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Updated on Wednesday, December 9, 2020
Blooom is a robo-advisor that provides portfolio management exclusively for retirement plans, including most employer-sponsored plans and IRAs at Vanguard and Fidelity. Acting as a retirement savings concierge, Blooom does the heavy lifting of analyzing the funds available to you in your plan and building an optimized portfolio — albeit for a fairly steep fee.
Still, finding a robo-advisor that will manage your 401(k) is relatively rare, making Blooom worth considering if your main priority is maximizing your retirement savings.
|Management fee||$45 to $250 per year|
|Accounts offered||401(k), 401(a), 403(b), 457 and TSP; Traditional IRA, Roth IRA, SEP IRA, nondeductible IRA, spousal IRA, Simple IRA and self-directed plans at Vanguard and Fidelity|
|Access to human advisors||Yes|
- What is Blooom and how does it work?
- Blooom’s investment approach
- Blooom’s fees
- Blooom’s features and tools
- Blooom’s user experience
- Blooom’s safety and security
- Is Blooom worth it?
What is Blooom and how does it work?
In the realm of robo-advisors, Blooom has carved out a pretty specific niche: The management of retirement accounts. While many of its competitors focus on individual brokerage accounts as their main product, Blooom only supports the management of employer-sponsored retirement accounts including 401(k), 401(a), 403(b), 457 and TSP plans, as well as those who have IRAs and self-directed plans at Fidelity and Vanguard.
To start, Blooom offers a free analysis of your current retirement portfolio. Similar to other robo-advisors, Blooom will then assign you a risk tolerance and a retirement horizon based on your answers to an online questionnaire. Once you link your retirement account to Blooom, it analyzes your actual portfolio against the ideal retirement portfolio it built for you based on your responses. It will then point out your current portfolio’s weak spots in terms of asset allocation, fees and diversification.
After signing up and committing to paying the yearly fee, Blooom will begin to build your custom retirement portfolio based on its recommendations. It will select funds for you and invest accordingly and, like many robo-advisors, place trades on your behalf. Note that Blooom is limited to the funds available in your particular retirement plan.
- Focus on retirement account management: The biggest benefit that Blooom touts comes down to the core service it provides: The management and optimization of retirement accounts. This is because many robo-advisors simply do not support the account management of plans such as 401(k)s and IRAs, making it difficult to find a service that will put your retirement savings to work. Blooom’s focus on retirement accounts makes it valuable to investors who aren’t interested in individual brokerage accounts but want to prioritize their retirement savings.
- Free portfolio analysis: One of Blooom’s chief benefits is its free Portfolio Analysis tool, which examines how your current retirement account portfolio compares to the portfolio it believes would allow you to maximize your retirement savings potential. Simply link your retirement account, and Blooom will provide its analysis. If you do not mind doing the heavy lifting on your own, you could simply take Blooom’s asset allocation recommendations and apply them to your retirement account yourself.
- Accessibility: One of the biggest conveniences of Blooom is that you do not need to move or transfer funds out of your current retirement account or open a new account. Instead, you can keep your funds right where they are, and Blooom will manage your 401(k) and IRA for you, as long as it is one of the many accounts that Blooom is compatible with.
- Flexibility for hands-on investors: In many cases, robo-advisors do not let their clients make changes to their portfolio on their own, as they control the entire process. Blooom, however, offers the option to make investment changes yourself with its Manual setting (as opposed to its Auto setting, in which Blooom handles everything). If you opt for the Manual route, you will still have access to Blooom’s recommendations, but it will be up to you whether you actually take them. This is a valuable feature for investors who want to make sure they still have some control over the investments in their portfolio.
- Steep price: The obvious drawback of Blooom is its price — even for its most basic plan, which includes the management of just one account, Blooom charges a steep $45 per year. That $45 per year also doesn’t offer many of the features most robo-advisors include for free, such as the option to have trades placed on your behalf and access to financial advisors. Its second-tier pricing plan is also high, at $120 per year, and also only includes management of one retirement account. If you have a 401(k) and a Roth IRA, for example, you will have to pay Blooom a pretty penny just to manage your retirement accounts, without access to financial advisors or the option to place trades if you’re signed up for the lowest tier.
- Limited IRA accounts supported: Blooom not only limits its services to retirement accounts, but it severely limits the scope of IRA accounts that it supports to those at Vanguard or Fidelity . For investors who want all of their retirement accounts managed by Blooom but have an IRA account open at a brokerage other than Fidelity or Vanguard, they will have to look elsewhere.
