- Plans: Free analysis (retirement plan analysis and recommendations only); three paid plans with varying levels of service (all of Blooom’s features in one package)
- Features: Free analysis (free plan) includes a comprehensive investment fee analysis, fund analysis, and recommendations from Blooom’s human experts; paid plans include software-driven fee minimization, periodic portfolio adjustment (optimization), suspicious activity alerts, access to human experts, and ongoing retirement account management
- Advantages: Blooom acts as a fiduciary; no obligation to opt into a paid plan; no minimum account size; Blooom has human advisors on call; no need to open a new account; no long-term commitment; clients retain full account control; Blooom takes a straightforward approach to long-term investing; Blooom is for nervous investors
- Disadvantages: Additional accounts cost more; Blooom won’t touch company stock; Blooom doesn’t ask for permission before trades (after initial authorization); trading may incur additional fees Blooom can’t control
In truth, about 95% of all 401(k) investors pay plan fees, according to TD Ameritrade and FeeX. The average total annual cost of a 401(k) came in at 0.45%, or about $450 per $100,000 in plan assets.
That’s serious money — a car payment or several weeks of groceries. But since it goes into an account you can’t readily access, it rarely has the same psychological impact as recurring obligations that shrink your checking account balance.
All the same, it’s your money, and it’s worth every bit as much as the sums that do keep you up at night. Why wouldn’t you want to keep more of it in your possession?
What Is Blooom?
Blooom and its ilk are for busy retirement investors who lack the time or attention to detail required to plumb the depths of retirement plans held with wealth management giants like Fidelity and Vanguard, uncover where and how their money managers overcharge, and correct course.
After an initial onboarding phase that’s no more painful than setting up a new bank or brokerage account, Blooom goes to work to uncover hidden fees, analyze your investments, and make recommendations to optimize your account — all at no cost to you.
But there’s more to Blooom. If you appreciate its fee analysis work, consider upgrading to one of Blooom’s optional paid plans.
These plans offer much more expansive investment management services — essentially, they act like a human-assisted robo-advisor for your retirement plan, periodically reweighting your account, minimizing excessive fees, and keeping watch for suspicious activity.
Blooom applies the same process to other employer-sponsored retirement plans, including thrift savings plans, 401(a), 403(b), and 457 plans, as well as self-directed IRAs (most often, traditional IRAs and Roth IRAs).
If you’re willing to do this tedious, time-consuming work on your own, you don’t need Blooom or anything like it. But if, like most retail investors, you barely have the time to stay on top of your daily obligations as is, take a closer look at Blooom’s capabilities, advantages, drawbacks, and overall suitability.
Blooom Plans & Features
Blooom has four plans: a bare-bones free analysis that merely delivers a taste of Blooom’s capabilities, and three paid plans that offer varying levels of hands-on service.
Blooom’s free portfolio analysis gives users an idea of how Blooom can help them lower investing fees to pique their interest in the paid turnkey solution. It’s a one-time service provided at no cost to the customer and includes:
- Investment Fee Analysis. After you’ve created a Blooom account, answered some questions about your time horizon and risk tolerance, and securely linked your retirement plan, Blooom goes to work analyzing the contents of your portfolio. This analysis includes a detailed comparison of the fees charged by your current retirement investments against fees charged by other investment options not presently held in your portfolio.
- Mutual Fund and ETF Analysis. Blooom also analyzes your retirement portfolio’s component funds, determining whether your portfolio is weighted in line with your stated retirement goals, expected retirement age, and investing style. Like the investment fee analysis, this part of the process is largely automated — it’s not clear that a human ever personally reviews your portfolio.
- Recommendations. After thoroughly reviewing your investment portfolio and its component sector and index funds, Blooom’s algorithms recommend an ideal stock-to-bond ratio to achieve your investing goals. The ratio depends in large part on your age and risk tolerance. The younger and more tolerant of risk you are, the greater your portfolio’s share of stocks will be.
