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As long as you’re of working age, you should be planning for retirement.
The savings part might be automatic if you’re putting money into a 401(k) at work or making regularly scheduled contributions to an individual retirement account (IRA), but that’s not all there is to it.
You need an investment strategy to make the most of the money you’re setting aside. That means putting the right proportions into stocks and bonds to match up with your risk tolerance — how much risk you can stomach — and your time horizon — when you plan to retire and start drawing from your nest egg. Sounds a bit time consuming, right?
Enter: blooom (yes, three o’s). Blooom is an investment advisor that takes charge of your retirement accounts for you to make sure you’re staying on course as the markets ebb and flow.
In short, blooom reviews your retirement account (or multiple), determines your ideal stock/bond mix, and picks quality, low-cost funds so that fees — which are generally unavoidable but can be mitigated — aren’t eating into your returns. And then it does all the heavy lifting.
- Prefer a hands-off approach when it comes to investing
- Want one flat fee for investment management and financial advising
- Get caught up in the details of investing and feel pressure to make the “perfect” decision
- Know what you should do, but don’t have the time to take action
- Want easy access to a fiduciary financial advisor
You might not like blooom if you:
- Already have a financial planner
- Like to get wrapped up in the details and research investments on your own
- Care more about investing in specific funds than minimizing fees
- Have an IRA that’s not at Fidelity, Schwab, or Vanguard (the three brokerages supported by blooom)
You can get an analysis of your retirement accounts for free when you sign up for a blooom account. If you’d like blooom to optimize and monitor your investment accounts, there’s an annual fee.
Blooom has three membership tiers: $45, $120, or $250 a year. The distinguishing factor between them is how many retirement accounts you can link up. The two cheaper tiers will manage one account, while the most expensive membership will manage an unlimited number of accounts. You might prefer the pricier tier if you have a 401(k) through work and an IRA on the side, for example. Unfortunately the advisor doesn’t support family accounts yet, so you won’t be able to pay blooom to manage both your and your partner’s workplace plans through one membership.
The $120 and $250 a year memberships both review your retirement accounts, recommend a personalized strategy, execute trades on your behalf, and monitor your accounts periodically to make sure you’re investing as cheaply as possible.
But just because blooom takes the wheel doesn’t mean you’ll be totally in the dark. Before making any changes to your accounts, it will always notify you. And as long as you keep your investment profile updated, blooom will manage your retirement account according to that framework.
Both memberships also come with unlimited access to blooom’s in-house financial advisors — a feature that makes it well worth the sticker price.
Blooom currently manages about $5 billion in retirement money for more than 25,000 investors. It uses technology to optimize retirement accounts just like a human advisor might, but for a fraction of the cost.
Blooom has a free tool that reviews your employer-sponsored retirement plan or IRA to analyze how well your current investments — i.e. your stock/bond ratio and what funds your money is sitting in — match your goals and risk profile. All you have to do is sign up for an account and link your retirement accounts to it, like you would with a budgeting app and your bank, for example, and fill out a risk profile.
In addition to managing almost any 401(k), 403(b), 401(a), 457, and Thrift Savings Plan (TSP) accounts, blooom can also handle most types of IRAs held at three major brokerages: Fidelity, Schwab, and Vanguard. You don’t need a minimum account balance to qualify.
After reviewing your account, it recommends an ideal stock/bond mix for your situation and shows you where you stand currently. According to blooom’s analysis of client accounts, 38% of investors had portfolios that were too conservative for their own goals and risk tolerance when they signed up with blooom. That’s nearly twice the share of investors who were too aggressive with their investments.
Blooom investing review: Automated management for 401(k)s, IRAs, and other employer-sponsored plans
Chris Costello, blooom cofounder and chief investment officer, says there’s a natural human tendency to be cautious with money. The company’s aim, he told Insider, is to reassure people who need to take on more risk to reach their goals and keep people who tend to make emotional decisions from botching their long-term strategy.
“That’s really what’s at stake here is making sure — are people saving money and is that money invested properly? Is it working in the way it should be for people?” Costello says. “Then the next best thing we can do is keep people from harming themselves, which is getting in there and doing dumb things like selloffs and things of that nature. That’s the biggest job in my opinion.”
If you like the recommendations blooom makes, which can range from shifting your asset allocation to creating a new portfolio from scratch using the options available in your retirement account, you can sign up for a membership and the digital investment manager will take it from there.
Blooom has six licensed financial advisors on staff, including Costello himself, who are available to answer investors’ questions about their retirement accounts and beyond.
“We’ve always told clients that any money-related question that you have is fair game to ask us,” Costello says. “It could be a question about paying off debt. It could be questions about paying off student loans. It could be a question about refinancing your home mortgage.”
The financial advisors are reachable during work hours via a chat box on the website. Depending on demand, members can get their question answered within two to three days. The advisors don’t do phone or video calls or in-person visits — it’s all virtual. Members are encouraged to fill out a profile within their account to give the advisors more information about their financial situation, like whether they’re married, have kids, carry a credit-card balance, or own a home.
As long as your membership is active, you have access to an advisor at no additional charge. A typical financial advisor might charge anywhere from 0.5% to 2% of your account balance as an annual fee to manage it, and potentially an additional flat fee to help with your larger financial plan. The average account balance at blooom is about $160,000, which would translate to an $800 annual management fee on the low end. Needless to say, blooom provides some of the cheapest financial advising you’ll find.
Most importantly, blooom is a fiduciary, meaning its advisors have a legal and ethical responsibility to make decisions and give advice that’s in the best interest of their clients. They can help run the numbers for investors who are weighing a big financial decision, but they’re also there to offer unbiased support and guidance, particularly during market downturns and other economic chaos.
“In my opinion, this is the biggest value add of your blooom membership — the ability when you’re scared, you’re confused, or you’re concerned, to be able to message an advisor and we have no conflicts of interest,” Costello says.
Tanza Loudenback, CFP®, is the personal-finance correspondent at Business Insider. She writes most frequently about saving money, planning for retirement, taxes, debt management, and strategies for building wealth. Have a money question for Tanza? Fill out this anonymous form.