- No app:Blooom does not have an app. Instead, you will have to rely on its website to access its services. As the financial landscape shifts to accommodate an increasingly mobile-first world, this is a notable drawback, especially for consumers who are accustomed to doing the majority of their banking from their phone.
- Sparse in features: When it comes to all of the bells and whistles that many robo-advisors offer — such as automatically investing your spare change, supporting fractional shares and deploying tax minimization techniques — Blooom is fairly sparse. If you’re looking for a robo-advisor that is rich in tools, there are more competitive options elsewhere.
Blooom’s investment approach
|Investment options||Limited to what is available through your retirement plan|
Blooom is limited to the funds available to you in your retirement plan. Its algorithm looks at all of the funds offered in your retirement plan and then categorizes them into one of 14 categories (such as large-cap stocks, emerging market stocks and more). It then works to optimize the funds that meet your target asset allocation, while focusing on funds with low expense ratios. In terms of investment strategy, the company diversifies your asset allocation based on your age and years left until retirement, focusing on long-term growth as opposed to timing the market.
Blooom reviews your retirement portfolio around 95 days after its last adjustment. As you get closer to your retirement years, Blooom will adjust your asset allocation so it leans more conservative.
It’s worth noting that Blooom says it does not actively manage individual stock holdings. So, if you have individual stocks in an IRA upon signing up, Blooom will ask you to either elect to keep your current position of those stocks as is (so Blooom won’t make any changes to them as it manages the rest of your portfolio), or allow Blooom to sell those stocks so it can manage your entire account.
Blooom does not feature any tax minimization features, although it is worth noting that retirement accounts are already structured to be tax-efficient vehicles for saving for retirement.
- Annual management fee: Ranges from $45 to $250 per year
- Transaction fees: Dependent on your retirement plan, but Blooom will notify you before processing a transaction that would result in a fee of $50 or higher
Aside from your initial portfolio analysis, which is offered at no cost, Blooom charges a flat fee for its services, as opposed to a percentage of your assets, which is a common pricing structure for robo-advisors. Currently, Blooom offers the following packages per price point:
Essentials – $45 per year, per account
- A personalized portfolio (this includes Blooom researching the funds in your account, giving recommendations based on your personal investor profile and keeping your portfolio on track as your target allocation shifts)
Standard – $120 per year, per account
- A personalized portfolio
- Transaction activity alerts
- Option to have Blooom place trades on your behalf
- Access to a financial advisor, with responses within two to three business days
Unlimited – $250 per year for unlimited accounts
- Personalized portfolio
- Transaction activity alerts
- Option to have Blooom place trades on your behalf
- Access to financial advisors via live chat
Additionally, as Blooom begins to turn your current retirement portfolio into the portfolio it recommends for you, you may incur transaction fees associated with certain funds. Blooom will reach out to you before making any transactions that would result in a transaction fee over $50.
Blooom’s features and tools
One of Blooom’s most attractive features is actually a free offering — its Portfolio Analysis tool. With this feature, you can link your current retirement account, and then Blooom will analyze it to determine whether you’re currently on track to meet your retirement goals. Additionally, Blooom will give you its ideal plan for your account.
Especially for investors who have simply signed up for their employer-sponsored retirement plan and didn’t actually select funds to be invested in, this is a beneficial feature.
Blooom offers a slew of calculators on its website that allow you to easily explore ways to maximize your retirement savings. There’s an allocation calculator that will provide a recommended asset allocation of stocks and bonds based on your answers to a series of questions about your current age, when you expect to retire and how much risk you’re comfortable with.
Additionally, there’s a diversification calculator that recommends specific asset classes based on your answers to a short quiz to help you better minimize your risk and stay on track to achieve your goals. Blooom also provides a fee calculator, in which you will answer a short series of questions about your current account balance, annual contributions, estimated expense ratio and time horizon to calculate how much you could be saving on account fees.
One of the common pain points of employer-sponsored retirement plans is dealing with them once you are no longer at the company. Since Blooom specializes in retirement account management, its advisors are available to help you figure out what to do with your account if you leave your company. They also will walk you through your new company’s plans and make rollover recommendations.
Human financial advisors
While Blooom is powered by an algorithm, it gives its Standard and Unlimited plan members access to human financial advisors, which is a valuable resource worth highlighting. Depending on which pricing tier you are a part of, you will receive either immediate access to a financial advisor via live chat, or by submitting a form and receiving a response in a few days.
