Can you trust Blooom to manage your retirement investments?

By   |   Verified by Nikita Sheth   |   Published 9th April 2021

Finty review Blooom
  • Robo-advisor passively manages retirement investments.
  • SEC-registered and established in 2013, Blooom is a trusted partner.
  • Is Blooom a good way to optimize your investments for a higher return?

Are you ready for retirement? Sure, we get it, you're in your twenties or thirties, and retirement is a long way away. However, it's a prudent move to start your financial planning as soon as possible.

Most young people enter the job market without thinking about saving for the day they decide to hang up their work wardrobe for good.

However, for those that do, they typically start with a low-risk investment like a 401(k) plan or a Roth IRA (traditional IRAs are for boomers, not millennials or zoomers, but that's a topic for another article entirely). Most newcomers to the workforce decide to take on their employer's retirement planning option.

We all sign up for an IRA or 401(k), assuming it's a vehicle to grow our savings over time. However, no one knows whether the fund manager is managing your money to your own goals and preferences.

Are you sure you're getting the highest returns available in your retirement portfolio? Different companies use different investment strategies, and you might not be getting the best returns from your advisory service.

Blooom, a leading robo-advisory, can help you optimize your returns to meet your risk strategy. As a result, you get a higher rate of return than using a fund manager that applies a one size fits all approach to managing your investment portfolio.

Let's unpack everything you need to know about Blooom.

What is Blooom?

Blooom is an SEC-registered investment advisory launched in 2013, with headquarters in Leawood, Kansas. Blooom is the only robo-advisory service we could find to help you manage your employer-sponsored retirement program.

With Blooom, you can take advantage of its advisory services without moving away from your employer-sponsored IRA or 401(k) or shifting accounts from your current trustee.

With Blooom managing the account, you’re not required to get your employer's permission to use the advisory. As a result, you get more control over your retirement planning.

Who is Blooom designed for?

Blooom is the ideal robo-advisory service for managing your employer-sponsored retirement plan. If your IRA is held with Fidelity or Vanguard, Blooom is the ideal solution for optimizing your portfolio returns. Blooom uses a "passive" investment strategy for people who know little about investing. If you don't know anything about the stock market, trading ETFs, or managing money, Blooom presents you with a fantastic hands-off solution to managing your retirement finances.

There are no issues with finding the right assets or picking the right trades. Blooom does everything for you without you lifting a finger. You can sit back and watch your retirement account grow.

Who Bloom isn’t so good for

If you're into self-directed retirement strategies, then Blooom isn't the ideal choice. If you understand how the markets work and you like being in control of your investments, Blooom is not for you.

How does it work?

When you sign up with Blooom, their robo-advisory works to optimize your portfolio. After understanding your preferences, their algorithm chooses the best funds in your portfolio to create a diversified and low-cost lineup that offers the best returns.

By looking after US workers' retirement accounts, Blooom offers a unique set of management services often overlooked or discounted by other leading advisory firms.

Blooom exclusively manages employer contribution plans, including 401(k), 403(b), 457, TSP, and 401(a) accounts, as well as Roth and traditional IRAs. However, it's important to note that Blooom limits IRA involvement to accounts held with Vanguard and Fidelity.

The Blooom investment model is easy to grasp, even for newcomers to investing. You don't have an account minimum, and you get a flat fee for managing your assets throughout the year, ranging from $45 to $250, depending on the number of accounts you have under management and level of service.

Blooom's investment strategy

Blooom's investment strategy is geared toward millennial and zoomer (Gen Z) investors and employees. The company is a financial fiduciary, meaning it acts in your best interests. It uses a secure platform, with the same 256-bit encryption used in the banking system.

Blooom's investment strategy involves placing your money in a range of ETFs and mutual funds that offer you the highest return possible. It offers you a high-risk strategy with high potential returns.

The company uses this strategy because younger investors have more time to recover if there's a market shock. By contrast, older investors invested so aggressively could lose a significant chunk of their retirement account in a crash and not have time left to recover before retirement.

How much does it cost?

If you have a plan value of $100,000, Blooom’s annual management fee of 0.12% works out to a cost of $120 per year. That's around 50% less than other robo-advisors.

Blooom's flat-fee model permits clients to select the level of service that suits their retirement needs.

Their services start at $45 per year per account for the "Essentials" package. With Essentials, you get a personalized portfolio tailored to your needs.

The second service tier, called the "Standard" package, costs $120 per year per account. This option supplements your personalized portfolio with robo-optimization, and gives you advisor access as well as transaction activity alerts.

If you want the highest tier available with Blooom, you can take the "Unlimited" package. The annual account cost is $250 for an unlimited number of accounts, and you get all the advantages of the standard package along with priority advisor access.

How do I sign up?

Signing up with Blooom is easy. Register your account on the official website, select your account plan, and pay your annual fee. After completing your setup, link your account to Blooom and authorize its use.

Pros and cons

Pros

  • No minimum starting balance required.
  • No need to change your employer-sponsored plan.
  • Low management fees, especially on large accounts.
  • Professional AI-powered asset management.
  • Access to real advisors on standard and ultimate plans.
  • No employer consent required.
  • Manage any retirement account type.
  • Hybrid investment strategies.
  • Suspicious activity alerts.

Cons

  • Limited risk tolerance profiles.
  • High-risk investment strategies.
  • Aggressive portfolio allocation.
  • High costs for small accounts under $10,000.
  • Limited investor assessment when signing up.
  • No live phone support.

Alternatives

  • Betterment: Another low cost robo-advisor that charges a 0.25% management fee. It's easy to put your investment portfolio on autopilot, and you get automated tax harvesting strategies.
  • Wealthfront: Offers free management of accounts under $5,000 with a competitive 0.25% management fee, including holistic financial advice and asset management. Wealthfront also provides useful financial planning tools with diversified passive investment strategies suited to new and seasoned investors, along with advanced tax harvesting strategies.

Verdict

If you are looking for a low cost way to ensure your retirement accounts are being managed for maximum growth and appreciation, Blooom’s robo-advisory services will ensure you are invested appropriately for your personal goals and preferences. Their algorithms will allocate and optimize your retirement accounts to help you confidently grow your retirement nest egg.