Let’s be honest, planning for retirement isn’t easy. In fact, one study found that a whopping 63% of Americans are confused about their retirement investment options and don’t know what to do to get ready.
When you stop to think about it, this is frightening. Most people go through their prime earning years without a clear understanding of what lies ahead at the finish line.
What most people lack is sound guidance — someone who can inform them where they should be putting their retirement savings and when. Enter Blooom, an automated service that takes the pain and confusion out of retirement planning. Hooray!
Let’s take a closer look at Blooom to see if you should hop on board.
Blooom is a part of a new class of financial planners called “robo advisors,” which are essentially bots that manage ongoing investment accounts. It’s a fully automated, low-cost way to monitor and manage your retirement account with minimal manual intervention.
The way that Blooom works is simple. First, you answer a series of questions that analyze your retirement goals, risk tolerance, and estimated retirement date. Blooom then uses this information to recommend the right retirement plan.
Next, Blooom asks you to link your existing IRA or 401k plan. Once your account is connected, Blooom’s robo advisor goes to work, identifying and researching your investments.
The service then compares your investment portfolio to the answers that you provided and lets you know your current versus ideal asset allocation as well as information on your diversification and the fees that you’re paying. Once this is complete, Blooom will make trades on your behalf.
So, in a nutshell, Blooom will research funds, buy and sell equities, monitor your account, and keep you posted as time goes on. Not bad!
Blooom is an automated investment management service that seems ideal for entry-level or passive investors. Their robo advisor works to optimize retirement accounts, identify hidden fees, and also monitors for suspicious activity.
- Automated Account Management
- Solid Referral Program
- Transparent fee structure
- Limited Customer Support
Here are some of the main features that Blooom offers.
Let’s face it: Not everyone has the time or desire to spend hours looking through index funds or stocks, trying to pick the best investments. Some people would much rather put the system on autopilot and only check in once in a while.
While this isn’t exactly the right investment strategy for everybody, the fact is that it’s better than ignoring your account for months on end and promising yourself that you’ll get to it, eventually. Automated investing can work just fine, especially if you are diligent about funding your account.
Fewer Fees Over Time
Unless you’re extremely diligent about investigating where your money is going, chances are likely you’re losing money to hidden investment fees. Some may even be lurking in plain sight.
Blooom sniffs out fees that you are paying and automatically restructures your plan so that you have the lowest possible expense ratio. For example, employers often charge workers for 401k costs and automatically deduct fees from the account balance every quarter. Blooom can let you know if this is happening and work to minimize your quarterly losses.
No Conflict of Interest
Another way that investors tend to lose out is when they trust human advisors or financial institutions to invest on their behalf. For example, a bank can choose to manage a 401k for a fee. This puts a great deal of trust in the institution.
And unfortunately, banks often invest with their own interests in mind — sometimes at the expense of their customers.
Blooom eliminates the need to use managed account services from banks. Instead, it offers its own third-party investment management plan, which they claim is unbiased.
On-staff Human Advisors
Blooom is fully automated. But they also employ expert investment advisors who can answer questions whenever you have them. So, you won’t be dealing entirely with robots, which is a huge plus.
Support for Multiple Account Types
Blooom offers support for a variety of account types, including:
If you have one of these accounts, you should be able to work with Blooom.
Blooom offers a free analysis that anyone can sign up for to receive a free consultation. This is a useful option for anyone who may be concerned that their retirement count is either stagnating or misaligned.
It doesn’t cost anything to try Blooom, so why not give it a look if it sounds interesting?
Beyond that, Blooom offers three service tiers.
1. Essentials: $95 annual fee
This plan offers a personalized portfolio. Blooom will research your situation, pick optimal funds, minimize fees, and place trades on your behalf.
2. Standard: $120 annual fee
The Standard option builds off of the Essentials plan but includes a few handy additions including auto-optimization, withdrawal alerts, and investment advisor access.
3. Unlimited: $250 annual fee
With the unlimited plan, you’ll get all of the features in the Standard package plus Priority Advisor Access, which lets you live chat with an advisor whenever you need financial advice.
One obvious thing to keep in mind is that you should do your own research to try and see how much you are paying in annual management fees each year before giving any money to Blooom. You don’t want to negate any potential savings by paying Blooom, after all.
The sign-up process is quick and easy and only takes about five minutes.
First, Blooom will make you answer a questionnaire in order to understand your financial situation and your retirement goals. You will also be asked to set a password and log into your existing retirement account.
