Updated June 9, 2020

Blooom Review: Is It Good?

Read more about Blooom
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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.

5-point scale (the higher, the better)

Pros and Cons

  • Manage retirement accounts
  • No account minimum
  • Flat yearly fee
  • No taxable accounts
  • Limited IRA accounts

Bottom Line

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

Shortcut: If you're unsure of how to manage your retirement goals, you should at least get a free 401(k) review from Blooom.

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 flat fee starting at $45 per year.

Keep reading to learn if Blooom is right for you.

Note: Blooom manages employer-sponsored retirement plans (401k, 401a, 403b, 457, and TSP). In addition, it can manage IRAs (Traditional, Roth, SEP, Simple) at Fidelity and Vanguard.

As of October 2020, Blooom manages more than $4 billion in assets.

Who Is Blooom Best For?

  • 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 starts at $45 per year, 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. There are no penalties for canceling. Your 401k remains with your employer so canceling is easy and hassle-free.

How Blooom Works

Blooom can work with many 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 removes you from investing in 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.
  • The blooom algorithm created by advisors 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? Blooom can also help you manage your Traditional, Roth, SEP, Simple, or Self-Directed IRA. At this time, it can only manage IRAs from Fidelity or Vanguard. If you have an IRA elsewhere, their financial advisors can give general advice on how to invest your IRA.

Fees: How Much Does It Cost to Use Blooom?

Blooom has three pricing tiers depending on the level of service:

Essentials Plan: $45 per year
The basic plan provides you with a personalized portfolio. It helps you pick the best funds for your situation and minimize hidden fees. It'll also update your portfolio recommendation as your allocation shifts. You're still responsible for placing your own trades.

Standard Plan: $120 per year
This plan allows Blooom to place trades on your behalf, so you can be mostly hands-off. You also get email and chat access to an advisor for any financial questions. It also will send a text alert if a withdrawal is detected.

Unlimited Plan: $250 per year
This plan allows for the management of unlimited accounts that belong to you. In addition, you get priority live chat access to financial advisors.

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

  • They offer a unique service with great benefits. Blooom offers just one service - managing your retirement 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 to be implemented on your next rebalance. 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.

  • 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. 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, the algorithm created by real financial advisors 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 95 days. Blooom automatically rebalances your account (if necessary) every 95 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

  • 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.

How Blooom Compares

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 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 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

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 yearly fee to make sure you are on target to retire with the bank account you envision.


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Jeremy Harshman is a creative assistant at CreditDonkey, a personal finance comparison and reviews website. Write to Jeremy Harshman at jeremy.harshman@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.

Note: This website 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. You do not have to use our links, but you help support CreditDonkey if you do.

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