free. Blooom will provide a free analysis of your 401k. If you're a confident DIY investor, you could register for an account, look over their analysis, and then implement the recommendations yourself. Or if you don't like their recommendations, you don't have to sign up and pay for the plan. You get the information first and then decide if you want to pay for it, giving you ample opportunity to think it through.

  • You'll learn which investments have the lowest expense ratio. Blooom evaluates every investment option within your 401k plan. After segmenting them into what they call "buckets" or categories, they will choose the fund that has the lowest internal expense ratio. This may help increase your retirement fund by putting more money towards investments and less towards fees.

  • You can tweak the asset allocation. Blooom gives you the option to change your asset allocation at any time. While they tend to choose heavy stock allocations, you can change that by clicking on "Adjust Allocation" in your account. Just move the slider and adjust the allocation between stocks and bonds until you hit a level that you're comfortable with.

    What are the returns? This information is hard for Blooom to get. Because there are so many variables that goes into 401k accounts, they cannot accurately know the average return. It's hard to say what growth came from paycheck contributions and what came from the market.

  • You can cancel the service at any time for no fee. Blooom does not charge a cancellation fee or require any type of contract. It's a month-to-month service. If you don't want to use it any longer, you can just cancel it within 48 hours before the last day of the month.

  • You can use the service no matter who you work for or who holds your 401k plan. You don't have to work for a specific company or have a specific company hosting the plan. In fact, your employer doesn't even have to know that you signed up for service with Blooom.

  • You pay fees directly with your credit or debit card. Investment companies typically take their fee off the top of your investments, decreasing the return you receive. Blooom doesn't do that. They automatically charge a debit or credit card the $10 fee each month. This helps you see more money in your retirement account in the long run.

  • There is human interaction. Sometimes when you sign up with a robo-advisor, you get no human interaction. That can be tough. While Blooom is mostly a robo-advisor, you can chat online with or email a real person. In fact, a real financial advisor will oversee your account upon opening and periodically throughout your service to make sure it looks as good as it can.

  • Your account is reviewed/rebalanced every 90 days. Blooom automatically rebalances your account (if necessary) every 90 days. This way they can make sure you are sticking within the recommended allocations to meet your targeted retirement goals.

  • You can ask the advisors any financial questions. Blooom's specialists will answer any general financial questions you have. You can ask for general advice about any other accounts, like IRAs.

Why You May Want to Look Elsewhere

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  • You have non-401k retirement accounts to manage. If you don't have an employer-sponsored plan, you cannot use Blooom's services. They do not yet offer IRAs or other taxable accounts.

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  • You want to alter your risk tolerance. Blooom comes up with your "perfect" allocation based on your birthdate and potential retirement date. They don't ask any other questions. This means you can't let an advisor or even a robot know about your risk tolerance. You may even have specific investment goals you want covered. Blooom doesn't ask questions about any of these things, making altering your allocation based on risk tolerance very minimal.

  • You don't like investing in stocks. Many investors find that Blooom automatically recommends that they invest 100% in stocks. Even if they adjust the slider to invest in fewer stocks, it's still a stock-heavy allocation. Blooom says that 45% of their current investors weren't aggressive enough in their investments. Blooom tries to change that by encouraging aggression. If stocks make you lose sleep at night, Blooom might not be the right choice.

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How Blooom Compares

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Blooom vs Wealthfront: Blooom and Wealthfront are both robo-advisors. The similarities end there. Blooom focuses on 401k and other employer-sponsored retirement accounts. Wealthfront focuses on IRAs and taxable accounts. Wealthfront and Blooom also differ in how they handle your funds. Blooom doesn't take custody of them; they just manage your account after you link it to their system.

 

Blooom

Wealthfront

 

Benefits and Features

Annual FeeAnalysis are free, $10/month and then $7.50/month for each additional account
0.25%
Minimum Deposit
$0
$500
Phone Support
Yes
Yes
Live Chat Support
Yes
No
Email Support
Yes
Yes
Human Advisors
Yes
No
Assets Under Management
$2.2 Billion
$10+ Billion
Tax Loss Harvesting
No
Yes
Goal Tracker
Yes
Yes
Automatic Deposits
No
Yes
Online Platform
Yes
Yes
iPhone App
No
Yes
Android App
No
Yes
Single Stock Diversification
No
Yes
Fractional Shares
No
No
Taxable Accounts
No
Yes
401k Plans
Yes
No
IRA Accounts
No
Yes
Roth IRA Accounts
No
Yes
SEP IRA Accounts
No
Yes
Trust Accounts
No
Yes
529 Plans
No
Yes
Annual Fee
Minimum Deposit
Customer Service
Investment Types

Blooom: Pricing information from published website as of 04/04/2018

Wealthfront: Pricing information from published website as of 04/04/2018

Blooom vs Betterment: Betterment is another robo-advisor with the typical 0.25% of your assets under management fee offering IRA and taxable account investments. Like Blooom, they don't have a minimum account balance, but they don't touch 401k accounts, a gap that Blooom has filled quite nicely.

 

Blooom

Betterment

 

Benefits and Features

Annual FeeAnalysis are free, $10/month and then $7.50/month for each additional account0.25% for accounts under $100,000; 0.40% for accounts $100,000+
Minimum Deposit
$0
$0
Phone Support
Yes
Yes
Live Chat Support
Yes
No
Email Support
Yes
Yes
Human Advisors
Yes
Yes
Assets Under Management
$2.2 Billion
$10 Billion
Tax Loss Harvesting
No
Yes
Goal Tracker
Yes
Yes
Automatic Deposits
No
Yes
Online Platform
Yes
Yes
iPhone App
No
Yes
Android App
No
Yes
Single Stock Diversification
No
No
Fractional Shares
No
Yes
Taxable Accounts
No
Yes
401k Plans
Yes
Yes
IRA Accounts
No
Yes
Roth IRA Accounts
No
Yes
SEP IRA Accounts
No
Yes
Trust Accounts
No
Yes
529 Plans
No
No
Annual Fee
Minimum Deposit
Customer Service
Human Advisors

Blooom: Pricing information from published website as of 04/04/2018

Betterment: Pricing information from published website as of 04/04/2018

Blooom vs Target Date Funds: Blooom tends to give investors a bit more flexibility and customization regarding their asset allocation than target date funds do. While they have a similar idea, slowly moving the asset allocation from equity-based to bond-based, Blooom offers many more customization features as you get closer to retirement (other than simply choosing the "targeted" retirement date).

Bottom Line

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Blooom can help you manage your 401k investments when you don't have the first clue where to start. Whether you just opened your 401k or you have had it for years, it's a service that not many other companies offer.

If you are unsure about the right asset allocation or don't have the time/knowledge to rebalance your allocation periodically, it may be worth the $10 monthly fee to make sure you are on target to retire with the bank account you envision.

Disclaimer: Opinions expressed here are author's alone. Please support CreditDonkey on our mission to help you make savvy decisions. Our free online service is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content.

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