The final step is an account analysis, which will give you a clearer picture of where you stand in your retirement planning.
Blooom Referral Program
Blooom is currently offering a referral program that will reward you for getting other people to sign up for their service.
After signing up for Blooom, you will receive a personalized link to send to friends. For every friend that signs up for Blooom’s free analysis, you will receive a $20 Amazon Gift Card — not a bad return considering the person doesn’t have to sign up for the actual service. All they have to do is go through the analysis process.
Blooom will occasionally offer different types of promotions, so be sure to check back for updates at regular intervals.
Blooom provides 256-bit encryption in addition to “bank-level security,” which translates to higher security standards that you would expect to find at a traditional bank.
In addition, Blooom will continuously monitor accounts for large withdrawals and suspicious activity. The company also offers a special opt-in service that can send text messages whenever a fraudulent loan or withdrawal is detected on the account.
As my readers know well by now, customer service is a big factor for me when it comes to looking for any personal finance product. It’s something that I take seriously. When something goes wrong, or when you have questions — which will inevitably happen — customer service is your first and sometimes only method for resolving the situation.
On Blooom’s customer service page, you’ll find these words: “Unlike your ex, we’re super responsive.” This is cute. However, at least exes come with phone numbers that you can dial if you’re bored or desperate.
Blooom does not offer phone service, so you can’t call in to get investment advice. There is an email address you can reach: firstname.lastname@example.org. Oddly enough, their email is not featured on their contact page, which only offers a message portal and a mailing address.
Pros and Cons
- Automated account management is perfect for people who want to take a hands-off approach to retirement investing
- Text alerts for detecting fraudulent activity that could potentially go completely unnoticed
- Solid referral program that offers $20 Amazon gift cards when you refer a friend
- Transparent, flat fee structure
- Minimum effort investing could potentially yield minimal results; if you have the time, I encourage you to take responsibility for retirement investing and manage it yourself
- Blooom is not a leader socially responsible investing, in case that’s important to you
- Limited customer service, without phone support; get used to email or live chat
Alternatives to Blooom
Some competing Robo advisor solutions include:
Also, larger investment institutions are offering their own Robo advisor services:
Providers tend to offer varying features and prices, and it’s important to find a plan that matches your exact needs.
Is Blooom worth the money?
The short answer is this: It depends. If you feel that you may be way off course in your retirement planning, or if you aren’t even sure whether you’re on the right track, then the answer is yes, Blooom is worth it.
However, if you’re someone who has the time and the patience to research your own funds and handle your own financial planning, then Blooom is taking the easy way out.
You could potentially make more money, in the long run, managing your own investments — without having to pay the fees that Blooom charges.
How often does Blooom rebalance?
Blooom conducts rebalancing four times annually, optimizing the account for things like market shifts, changes to funds, and hidden fees.
Is Blooom a fiduciary?
As Blooom explains on their website, the company is a fiduciary — meaning they are required by law to act in the best interests of their customers. In other words, Blooom will not make investments that harm consumers for their own interests.
Are Robo advisors a good idea?
Robo advisors are a good option for entry-level or passive investors as they can help chart a course that makes sense for your needs. Robots work around the clock, they can be customized to help you achieve specific goals, and they are secure.
However, there is no substitute for a trained human financial advisor. If you’re looking for advanced consulting, it may be worth paying someone more money to manage your investments on your behalf.
Should You Use Blooom?
Blooom is an automated investment management service that seems ideal for entry-level or passive investors. Their Robo advisor works to optimize retirement accounts, identify hidden fees, and also monitors for suspicious activity.
Blooom is not a savings account, meaning they do not provide interest or any related growth services. This is a tool for managing how your individual retirement account is diversified among the stock market and other securities.
The bottom line is this: If you think you’re off course in your retirement planning and you are looking for a cost-effective financial advisor, Blooom is a great start. It’s not the only Robo advisory service on the market, but it’s a strong option and one that’s worthy of consideration.
If your goal is achieving financial independence, a Robo advisor may be worth adding to your financial portfolio. But you will probably want to make sure to have other instruments in your arsenal, too, like a high-yield savings account, mutual funds, and maybe even REITs.
You know your financial situation better than anyone else. Research your options and only invest what you’re comfortable with. Be patient, stick to the plan, and trust the process. It’ll pay off over the long haul, and you can trust me on that. Good luck!