Additionally, Blooom notes that it is actually a registered investment adviser (RIA), meaning it is held to a higher standard and obligated to act as a fiduciary, which requires it to put its clients’ best interests first.
Blooom’s user experience
Blooom’s web interface is user-friendly, as it provides a dashboard with a snapshot of your retirement portfolio’s current asset allocation and a side-by-side comparison of how it can be optimized. Information is presented in a clean and uncluttered manner. However, Blooom does not have an app, which is a notable drawback.
Blooom offers access to human financial advisors via a live chat or email to the top two tiers. A customer support team is available to all tiers. You can contact the customer support team from 9 a.m. to 4 p.m. CST, Monday through Friday, by filling out a form via Blooom’s website.
Blooom’s safety and security
- Bank-level security with encrypted servers
Since you aren’t investing your funds directly into a Blooom account and are instead just allowing Blooom to manage your account on your behalf, Blooom itself does not offer SIPC protection. That being said, it does note that it is fiduciary.
To protect your information, Blooom uses bank-level security with encrypted servers, and it will notify you via email any time it makes adjustments to your portfolio.
Is Blooom worth it?
Employer-sponsored retirement accounts are notorious for being the type of accounts that are all too easy to put on autopilot. Many people allow their plan to just automatically enroll them to contribute at a certain percentage, pick their funds for them or even allow their funds to just sit in cash. When you’re not taking a more active role in managing your 401(k), it can be easy to leave money on the table. That’s where Blooom provides real value: It makes sure you are on the right path to retirement by doing the heavy lifting for you and actively managing your account throughout the year, leaving no stone unturned.
Blooom is unique in this aspect — as many robo-advisors only deal with managing brokerage accounts — so if you’re looking for a robo-advisor specifically for your employer-sponsored retirement savings, Blooom is likely your best bet. However, if you have an IRA, it might be beneficial to look elsewhere, as Blooom only supports IRAs at select brokerages, and its services run on the pricier side.
Alternatives to Blooom
|Account minimum||Annual fee||Accounts offered|
|Blooom||$0||$45 to $250 per year||401(k), 401(a), 403(b), 457, TSP; Supports the following types of accounts if they are open at Fidelity or Vanguard: Traditional IRA, Roth IRA, SEP IRA, nondeductible IRA, spousal IRA, simple IRA, self-directed|
|Betterment||$0||0.25%||Traditional IRA, Roth IRA, SEP IRA, 401(k) plans for businesses|
|FutureAdvisor||$0||0.50%||Traditional IRA, Roth IRA, individual taxable accounts, joint taxable accounts|
Blooom vs. Betterment
Although they share a number of similarities, Blooom and Betterment are fairly different products. While Blooom simply manages and optimizes your retirement investment accounts, you are not actually investing money into a Blooom account, as it is not a brokerage. Betterment, on the other hand, does offer Traditional, Roth and SEP IRAs, as it is a SEC-registered broker-dealer and member of FINRA and the SIPC. It also offers 401(k) accounts for businesses.
If you are looking for a way to optimize an employer-sponsored retirement account, you will need to opt for Blooom over Betterment. However, if you’re interested in IRA management, consider Betterment, since Blooom only offers the management of IRAs at Fidelity and Vanguard. This means you will likely be paying a management fee at your broker, as well as the annual fee that Blooom charges. Meanwhile, you can just pay 0.25% a year for Betterment to build and manage a custom IRA portfolio.
Blooom vs. FutureAdvisor
Similar to Blooom, with FutureAdvisor, you are not actually investing directly with the company. Instead, FutureAdvisor acts as a fiduciary and manages your money at select brokerages. FutureAdvisor also works to optimize your investment portfolio by rebalancing when necessary.
Whether to choose Blooom or FutureAdvisor is pretty cut and dry, as there are a few characteristics that make these companies pretty different. First, Blooom only supports IRA accounts at Vanguard or Fidelity, while FutureAdvisor only supports accounts at Fidelity and TD Ameritrade, automatically resulting in an easy decision for those who invest with Vanguard or TD Ameritrade. Additionally, FutureAdvisor does not manage 401(k) accounts, so if you have an employer-sponsored plan, your only option is Blooom.
All information included in this profile is accurate as of 10/28/2020. For more information, please consult Blooom’s website.
The “Find a Financial Advisor” links contained in this article will direct you to webpages devoted to MagnifyMoney Advisor (“MMA”). After completing a brief questionnaire, you will be matched with certain financial advisers who participate in MMA’s referral program, which may or may not include the investment advisers discussed.