Blooom Review 2020: Professional Help for Your 401(k)

Blooom makes investment advising affordable for anyone who needs help with a 401(k), IRA, or similar retirement account.
Last updated Aug 7, 2020 | By Christy Rakoczy
Smiling woman using computer

FinanceBuzz is reader-supported. We may receive compensation from the products and services mentioned in this story, but the opinions are the author's own. Compensation may impact where offers appear. We have not included all available products or offers. Learn more about how we make money and our editorial policies.

When you're looking for ways to earn passive income, investing is one of the single best options. When you invest, your money works for you, and your account balance could grow without any effort on your part.

Of course, you earn extra cash only if your investments perform well, and there's no guarantee that will happen.

To maximize your chances of earning positive returns, you'll need to be smart about which assets you buy. That's where Blooom comes in. Blooom is a robo-advisor that can optimize your workplace retirement plan, or if you want to roll over a 401K to an IRA, Blooom can help with that as well.

Blooom finds optimal funds to invest in for your retirement, and its goal is to make quality professional financial advice accessible to everyone. But is it right for you? This Blooom review will help you find out.

Blooom Benefits

  • Cut hidden investment fees by 66%
  • Improve your diversification
  • Unlimited access to financial advisors
  • See what Blooom can tell you in just minutes

In this Blooom review:

What is Blooom?

Blooom is an online registered investment advisor that can help you manage and optimize your retirement plan for a small fee. It serves as both a robo-advisor and human advisor for investment management.

Blooom manages only employer-sponsored accounts, and traditional and Roth IRAs held at Fidelity, Vanguard, or Charles Schwab. You don't have to move your money from your existing account, though — you just provide Blooom with online access.

The company was co-founded in 2015 by Chris Costello, Kevin Conard, and Randy AufDerHeide, and is headquartered in Leawood, Kansas. Today, Blooom has more than $3 billion in assets under management.

To get started with Blooom, you'll answer a few simple questions about your retirement goals to get started, and Blooom will review your account and make any necessary adjustments. Then, around every 95 days, Blooom analyzes and rebalances your account as needed.

When evaluating the best investment apps, Blooom stands apart for many reasons. However, one of the most important is that it acts as a fiduciary (meaning it’s required to act in your best interests), and it adjusts your investments for you without you doing anything. So it doesn't just provide you with financial advice or aim to make it easier to manage your money — it takes over the task of investing your retirement savings for you.

How does Blooom work?

To use Blooom, start by connecting your employer retirement accounts, such as your 401(k), 403(b), 401(a), 557, or TSP plan. You can also connect your traditional or Roth IRA held at an eligible brokerage firm. Blooom can also help you roll over a 401(k) to an IRA, in certain cases.

Blooom will conduct a free analysis of your accounts to provide you with insight into whether you have a diversified portfolio with appropriate asset allocation. Although this may sound complicated, it basically means that it will see if you've invested in a mix of different kinds of assets and are exposed to an appropriate level of risk.

If you decide to sign up with Blooom, you'll pay an investment fee and Blooom will:

  • Review investment options available to you within your account and eliminate any funds that don't meet your needs.
  • Look for index funds (funds that aren't actively managed by a professional who selects investments, but rather ones that track stock market performance)
  • Identify funds with low fees that provide you with an appropriate asset allocation (mix of different investments that's right for your age and risk tolerance)
  • Monitor your account to reallocate your investment portfolio as needed to get you the right mix of investments.

Blooom will not only help you choose the best investments when you sign up, but it’ll also review your account for changes and check in on your investments around every 95 days. This helps ensure you stay invested in the right mix of assets based on your target retirement date and risk tolerance.

Blooom will notify you when it makes changes to your account, but you won't get to sign off on the changes because you'll have to sign a "discretionary management agreement" when you sign up. This gives Blooom the authority to trade on your behalf.

Who should use Blooom?

The good news is, Blooom doesn't have an investment account minimum — anyone can get help, even if they don't have much invested. However, unlike other online stock brokers such as Betterment or Stash, Blooom works only with retirement accounts — and primarily with those offered by employers.

If you have a 401(k), 403(b), 401(a), 557, or TSP plan that you can manage online, you should be able to connect to Blooom and take advantage of its services. You can also use Blooom to manage your traditional or Roth IRA held at Fidelity, Vanguard, or Charles Schwab. But if you're invested with another broker or using another type of account, Blooom can't help you.

You'll also need to be willing to pay Blooom's relatively low-cost fee for managing your accounts on your behalf. Blooom offers three different pricing tiers:

  • Essentials: This plan has a $95 annual fee per account and provides you with a personalized portfolio
  • Standard: This plan has a flat fee of $120 annually per account and includes a personalized portfolio, automatic optimization of your accounts so your portfolio stays on track, and withdrawal alerts so you receive a text message if funds are taken out. Plus, you get access to a financial advisor who will answer questions via email within two to three business days.
  • Unlimited: With this plan, you pay a management fee of $250 annually, but Blooom will manage an unlimited number of accounts for you. You'll benefit from automatic optimization, withdrawal alerts, and priority access to financial advisors. With this priority access, you won't just get questions answered via email — you can ask advisors questions via live chat.

This is far less expensive than getting personalized financial help from a registered investment advisor. However, it is more expensive than managing your accounts on your own.

Because you're paying for professional help investing your retirement assets, Blooom is an ideal choice if you don't want to take the time to select investments on your own or if you aren't sure how to maintain an appropriate asset class allocation as your portfolio changes.

However, if you are uncomfortable giving Blooom authority to trade on your behalf, it's probably not the right option for you.

