Blooom Review: A Free 401(k) Analysis Review

When I was single with no kids, no mortgage and just a ~$35k student loan at under 4%… it wasn't too hard to plow a ton of money into a 401(k) out of college.

That flexibility hides a lot of mistakes.

With a decade, some wild swings in the stock market, and zero fingerprints, the account now sits comfortably in a Vanguard account where I only look at it once a month to record it in my net worth.

Until the rollover, I never thought about my 401(k). I picked some funds when I started working at 23, ignorant to asset allocation, and for five years the contributions went towards whatever my naive little 23-year-old mind decided was “good.”

I should have been thinking more about the allocation, rebalancing, and more about the fees. The only thing I did was rebalance annually.

Here's the thing:

Many corporate 401(k) plans are filled with terrible options.

They're not set up like Vanguard funds or Fidelity, with low fees and a transparency we've come to expect. They hide what they're investing in, what you pay in fees, and other details within documents. One of my plan options was an actively managed fund that charged over 1.5% each year! I only knew because I logged in, downloaded the prospectus, and searched through the stupid thing to find the fees.

For many folks, your 401(k) is the bulk of your retirement savings. This is a thing that will grow for 40+ years until you retire. You need to be reviewing your 401(k) regularly because small changes can mean big results.

401(k) reviews by a financial planner are expensive. It's because an experienced human being needs time to conduct a review. My friend Jeff Rose is a brilliant financial planner and he charges $350 for a 401(k) review (worth every penny I bet). $350 is not a lot to review a five or six-figure retirement account but maybe you're not ready to do that yet.

If that sounds like you, there's a startup that will review your 401(k) for free. (it's not as comprehensive as what Jeff would do, but it also costs nothing)

Get a free 401(k) analysis by blooom
(it's completely online)

What is Blooom?

First, some information on the company.

Blooom is a robo-advisor for your 401(k). They will analyze your portfolio for free but the value proposition is that they will do for your 401(k) what Betterment and Wealthfront do for a taxable brokerage account. They'll also do it for a flat rate, rather than a percentage of your assets.

Throughout this article I talk only about 401(k)s but they do this for 403(b), 401(a), 457, Thrift Savings Plans (TSP), and some IRAs too.

Blooom was founded by Chris Costello, Kevin Conard, and Randy AufDerHeide. Costello and Conard are the finance folks, AufDerHeide brings the tech. Costello is a Certified Financial Planner, previously co-founded an investment advisor firm with $500 million in assets under management, and has also worked with wealthy individual clients. Conard has 15 years of working with clients at another firm. blooom raised a $9.15 million Series B investment in February of 2017.

Here's a thirty-second explainer video (followed by screenshots when I went through it):


Free 401(k) 5-Minute Analysis

The analysis is really fast – enter in your birthday (to determine your age) and then the age you wish to retire.

The data in these screenshots is for demonstration purposes only, it's not my data. The analysis is real though (using my age and retirement age target of 65).

You're then asked a series of risk-related questions (what would you do if the stock market tanked, describe your perfect job, etc.) to establish risk.

After you create Blooom account, you can link up your 401(k) account:

After a bit of analysis, it'll show you how your asset allocation is compared to what it should be for someone of your age and looking to retire when you do:

As you hit next, you walk through each piece of the analysis to see what could be improved.

For example, under fees, it appears that I am overpaying. My current fees of 0.30% are higher than the optimal fee structure of just 0.17%.

After looking at the warning lights (risk and diversification), you're shown the check-up summary:

There's a lot of information here that you can use to adjust things yourself but Blooom does offer a paid service that costs as low as $10 a month.

It isn't until you after the check-up summary that you get to billing. So you get the analysis before they ever ask for a credit card.

Blooom's Ongoing Service

What do you get for your fee?

They will rebalance your portfolio about once every 95 days, if needed, to match your asset allocation. If you need to change the target allocation, Blooom will adjust to that on the next rebalancing date.

They will also adjust your portfolio so that it matches your glide path, which is how your allocation changes as you age and near retirement. They will lower your allocation in stocks, increasing it in bonds as you get closer to retirement.

Lastly, there is personalized support with licensed financial advisors. You can ask them anything (I haven't tested this myself).

What Blooom is Missing

The biggest thing I notice is that Blooom doesn't take into consideration your entire portfolio's asset allocation. Retirement assets are just one piece and so it's on you to remember what you want your 401(k) to do if it's outside the standard.

In other words, let's say you keep most of your stock investments in a taxable brokerage account because you want the favorable long term capital gains. If you put bonds inside your 401(k), since the bond dividends don't qualify for long term capital gains, then Blooom will think you're over-exposed.

Fortunately, you can adjust your allocations so it's not a big deal.

Is Blooom worth it?

The free analysis is worth it. It can tell you things you didn't even think about, like how some of your funds might have excessive fees, or if your allocation is out of alignment.

As for whether the ongoing management is worth it, that'll depend on you and your 401(k). If you are the type of person to re-balances your 401(k) every quarter, reviews fees, and check to see that the allocation is in line with your taxable investments… you probably don't need it (unless you want to pay $120 and automate it…).

(FWIW, I'm a fan of buying time)

Give it a shot and let me know what you think:

Get a free 401(k) analysis by blooom

Blooom

8.5

Overall

8.5/10

Strengths

  • Free retirement portfolio review
  • 90-day rebalancing
  • Access to financial planners
  • As low as $10 monthly fee

Weaknesses

  • Can't include non-retirement assets

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Jim Wang

About Jim Wang

Jim Wang is a thirty-something father of three who is a frequent contributor to Forbes and Vanguard's Blog. He has also been fortunate to have appeared in the New York Times, Baltimore Sun, Entrepreneur, and Marketplace Money.

Jim has a B.S. in Computer Science and Economics from Carnegie Mellon University, an M.S. in Information Technology - Software Engineering from Carnegie Mellon University, as well as a Masters in Business Administration from Johns Hopkins University. His approach to personal finance is that of an engineer, breaking down complex subjects into bite-sized easily understood concepts that you can use in your daily life.

One of his favorite tools (here's my treasure chest of tools,, everything I use) is Personal Capital, which enables him to manage his finances in just 15-minutes each month. They also offer financial planning, such as a Retirement Planning Tool that can tell you if you're on track to retire when you want. It's free.

He is also diversifying his investment portfolio by adding a little bit of real estate. But not rental homes, because he doesn't want a second job, it's diversified small investments in a few commercial properties and a farm in Illinois via AcreTrader.

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These responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

  1. George M says

    I have been with Blooom for two years. On several occasions, I had to call in because I noticed that my account had not been rebalanced in more than 3 months. Two of those times, I was told it was in the cue to be done that night… what a coincidence. (December 14, 2017, July 21, 2018 for reference)

    I finally pulled the plug when I checked my account today and I have a -9.07% return year to date when all my other accounts have had a great year. When I logged in this time, I was given a line about no one being able to predict the market and how even monkeys, throwing darts at a board, can sometimes better predict stocks better than pros. Well, here I am, much the poorer for choosing you so next time I will ask for a monkey to choose the stocks and save the money.

  2. Grokking Money says

    Hi,

    I moved from Fidelity Managed accounts to using Blooom for my 401K. I was able to save my overall fee from 0.78% to 0.30%. I love blooom and have referred it to a lot of friends at work too.

    Great tool.

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