Blooom Review: Flat Fee 401k Financial Advice (CFP) + Free Upfront Analysis

The numbers tell us that you probably have a 401k and you’re probably managing it yourself. Blooom (yes, with three Os) is a new company that focuses on providing advice for 401k, 403b, 457, and TSP accounts with modest balances, charging a flat $10 a month fee that includes the following services:

Fee analysis. Each mutual fund you own charges a “hidden” expense ratio that is quietly taken out of your balances daily. There may also be administrative fees charged by your provider (not to mention they may get a cut of those mutual fund expense ratios).
Asset allocation advice. They will provide a suggested stock to bond mix based on your retirement goals.
Rebalancing service. Blooom will rebalance your assets periodically back towards your target values.
Chat with Certified Financial Planners. You can e-mail or Live Chat with a Certified Financial Planner (CFP) about all general financial matters, like planning for college or .
Fiduciary advice. Blooom is not affiliated with a bank or mutual fund company. They are a Registered Investment Advisor (RIA), which means that they have a fiduciary duty to give advice in your best interest only.

Free 401k analysis screenshots. Blooom also offers a free upfront 401k analysis, so I figured that I would take advantage and see what they have to offer. You aren’t agreeing to a trial, and they won’t ask for credit card or any payment information.

1. They ask you for name, birthdate, and retirement age. You don’t need to be super-specific here, they just want your age and target retirement age to help create your target asset allocation.

2. Provide your login credentials. Blooom will automatically pull in your 401k holdings and other information (like your other investment menu options) when you provide them your username and password. You can opt-out, but in that case it skip to asking you questions about your investing behavior and not analyze your 401k. It took them a couple of minutes to crunch everything. It looks like many 401k providers are included, but likely they will have missed some small ones. This is why the free 401k check is good before you commit to paying money.

3. Analysis results and screenshots. They first give you an overall report card. Now, I don’t actually own company stock, so that part could use some improvement.

Next, they told me about the fees that I am paying. It’s true, this 401k does have limited options that can be expensive, but most of my money is actually invested through a Schwab brokerage window. This fact kind of borked their analysis engine.

They should analyze your asset allocation using a similar system to Personal Capital (also free), figuring out what is inside each of the mutual funds and assigning the proper asset class. Here is their advice about asset allocation:

Finally, as you might expect, they make a pitch for why you should hire them to help you manage your 401k.

My take. My main gripe from this analysis is that it only takes into account your 401k. If your 401k is your only retirement savings, then this is fine. However, my 401k less than half of my overall portfolio. In addition, I use tax-efficient asset placement, so it’s not a complete picture in terms of stocks and bonds. In addition, they were not able to analyze most of my 401k account anyway as I use a self-directed brokerage window. I suppose that isn’t very common, but it prevents me from getting value out of this service.

Other than that, their asset allocation advice seems pretty cookie-cutter, and that’s not necessarily a bad thing. A lot of people have holdings all over the place. Too much company stocks. Too much money in expensive funds with hot recent performance. All cash. Completely ignored. The “standard advice” is often an improvement. The standard advice is low costs and passive indexing. The standard advice is for a mix of stocks and bonds that are appropriate for your age and time horizon. The standard advice is diversification across asset classes like US stocks, international stocks, small caps, etc.

Cost. Blooom has settled on a flat $10 a month fee for ongoing 401k management and advice. This is the same if you have $10,000 or $10 million. Flat fees end up being a high percentage of small accounts though, for example on $10,000 that ends up being 1.2% a year. My personal opinion is that if you only have a thousand dollars or less, you should buy the cheapest S&P 500 index fund in your 401k and focus on increasing your contribution rate. Asset allocation isn’t as important yet. Of course, the financial advisor access may be worth more than $10 a month by itself (see below).

While flat fees don’t work out mathematically for small accounts, you will start to save money as your account grows when compared to a percentage-based fee. I personally like the idea of a reasonable fee that stays flat as my assets grow. I wouldn’t pay $10 a month for no reason, but it is still less than many people drop on energy drinks or bottled water. If there was a robo-advisor that would take a holistic view of all my accounts and rebalance things for a flat fee, I would seriously consider it. Emotionless rebalancing is a feature that I feel in under-appreciated. Blooom would also make sure your stock/bond mix gets more conservative over time.

Now, if you had a solid low-cost, diversified Target Retirement fund from Vanguard, Fidelity Index Series, or Schwab Index Series, I think those are fine and you don’t need to pay for extra advice. The asset allocation, rebalancing, and growing more conservative over time is all baked in already at an expense ratio about 0.20%. The problem is that there are a lot of bad Target Retirement funds out there that have added layers of fees, stuffed with expensive questionable funds, and chase performance.

CFP advice for $10 a month? The most intriguing part is the ability to Live Chat (text) or e-mail with Certified Financial Planners with no minimum balance requirement.

DID YOU KNOW blooom clients have access to a CFP? Just ping us on chat, email, Morse code, singing telegram, Pony Express… well, you get the idea, we are accessible.

They also seem to welcome questions about topics outside your 401k:

Ask our advisors any financial questions you have… even beyond 401ks! […] We go beyond retirement advice. Thinking about how a puppy or new car might affect you financially? Give us a whirl! Whether it’s $20 or $20,000, we want all our blooom members to make smart decisions about their finances.

In comparison, Betterment is also an independent RIA but won’t even let you pay extra for CFP access unless you have $100,000 held with them (401k assets that aren’t rolled over into an IRA don’t count).

Bottom line. Blooom may be appropriate for you if your 401k (or 403b/similar) contains the majority of your retirement assets and you are looking for low-cost, unbiased financial advice from a human. They will manage your 401k and also provide chat/e-mail access to a Certified Financial Planner for a flat $10 a month, regardless of your balance. However, I would make sure they can actually analyze your 401k correctly. Get your free 401k/403b analysis first. No credit card required.

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Blooom Review: Flat Fee 401k Financial Advice (CFP) + Free Upfront Analysis from My Money Blog.