With so many robo advisors handling IRAs and individual accounts, Blooom decided to take a different approach and focus on company-sponsored 401(k)s and 403(b)s. It uses the same robo advisor technology to optimize your investment returns while working within the investment offered by your company’s retirement plan. We take an in-depth look at the service to see how it works.
- Best For: 401(k) management. Blooom is best for people who want to improve the performance of their 401(k) accounts without paying a financial adviser.
- Price: Blooom charges a flat rate of $10 per month no matter how much money you have in your retirement portfolio.
- Features: Blooom includes several noteworthy features, including 401(k) audits, 256-bit encryption, 24/7 virus scans, regular account reviews and educational tools that will help you make wiser investment choices.
- Customer Service: You can contact Blooom’s customer services via live chat or email. The team at Blooom usually responds within a few hours during business hours. If you reach out to them at night, you may have to wait until the next morning for an answer to your question.
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How Does Blooom Work?
Blooom does several things to make sure that you get the most out of your 401(k) account. When you first become a member, the service evaluates your age and expected retirement date to determine how much money you will need to live comfortably. If you need to contribute a little more money, it will encourage you to do so. If you’re contributing more money than necessary to your Blooom 401(k), then the service will recommend investing less.
Once Blooom knows your financial targets, it will review all of your investment options to see which ones will work well for you. Blooom 401(k) actually uses 14 asset classes so it can manage your money accurately. By putting your current investments into these categories, Blooom can evaluate your retirement planning and give you smart tips to boost returns.
If you aren’t investing in an area that Blooom thinks will suit your needs well, then it will recommend which categories you should move more of your money to. You don’t have to follow the advice, but Blooom’s robo advisor works pretty well, so you should take its recommendations seriously.
Once you finalize these basic investment options, Blooom will give you a mixture of assets and categories that you should include in your portfolio. More often than not, Blooom 401(k) likes to invest in low-cost index funds. These funds often carry little risk because they don’t require hefty investments, but some can still give you big returns when they perform well.
Blooom can only work with the investment options available in your 401(k), so its approach will change depending on what type of retirement account you have. This is good news for people who don’t want to learn a lot about investing because Blooom 401(k) naturally adjusts to the limitations of your plan.
Blooom continues to work behind the scenes to make sure you have a healthy retirement account. Legally, Blooom has to put your interests ahead of its own, so you should get smart advice that helps you earn more money.
What Makes Blooom Stand Out?
One of the best things about Blooom is that it doesn’t demand much of your attention. Once you give it access to your 401(k) and answer a few questions, the company uses its algorithm for automated investing that keeps your retirement accounts on track. It’s smart to check your account from time to time, but you don’t have to manage the portfolio. Blooom does the hard work for you.
Blooom also stands out from its competitors by avoiding complicated charts that can confuse investors. Some investment companies bombard their clients with charts and graphs that explain how markets are evolving. This might sound useful, but most people don’t know what these charts and graphs mean. Unless you have a background in finance, the numbers probably won’t give you an insight into how well your portfolio performs.
Instead of throwing a lot of numbers at you, Blooom keeps you informed with a picture of a flower. The flower represents your 401(k) account. If your account is doing well, then you will see a happy, healthy flower. If your account isn’t performing as expected, then you will see a wilted flower dropping its petals. A few simple tools give you the opportunity to adjust your account settings to make your flower grow larger.
Charging a flat rate also makes Blooom stand out from some of its competitors. Traditionally, financial advisers get paid by taking a percentage of your profits. The more money you earn, the more money the adviser gets. Some people like this approach because it gives advisers a financial incentive to make smart choices for their clients. Unfortunately, this type of payment scheme can also mean that you lose a significant piece of your earnings.
By charging a flat rate, Blooom lets you know exactly how much money you have to spend each month. No matter how quickly your account grows, you continue paying Blooom the same amount. Considering that Blooom uses an algorithm to make most of its investment decisions, there isn’t a reason to give the company an extra financial incentive to do its job well. The robo advisor doesn’t need a bonus, so Blooom can keep its prices low enough for practically anyone to afford.
Common Blooom Reviews
Most Blooom reviews show that the company does an excellent job of managing retirement accounts, especially for people who don’t want to spend a lot of time thinking about their investments.
The average Blooom review shows that the company knows how to make retirement accounts grow quickly. Some clients report that their accounts started to grow about twice as fast as they had before using Blooom.
A lot of Blooom reviews point out that the company adjusts its saving and investment recommendations based on how old clients are. If you’ve just started your career, you shouldn’t use the same investment strategies as someone nearing retirement. Blooom takes that into account so you don’t waste your time or money on strategies intended for someone else.
Blooom also gets positive reviews for offering new clients free 401(k) audits. Realistically, you may not know if your retirement account is doing well. Most people assume that they just need to contribute money each month so they can fund their retirements. Your free audit will show you how ways that your current 401(k) underperforms. Once people see how much more money they could make, they’re excited to try Blooom.
Of course, not everyone loves Blooom. Negative Blooom reviews say that the company takes an approach that’s too aggressive for some investors. The complaint usually comes from young people. Although people under 40 can usually take aggressive approaches to investing, the strategy doesn’t work well for everyone. Having Blooom manage your account may lower the risk of aggressive investing, but it cannot eliminate the risk.
If you feel that Bloom wants to invest too much of your money into high-risk stocks, you can always manually adjust your strategy to include safe investments like bonds.
Is Blooom for Me?
Choosing the right robo advisor for your retirement account should take a little time and research. Make sure you read several Blooom reviews before you commit to using the service. With that said, Blooom usually excels for people who want their retirement portfolios to grow but don’t want to pay a professional large amounts of money.
If you’re looking for a simple, low-cost way to grow your 401(k) or other retirement accounts, then you will probably like the services that Blooom offers.