How Blooom helps optimize your investments

Blooom enables you to earn money by helping you make better investments. There are a few specific ways Blooom works to help your investments perform better:

  • Blooom helps ensure you're invested in funds that charge the lowest possible fees. This is essential because even a small fee can eat into your returns over time and reduce your retirement account balance.
  • Blooom researches to help you pick the right funds to invest in and makes trades, so your portfolio remains diversified and maintains the right asset allocation.
  • Blooom monitors your account and makes changes as needed. If you don't actively manage your investments, you can drift away from your ideal asset allocation as some investments perform better than others. Blooom rebalances your portfolio to help ensure that doesn't happen.

Blooom indicates it has analyzed "decades of market data" to create an algorithm that will pick the best investments for you. Of course, the amount of money you make will still depend on the performance of the specific funds you're invested in.

How to use Blooom wisely

The best way to maximize your earnings with Blooom is to invest as much in your retirement accounts as possible. The more you invest, the more money Blooom is managing — and the more passive income you can earn when your investments perform well.

Increase the amount you invest by ensuring you make saving for retirement a top budget priority. Consider automating contributions so you'll always have a set amount going into your retirement accounts. When you have a workplace plan, this is easy because your employer will usually withdraw the money before you receive your paycheck. If you're investing in a traditional or Roth IRA that you want Blooom to manage, you'll have to set up automated investing yourself to put your retirement savings on autopilot.

Common questions about Blooom

Is Blooom a fiduciary?

Blooom is a fiduciary, which means that it must act in your best interests in all transactions entered into on your behalf.

How much does Blooom cost?

Blooom offers three different pricing plans:

  • Essentials: For $95 annually per account, you can buy Blooom's entry-level package and receive a personalized portfolio.
  • Standard: For $120 annually per account, you can upgrade and receive a personalized portfolio, automatic re-optimization to ensure your asset allocation remains appropriate; text alerts of withdrawals; and access to a financial planner who will answer questions via email.
  • Unlimited: For $250 annually, Blooom will manage unlimited accounts and provide all of the services under the standard plan, as well as allowing you to connect with a financial advisor via live chat.

Is Blooom secure?

Blooom recognizes that security and privacy are important when you provide access to your retirement investment accounts. It uses 256-bit encryption and bank-level security to protect your information.

How often does Blooom rebalance your portfolio?

Blooom reviews your portfolio around every 95 days, or when you make certain changes to your account information. If it determines that rebalancing is necessary, Blooom will adjust your investments for you automatically.

Is Blooom worth it?

Blooom may be worth paying for if you want help managing your investments in your workplace retirement account or eligible IRA. Although monthly fees come to $10 per month for the standard plan, maintaining the appropriate asset allocation and limiting fund fees may help your investments to grow more effectively. If your investments perform better due to Blooom's assistance, the added returns you earn should help to cover the cost.

How to sign up for Blooom

Signing up for Blooom involves a few simple steps. You'll start by clicking "Sign up" on the top of the main page when you visit the website.

You'll need to provide your email address and create a password to get started, or you can sign in with a Google account. Next, you'll need to provide some information in response to a series of questions so you can get your free portfolio assessment. You'll be asked to provide some personal information, including:

  • Your name
  • Your birthdate
  • Your expected retirement age
  • Your email address
  • The type of retirement accounts you have (options include employer-sponsored plans, traditional or Roth IRA accounts, or others, such as a college savings or brokerage account).
  • Your knowledge of stocks and bonds (expert, limited, or pretty good are your choices)
  • Whether you'd prefer a job that offers more pay increases but less security; smaller pay increases but more security; or average pay increases and average job security (this question aims to discover your risk tolerance)
  • What your ideal vacation is (a guided tour, beach chair relaxing, or extreme sports)
  • What you'd do to your retirement account contributions if your account balance fell 20% over the past three months (stop contributing, increase contributions, or not really notice because you rarely check on your account)
  • How you'd respond to a 200 point drop in the stock market (pull your money out, buy more, or do nothing because you don't follow the financial news)

Based on your answers to the questions; Blooom will indicate what type of investment strategy it thinks you'd be best suited to: conservative, moderate, or aggressive. You'll then be asked to link your investment accounts to see whether the funds you're currently invested in match your goals. You’ll also get a free assessment of how risky your current investments are.

You can review your free assessment to see how your portfolio fares in terms of diversification, fees, and risk level. You can use the information Blooom provides to make changes on your own if you want, without paying for its financial planning services.

However, if you have an eligible account, you will also be provided with the opportunity to sign up for Blooom's services along with your assessment. You'll need to choose which plan you want and provide Blooom with online access to your accounts as well as the authority to make trades on your behalf if you decide to sign up.

Once you sign up, Blooom will use the information you provided about your risk tolerance, goals, and timeline to design your personalized portfolio. The shorter your timeline is for investing and the less risk you're willing to take on, the more conservative Blooom will be with your investments.

While no investments are 100% safe, Blooom aims to make investing less risky by ensuring you have a diverse mix of investments and aren't taking on more risk than is appropriate. Remember that there's a risk of being too conservative as there's usually an inverse relationship between risk and potential return. Putting some of your money into the stock market will help you potentially earn better returns than safer investments (like a savings account or Certificate of Deposit) can provide.

Other investment apps to consider

Blooom limits who it can help because the service is available only to people with qualifying workplace plans or with IRAs held at participating brokerage firms. If you want to invest in a taxable account or another type of account Blooom doesn't work with, you'll need to look elsewhere. Both Betterment and Stash offer help investing for account types that Blooom doesn't work with, while also assisting with building a portfolio that's appropriate for your needs.

Blooom Benefits

  • Cut hidden investment fees by 66%
  • Improve your diversification
  • Unlimited access to financial advisors
  • See what Blooom can tell you in just minutes