Blooom Review 2018

blooom review

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Blooom automates investment management for employer-sponsored retirement plans. Where many other robo-advisors, such as Wealthfront and Betterment, shy away from defined contribution plans, Blooom (with 3 ‘o’s!) embraces them and fills the gap in the market.

Blooom manages retirement accounts for a flat-fee cost of $10 monthly with no account minimums.  For this charge, Blooom will assess portfolio fees, make fund recommendations and rebalance every 90 days on average.

Blooom  Spotlight

blooom logo

InvestorMint Rating

4 out of 5 stars

  • Management Fee: $10 monthly
  • Account Minimum: $0

via Blooom secure site

Blooom Customers

Blooom  appeals to hands-off, fee-conscious investors with its flat-fee pricing structure of just $10 monthly. Portfolio compositions at Blooom favor risk-seeking investors due to their heavy exposure of equities.

For many individuals, a 401(k) is the largest investment account held yet few automated professional management solutions for 401(k)s exist; FutureAdvisor will do so but is an exception among robo-advisors while Personal Capital will advise, but not manage, on 401(k) plans.

Blooom claims that investors who receive professional help managing their retirement portfolios generally have twice as much at retirement as investors who go solo. Blooom further claims that investors make three common mistakes when it comes to managing retirement accounts because they are frequently:

  • intimidated and stick their heads in the sand when it comes to managing their retirement accounts;
  • biased towards keeping assets in a company stock instead of diversifying; or
  • employ the wrong mix of stocks and bonds.

While using a service like Blooom may be better than investing alone, Blooom may not be every investor’s cup of tea; Blooom leans aggressive in its portfolio composition, heavily weighting portfolios with equities until about 20 years out from retirement when more bonds are featured in the mix.

Blooom is best for:

  • Retirement-focused investors
  • Beginner investors
  • Fee-conscious investors
  • Hands-off investors
  • Investors who are more risk-seeking than risk-averse

Blooom Management Fees

Blooom charges a flat monthly fee that offers a compelling value proposition to investors with larger portfolios and a fair rate to investors with smaller sized retirement accounts. Blooom manages over $500M and has analyzed approximately 30,000 401(k) accounts comprising over $1.6 Billion.

The fees charged and account minimums set by Blooom are:

  • $10 Monthly Management Fee
  • $0 Account Minimum

Blooom clients with larger nest-eggs get an especially good deal thanks to the flat-fee pricing structure. A $100,000 portfolio costs just 0.12% in annual management fees, which is very competitive compared to established robo-advisors, such as Personal Capital, which also has financial advisors with whom investors can connect.

Smaller portfolios will be penalized however with comparatively high fee percentages. For example, a $20,000 portfolio incurs as much as 0.6% annually in fees. Nevertheless, for the automated retirement investment management service Blooom provides – a rarity among robo-advisors – and the fact that live advisors are accessible by e-mail and chat, the pricing is fair.

Blooom Investment Method

Blooom assesses your current 401(k) portfolio composition, eliminates funds that don’t make sense, and replaces with funds that are better aligned with your recommended target allocation to meet your retirement goals.

Blooom selects investments algorithmically in the following sequence:

  1. Funds in your existing 401(k) are analyzed and removed if they don’t make sense for you to own.
  2. Index funds are generally used to keep fees low but, every once in a while, actively managed funds will be selected to gain investment exposure as needed.
  3. Once the funds have been selected to get you close to your target allocation, Blooom’s algorithm selects investments based on expense ratios and manager experience.
  4. Blooom verifies the results and cross-checks with your recommended 401(k) allocation.

Investment selections and portfolio weightings are reviewed every 90 days and automatically rebalanced if needed.

As you inch nearer to retirement, Blooom automatically adjusts down the weighting of stocks in your portfolio to structure a more risk-averse portfolio.

Blooom Tools

Many robo-advisors, such as Personal Capital, offer world class tools and mobile apps that even non-clients can enjoy. Blooom sticks with a focused approach of serving hands-off, retirement investors without the bells and whistles. The standout feature of Blooom is the ability to link to an existing 401(k) account and assess its merits: fees and composition, and allocation.

Blooom allows clients to freely and seamlessly analyze an existing 401(k). Simply link to your existing provider after setting up your Blooom account and Blooom shows you how well your 401(k) is doing. Hands-off investors can leave it to Blooom to manage the 401(k) while self-directed investors can act on the recommendations provided.

Where Blooom earns a few extra brownie points is its risk tolerance assessment. Risk tolerance measures are factored into the onboarding process using an adjustable slider that allows you to change your allocation by up to 20% either way from the suggested allocation.

Blooom Pros and Cons

Blooom  has a flat monthly fee, an easy onboarding process that allows seamless linking of an existing 401(k) account, automatic rebalancing every 90 days, provides phone support to clients, factors in risk tolerance by allowing clients adjust suggested allocations by up to 20% and imposing no account minimums. Where Blooom loses a few brownie points is in charging a high management fee as a % of assets under management on smaller account sizes.

Blooom Pros Blooom Cons
Low Management Fees: Charging just $10 monthly for management of retirement accounts, Blooom offers a compelling value proposition, especially to those with larger account sizes; the fee as a % of assets under management is competitive with other robo-advisory firms who do not support 401(k) portfolio management. Large Cash Holdings: Blooom structures portfolios with heavy weightings of equities which doesn’t account for the differing risk tolerance levels of clients and caters more towards risk-seeking than risk-averse investors.
Financial Advisors: Although only email and live chat support is available, Blooom clients do have access to financial advisors – a benefit not all robo-advisory firms offer. Small Account Sizes Penalized: The flat-fee structure is a double-edged sword. While it results in very low fees as a % of assets under management for large account sizes, equally the fees can be quite lofty for small account sizes, though still generally competitive when compared to traditional financial advisors, who often charge north of 1%.
Automatic Rebalancing: When the weightings of funds drift too far from the recommended allocation, Blooom rebalances the portfolio. Automatic rebalancing is done every 90 days.
401(k) Assessment: Blooom allows easy linking of an existing 401(k) to assess whether expense ratios can be optimized and portfolio composition can be improved upon.
No Account Minimums: Blooom allows clients to sign up with no account balance minimum, a feature not all robo-advisory firms support.

Blooom Fees & Minimums

Blooom has a zero account balance minimum, a $10 flat monthly fee for account management and automatic account rebalancing.

Category Fees
Account Management Fees $10
Account Minimum $0
Automatic Rebalancing YES
(every 90 days)
Annual, Transfer, Closing Fees $0

Blooom Accounts

Blooom  supports employer-sponsored plans: 401(k), 403(b), 401(a), 457 and TSP.

Type Capability
401(k) YES
403(b) YES
401(a) YES
457 YES

Blooom Summary

Blooom is a rare registered investment management advisory firm that automates portfolio management for employer-sponsored retirement plans. Blooom makes it easy to sign up, freely assess how your existing 401(k) is performing and takes over the management for hands-off investors.

Blooom provides a comprehensive investment management service with a compelling value proposition, especially for higher net worth individuals who are charged comparatively low fees relative to other robo-advisory firms.

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