Bloom offers three paid plan options to investors who’d like to continue using its services:
For $120 per year, the Standard plan comes with:
- Personalized Fund Line. Blooom identifies the best mix of investment funds for your situation and provides customized asset allocation recommendations that you can implement as you wish in your portfolio.
- Ongoing Investment Monitoring. Blooom’s software automatically monitors your account to ensure you remain aligned with your financial goals.
For $245 per year, the Advisor Access plan offers:
- Access to Experts. Blooom makes human experts available for questions about its core activities, as well as general money management questions you’d typically ask a financial advisor. As a sworn fiduciary, Blooom is obligated to address these questions with your best financial interests in mind. Think twice about replacing your full-time financial advisor with Blooom, as emailed responses can take two or three business days to arrive. But it’s nice to know you have experts on call regardless.
- Trade Assist. With your authorization, Blooom places trades on your behalf without any action required on your end.
- Withdrawal Monitoring. Blooom automatically monitors your account for withdrawals — a possible sign of suspicious activity — and alerts you when one is detected. Since 401(k)s and IRAs are common targets for data breaches and identity theft, this feature provides valuable peace of mind.
- Periodic Portfolio Adjustment (Auto Optimization). While the initial batch of orders could render your portfolio unrecognizable, Blooom’s periodic portfolio adjustments take a much lighter touch, rebalancing holdings that have grown over- or underweight due to market movements. There’s no set schedule for these periodic adjustments, but fiduciaries typically rebalance client portfolios every one to two quarters. Again, Blooom places trades on your behalf. You don’t even have to log into your 401(k) or IRA directly if you don’t have time.
For $395 per year, Blooom adds one-on-one guidance from in-house financial advisors. You get one 30-minute phone or video consultation each year.
At this price point, which works out to a monthly fee of about $35, you can start to think about replacing your full-time financial planner or financial advisor — provided the rest of your financial life doesn’t have too many moving pieces.
Blooom’s top selling points include its status as a sworn fiduciary, no minimum account size requirement, no obligation to opt into a paid plan, and human advisors on call for paying customers.
- Blooom Is a Fiduciary. Blooom is a sworn fiduciary, meaning it’s legally obligated to act in its clients’ best interests. For clients eager to maximize performance and minimize fees, the fiduciary standard is far superior to the looser “suitability” standard followed by nonfiduciary wealth managers — a standard that compels them to tailor recommendations to the client’s general situation but not necessarily to act in their best financial interests
- No Need to Open a New Investment Account. Clients new to Blooom don’t need to open new investment accounts or roll over existing assets to use its services. Blooom simply accesses existing employer-sponsored retirement plans using clients’ login credentials.
- No Account Minimums. Blooom imposes no minimum asset value requirements. Whether your account is still new or its balance is the envy of your coworkers, Blooom is happy to help. Of course, Blooom’s flat fee isn’t a good deal for smaller accounts, so wait until your balance is ample enough to keep Blooom’s annualized percentage cost under 1% of assets under management — which is close to what you’d pay for many human advisors.
- No Obligation to Opt Into a Paid Plan. New Blooom users aren’t obligated to sign up for a paid plan after taking advantage of Blooom’s free onboarding analysis. Indeed, the free plan may be more than sufficient for sophisticated investors with the time and inclination to execute Blooom’s recommendations.
- No Long-Term Commitment Required. Blooom doesn’t require clients to sign long-term advisory agreements. You’re only obligated to Blooom through the end of your paid-up monthly or annual billing cycle. And you can use your account dashboard to turn off the default auto-renew function at any time.
- Human Advisors on Call. Blooom’s algorithms do most of its fee-minimization and rebalancing work, but the company does have human advisors on call to answer paying clients’ questions. If you’re willing to pay Blooom $245 per year or more, Blooom’s advisors are happy to dive deep into the weeds of your employer-sponsored retirement plan. They can provide general financial advice about investing in other types of accounts too, but they’re not suitable as replacements for your full-service financial advisor.
