Account Minimum: $0 – Fees: $10/mo – Best for: Retirement, 401(k) Analysis
If you think you are saving enough for retirement, you’re probably wrong. Even if you are saving enough it’s likely you pay more in fees than you need to. Blooom is here to fix that once and for all.
TL;DR – Blooom is a robo-advisor specializing in free 401(k) analysis and employer-sponsored retirement plan advisement.
What is Blooom?
Blooom is an online financial advisement platform (apparently they hate the term robo-advisor). Instead of focusing on investment accounts, they are laser focused on providing the best analysis and management of 401k plans on the market.
They offer a free service that will analyze your current 401(k) to see if you are paying any unnecessary fees and if your assets are allocated to maximize growth and security. Often 401k accounts have hidden management fees and your assets may not be properly allocated to maximize growth while mitigating risk.
Blooom was built to help people who need assistance managing their 401(k). Previously the founders managed funds for wealthy clients, but they realized there were unmet needs people faced every day in dealing with their retirement plans. To learn more about how the company got its start, check out the video below.
Who created Blooom?
A 3 man team co-founded Blooom. Their names are Randy AufDerHeide, Kevin Conard and Chris Costello. The three of them have backgrounds in finance in the midwest. The company is in Leawood, KS. The population of Leawood is less than 35,000, but Blooom manages over $3 billion in assets. Apparently good things do come in small packages.
In a blog post in early 2018, Blooom quietly announced Matt Burgener would be replacing Chris Costello as CEO of Blooom. Matt’s experience involves Accenture, Lending Tree, Bank of America and several CMO positions. He previously acted as CMO and Chris will continue to stay on the board.
Blooom seems to be a company with a small but dedicated team providing expert 401(k) advisement to everyone.
Invest in your retirement.
As of late 2018, 1 in 3 Americans had less than $5,000 saved up for retirement. Blooom thinks even if you are saving for retirement it’s likely that you are paying too much in fees.
The savings ticker on their site shows how much they have saved their clients. This projection is calculated with the median blooom client data including:
401k balance of $49,805
$5,000 annual contribution,
Median pre-blooom investment expense ratio of 0.47%,
Median post-blooom investment expense ratio of 0.19%,
Allocation mix of 96% stocks with a 7% gross annual return and 4% bonds with a 3% gross annual return,
27 years until retirement and the number of active blooom clients.
All median data as of August 5, 2018.
That’s a lot to process, but the big takeaway from all of this is that on average a customer saves 0.28% on their expense ratio, which can add up to thousands of dollars over time.
If you don’t look closely at your 401k you might be asking yourself why the expense ratio is so high. Let’s take a closer look at this.
I though my 401(k) already worked for me?
Only 32% of Americans have a 401k and are saving for retirement. If you are avoiding those company meetings because they seem boring, stop that and get into those meetings.
A big part of this is that income has either stayed the same or decreased, but there might be something you can do to make a change. Here are a few things you may be overspending on and some strategies to change that.
If you don’t have a 401k
Most people don’t know how a 401k works. Basically it is an account you use to save for retirement. Let’s say you put $5,000 in your 401k this year. If you do that, you will have $5,000 deducted from your pre tax salary.
This is why a 401k is so awesome. Your taxes actually go down, and what you invest isn’t taxed.
If you are new to 401ks check out this great guide by Lifehacker on how to get started.
If you have a 401k
Congrats, you’re already ahead of the game! If you are at this point you might be an ideal customer for Blooom. The average American who has a median salary by age 25 will pay upwards of $138,336 in retirement fees in their lifetime. This could add years to your time in the workforce and significantly delay your retirement.
The average American pays approximately a 1% fee for their 401k assets to be managed. Blooom estimates an average rate of 0.19%. That means you might be paying 5x more what you need to in fees. You need to keep into account the $10 per month cost, but $120 a year over 10 years is $1,200. Still a lot cheaper than the alternative 1% fee.
How do I know what my 401k fees are?
401k fees are intentionally very difficult to find. Moneycrashers has a great resource on how to find your 401k fees fast.
4 reasons we love Blooom.
- Great 401k Management – Blooom doesn’t try to do everything. Instead they just stick to one thing and do it super well. With their dedicated team you can rest easy knowing your 401k will be well managed, as that is the sole goal of the entire business.
- Complimentary Analysis – If you are financially savvy and just want a tool to analyze the state of your current 401k Blooom offers this as a feature. Know where you are at, where you can improve and make decisions based on their completely free tool.
- Financial Advisors are Available – If you have questions about your account, planning for a life event or making a change you can easily get on a live chat to talk with one of the financial advisors Blooom has standing by to assist you.
- Affordable – Blooom actively tries to reduce the fees you pay on your 401k without taking a percentage themselves. Other financial products are “free to use” but they take a management fee. In the long term Blooom is much, much cheaper.
401(k) analysis in under 5 minutes = Free
This is an awesome feature. When you take a step back though it is really just a technique to get people to sign up for an account. It can be helpful, but they also now have you in the sales funnel.
Management = $120 per year
Almost no other financial products charge a flat fee for their services. Services like Betterment take a percentage of your funds and M1 Finance gets interest when you borrow against yourself.
If you have little to nothing in your 401(k), $10 a month is a steep price to pay. As your account gets larger however, it could make sense to pay $10 a month to manage and optimize your account.
Where Blooom could improve.
- Limited Customer Service – Like many online financial platforms, Blooom doesn’t let you speak to a person on the phone. They are available 8-5 CST, Monday through Friday via email or live chat.
- Limited Account Types – The greatest strength Blooom has is also the biggest flaw in the product: they focus exclusively on 401k management. Even if you love the service they provide you will not be able to set up an investment account. The simplicity of the product does allow them to focus on helping every client achieve the same goal: retire with the ability to live comfortably without financial stress.
- Few Educational Tools – The product is so easy to use, but there’s not a lot of supplementary education. The onboarding process asks a couple of questions to gauge your risk tolerance. After that you are given a proposed stock/bond allocation (they are usually very heavily in favor of stocks).
Blooom Review: The Bottom Line
If you are serious about aggressively funding your retirement Blooom is a great option. They have a team committed to providing a great experience for their customers.
If you already have a low fund 401k, then Blooom might not be the ideal service. If your 401k is small the $10/month fee could really reduce the amount you are able to save.