Blooom Your Retirement Plan

Jul 14, 2020 11:54 AM ET
Blooom Your Retirement Plan

Blooom: How Does It work?

Blooom is a registered robo-advisor and investment advisory. The company launched in the year 2013. This Kansas based robo-advisor stands apart from the others due to its specialization that is entirely in the retirement accounts. It is still the first and practically the only robo-advisor designed for the management of employer-sponsored retirement plans.

Blooom

For Blooom to start working for you, you need to signup online by linking your retirement plan (employer-sponsored or IRA account).

Once you have signed up it operates in the following way-

  • Blooom for employer-sponsored retirement plans: Blooom works for employer-sponsored retirement plans by professionally managing the full range of employer plans including 401(k), 457, TSP and 403(b) plans. It does not need your employer’s consent. Blooom acts as an investment management service and does not take custody or control of your plans. After the signup process, your current portfolio allocation is analysed for free, allowing you to understand all the fees you are paying and if you were aware of them. They construct your portfolio with low-cost index-based ETFs. They refrain from using mutual funds, individual stocks, and other securities. If they pre-exist in your plans they are sold and transferred to suitable EFTs.

  • Blooom for IRAs: Blooom works for IRAs in a similar manner as it does for employer plans. Your existing portfolio allocation goes through an evaluation. Funds are then moved to low-cost ETFs. These are usually consistent with your time horizon, risk tolerance, and investment goals.

Blooom Main Features:

  • Personalized portfolio option.  

  • Auto optimization which ensures your portfolio is on track as allocation shifts with the market.

  • Access to a financial advisor and priority advisor

  • Withdraw alerts sent via text messages.

  • Customer service Monday through Friday from 9:00 am to 4:00 pm via email and live chat.

  • Account protection with the help of account custodians.

  • Blooom is fiduciary

Money

How to Start Saving with Blooom?

Opening an account at Blooom is simple and seamless. They provide applicants with a brief questionnaire, which enquires about the applicant’s age, market knowledge, employment psychology, and expected retirement date. Blooom then provides a proposed stock and bond allocation based on the applicant’s answers, followed by a page containing the retirement plans which are popular. Applicants can either search the page to find their desired plan or choose from the detailed list they provide. Unlike other robo-advisors, Bloom does not require the applicant to divulge personal information such as assets, dependents, marital status, etc.

If an applicant links to the ESRA account, he/she gets a generated list of detailed breakdowns, which compare the proposed and current portfolio allocations. They subdivide it according to market sectors such as US Large Cap, US Midcap, US Small-cap, International and Emerging markets.

Applicants receive a free analysis of their current employer-sponsored retirement plan. This triggers a proposal where applicants can put lower-cost equivalents, replacing high cost ETFs and mutual funds. It also provides a clear picture of the proposed diversification of assets, with bond and stock weightings for balance. 

What is Blooom investment strategy?

Irrespective of the type of retirement plan you sign up for Blooom will incorporate the following investment strategies:

  • If your plan consists of individual stocks Blooom will either sell and move it to appropriate funds or move it to the self-directed portion of your plan.

  • If there exist company stocks in your plan, Blooom will sell your allocation down to not more than 20% of the total plan value.

  • Blooom will sell your current investments into cash and then buy the recommended investment positions.

  • Blooom strategies also work to minimize concealed investment fees. At the same time, they work to eliminate managed account services and pull you out of target-date funds which charge high fees with time.

What About the Fees and Commission?

Blooom charges its fee in a simple manner. They do not charge a percentage of the fee on the balance of the account. Instead, they charge a single annual fee which depends on the type of account you signed up with. Blooom offers three choices-

  • Essentials: This is the most affordable option offered by Blooom. You get to enjoy the ability to get your portfolio personalized. ($95 per year)

  • Standard: An upgrade from the Essentials, this is a little more expensive. This option offers all the features of Blooom except for priority advisor access. You will still be provided with an advisor and can enjoy auto-optimization. ($120 per year)

  • Unlimited: The most expensive option by Blooom is ideal for people with multiple 401k’s since it has no limit to the number of accounts you can use. Under this plan, you are also provided with priority advisor access. ($250 per year)

Blooom Pros Cons and Who Is It For?

Pros:

  • No need to move your employer-sponsored retirement plan.

  • Professional management for your largest asset.

  • Manage any type of retirement plan- 401(k), TSP plans, 403 (b), 457 and all types of IRAs.

  • Alert system for suspicious activities.

  • Very low management charge on large plans.

  • No minimum limit of the initial investment.

  • You do not require your employer’s consent.

  • Hybrid investment management.

Cons:

  • The monthly charge for small accounts will be high.

  • The service does not provide phone support, only email and live chat contact.

  • IRA plans are limited to only 3 custodians including Vanguard, Fidelity, and Charles Schwab.

  • Not available for taxable investment accounts.

  • Clients need to pay transaction costs.

  • No performance data.

After analyzing the pros and cons one can understand that Blooom is ideal for those people who do not have enough time, experience, or inclination when it comes to managing their own retirement plans. It is also ideal for hands-off investors, employer-sponsored plan participants, those who desire free 401k analysis and people with IRAs at Vanguard, Fidelity, or Charles Schwab.

Blooom Pros Cons and Who Is It For

Bottom Line

The agony over the management of your employer-sponsored retirement plan ends with Blooom. No more winging this process. Blooom is an efficient and trustworthy solution out there than can help professionals manage your retirement plans while you get to carry on with the life matters that need your undivided attention and expertise.


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