- You Retain Full Control Over Your Retirement Account. When you sign up for Blooom’s paid plans, you give the platform discretionary control over your employer-sponsored retirement plan. That means Blooom can execute transactions and debit investment management fees without your consent. But you retain full control over your account at all times too. That enables you to make moves between Blooom’s periodic rebalances, whether to customize your investment strategy (perhaps for better diversification) or adjust your assets’ risk profile.
- Straightforward Approach to Long-Term Investing. Like other passive management advocates, including low-cost fund giants like Vanguard and Fidelity, Blooom doesn’t try to time the market or invest tactically. Its passive approach to investing may reduce your net plan costs by keeping transaction fees low.
- Plenty of Reassurance for Nervous Amateurs. Blooom is ideal for inexperienced investors who understand they’re better off putting their money to work in the market than stashing it under the mattress but don’t know much beyond that. By offering turnkey delegation, Blooom takes the guesswork — and second-guessing — out of the equation.
Because Blooom’s free analysis is so basic, it has few disadvantages to speak of — that is, if you’re willing to provide the requisite personal information and take the time to complete the analysis.
That said, if you’re not willing or able to upgrade to the paid plans, Blooom’s free analysis leaves you with nothing more than an idea of what you could save. It’s on you to act on its recommendations.
Blooom’s paid plans have disadvantages of their own, including higher pricing for investors with multiple retirement accounts, the potential for added rebalancing fees, and no company stock management.
- Blooom Only Manages Retirement Plans. Blooom only manages 401(k)s, 403(b)s, similar employer-sponsored retirement savings plans, and self-directed IRA accounts. It won’t touch employer-sponsored health savings accounts, tax-advantaged education savings plans, or taxable accounts. If you’re looking for a full-spectrum wealth manager, Blooom isn’t for you.
- Rebalancing May Incur Additional Fees. Depending on the terms of your retirement plan, Blooom’s periodic rebalancing may incur transaction fees Blooom can’t control. Bear this in mind when opting into its paid plans, which may produce an eye-popping initial account overhaul.
- Blooom Doesn’t Ask for Permission Before Placing Individual Trades. Blooom’s discretionary arrangement does require clients’ initial authorization and is standard practice for fiduciary investment advisors. However, inexperienced clients may not realize precisely how much discretion Blooom has over their retirement portfolios once granted that authorization. Therefore, Blooom isn’t appropriate for investors who prefer to retain veto power over every transaction.
- Blooom Won’t Manage Company Stock Under Normal Circumstances. Blooom won’t manage company stock held in employer-sponsored retirement accounts either. If you hold company stock, Blooom tries its best to work around it, though Blooom may occasionally sell small fractions of your total company holdings to meet its target asset allocations and class weighting.
Blooom’s modest free plan draws up a road map for confident investors to make sorely needed adjustments to their employer-sponsored retirement plan allocations, but that’s pretty much all it does.
If your goal is to reduce the time and effort required to control your plan’s cost and maintain optimal weighting — without relying on automated rebalancing programs that may miss your objective — then Blooom’s free package isn’t enough.
Whether it’s worth the cost to upgrade to Blooom’s paid plans is your call. Before you make your decision, divide the annual expense by the total value of retirement assets you plan to entrust to Blooom to calculate the service’s annualized percentage cost.
If your retirement plan balance is ample, this figure will almost certainly undercut even the most reasonably priced full-service human advisor. While Blooom generally isn’t a suitable replacement for a human fiduciary, if you’re not ready to hire one, Blooom may be all you need.
And Blooom’s algorithms could pay for themselves. Paid products that directly pay for themselves don’t come around every day.
Blooom manages employer-sponsored retirement plans so busy, working-age investors don’t have to. If you’re disinclined to monitor the performance and cost of your 401(k) or similar plan, Blooom is for you.
Just be aware of Blooom’s limitations before you sign up. Bloom doesn’t manage investments not held in an employer-sponsored retirement plan, won’t touch company stock even if held in an employer-sponsored retirement plan, and generally isn’t a substitute for a full-service financial advisor.