★ Rockstar Review: Blooom (Optimize Your 401(k)!)
This is part of our Rockstar Reviews series.
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Blooom Wants to Manage Your 401(k) For You to Save Fees and Boost Performance
When was the last time you took a peek at your 401(k) or 403(b)/etc. statement? If you’re like most people, you probably don’t pay attention until they come in the mail once a quarter, and then promptly file it away and forget about it.
Reviewing this stuff can be brutal, which is where Blooom steps in.
Blooom’s goal is to fix your 401(k) for you and then manage it on your behalf going forward.
On top of us not paying attention to our statements, we’re also bad about not knowing what exactly we’re invested in or what we’re paying in fund fees for the privilege of it. A couple of tweaks here can make all the difference to your wealth, and this is where Blooom comes in handy.
How Blooom works
The first thing you’ll do is sign up to Blooom and then get your 401(k) or 403(b) account linked. You answer a few easy questions about yourself like below, and then you’re on your way:
Next, you link up your 401(k) or 403(b) account so they can see what they have to work with:
Since it’s tied to your employer’s plan, the only options available to you are what they offer – which is good and bad.
It’s good in that you never have to worry about any “upselling” from Blooom since they can’t move your $$$ over to any other funds/accounts even if they wanted to (which most fintech companies want you to do), but it’s bad in that you’re limited to whatever your employer offers. And unfortunately, not all plans are created equal.
Once you’re linked up, Blooom will then analyze your investments for you and tell you if your account is in good shape or not. Their cute little flower is your indicator:
In this case, the flower is nearly dead meaning this person’s account is in the toilet. Now what?
Let’s back it up. Blooom does two main things for you: they identify if you’re overpaying in fees, and they tell you if your asset allocation – your exposure to stock and bond funds – is accurate for your age.
If asset allocation is not accurate for your age, you’re likely not growing your money as best as you could. So, using the above toilet-portfolio as an example, Blooom would then suggest a better portfolio for you, as represented by this pretty flower:
And of course, if you don’t like what Blooom suggests, you can always tweak your allocations on your own.
How They Make Money
Blooom charges you $10 per month to analyze your account and then manage it for you on an ongoing basis. They do all this for you automatically behind the scenes, so that when markets change they’re there to tweak it for you. You literally don’t have to do anything (unless you want to – and which either way we recommend you at least knowing what’s going on with your account).
There are no hidden fees or hidden costs and you can cancel any time. Also, as a Blooom member, you have access to a financial advisor if you have any questions. You communicate with a Blooom financial advisor through an online chat session and you can chat with them as much as you’d like.
Here’s a smattering of FAQs from their site:
Do I have to move my account to have Blooom help me? No. Your 401k stays put. You don’t have to open up a new account or transfer it.
Is there a minimum account size? Nope. You could just be starting out with your 401k or you can have a gazillion dollars. It doesn’t matter to us. We help all 401k participants.
Is Blooom a fiduciary? Yes. We are a fiduciary. This basically means we are required by law to act in your best interest, not ours. We wish this was the case for all advisors in the good ol’ US of A, but it’s not.
How long does it take Blooom to fix my 401k? Most of the time, the account will be adjusted within 10 days. Sometimes it can take a bit longer, but never more than 30 days.
How often will Blooom adjust my 401k? Every 90 days we will take a peek under the hood and see if we need to make any adjustments. If we need to tweak something we’ll do it for you.
Can I adjust my 401k allocations without Blooom’s permission? Of course, you maintain full control of your account at all times.
Will Blooom contact me when they make a change in my 401k? Yes. Anytime we make investment adjustments we will send you an email.
Will Blooom initiate withdrawals out of my account? No. We never will take money out of your account. You will have to call your custodian to initiate a withdrawal or a loan.
Will Blooom change my contribution amount into my 401k? No. We will not change the amount that you are withholding out of your paycheck to fund your retirement. But if you want some basic advice, we’d tell you to contribute as much as you can to your 401k.
And our personal favorite…. ;)
What keeps me from signing up with Blooom and then quitting after Blooom fixes my 401k? Nothing. You are free to go. BUT, 401ks aren’t a “set it and forget it” solution to your retirement savings. Having a professional making adjustments, analyzing your fund options, and adjusting your allocation as you get closer to retirement goes a long, long way to helping you hit your goals.
Blooom is a great way to stay on top of your 401(k) or 403(b), 401(a), or 457 account if you hate managing it yourself and/or don’t know what the heck you’re doing. You want to make sure you’re not getting gouged with fees or invested in something that isn’t pushing your goals forward!
To learn more, or sign up, visit: Blooom.com
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