Category : 401k

Thanks 1 Billion Clients

Blooom Reaches $1 Billion in Assets Under Management

“Wall Street has made a habit of running in the opposite direction of investors with small accounts…maybe we should build something and run towards them.”

This was written in email from Kevin Conard, my co-founder to me late one night back in January 2013. Four-and-a-half years later that idea has evolved into a company – blooom – and we are proud to announce that we have grown faster than virtually any other robo-advisor. Blooom now manages more than $1 billion of retirement accounts for our clients.

Specifically, thousands of people from all across this country have trusted blooom with what is likely their most important and potentially most valuable financial asset – their employer-sponsored retirement account, or 401ks/403bs, as they are so strangely named.

If you’re a blooom client, I want to thank you for believing in us and starting this journey of bettering your retirement and financial situation together. The entire blooom team works hard every day to help you reach your financial goals.

Every time we receive a message of gratitude from one of our clients, we share it with the team and … everyone gets to work the next day with a sense of pride that they are truly helping people and striving to achieve greatness. Thanks to everyone once again. We will continue to provide our helpful service to all of you — in good times and bad.

Speaking of pride. We also take pride that this Kansas-based company reached the milestone faster than both Betterment or Weathfront – while doing so on a fraction of the capital. They’re peers not so much from a comparable service offering but in that they’re a benchmark for other robo-advisors. In other words, out of the gates, we have grown faster on fewer resources, as one should expect from someone managing their money.

Blooom was started in 2013 to help the traditionally un-helped.

We felt – and continue to feel — that it isn’t fair that the people who needed the help from the financial services industry the most were the least likely segment of the population get it.

You’ve done the hard part: You started saving for you retirement. Thanks for letting us do the rest.

If you haven’t already read blooom’s manifesto — here’s WHY this is all so important to us:

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6 Pitfalls Why You Don't DIY Your 401k

6 Pitfalls of Going it Alone with Your 401k

In this day and age of DIY tutorials and life-hacks, you might be tempted to do your 401k all by yourself. But be wary, brave traveler! There are several pitfalls you could get into if you follow this path.

Pitfall #1: Being Too Conservative

The old rule of thumb was that if you subtract your age from 100, then that should be the percentage of stocks in your portfolio. For example, if you were 20, then 80% of your portfolio would be in stocks, and 20% in bonds.

With Americans living longer, and empirical evidence of higher long-term returns from stocks vs. bonds, this framework is a bit outdated. Instead, raise that number to 110, or even 120. So, your portfolio would have 90-100% of stocks.

To find out why, read some friendly tips from Investopedia, and a blog that our CEO wrote.

Pitfall #2: Being Too Aggressive

We know, we know. You literally just read not to play it too safely. But here’s why you shouldn’t be too reckless with your investments. Say you’re less than 5 years away from retirement. We recommend that around 40% of your 401k get invested in bonds, with the other 60% in stocks.

As folks start getting closer to retirement, their nest egg needs to be safer from a market crash or a decline in stock prices. That’s why blooom continually monitors and periodically rebalances our clients’ accounts as they get closer to retirement, bringing down the percentage of stocks and increasing bonds.

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401k Fees Eat Holes in Money Socked Away

What The Heck are 401k Fees and How Do You Kill Them?

The saying “ignorance is bliss” doesn’t apply to hidden 401k fees. We frequently reference them … and for good reason. According to research from NerdWallet, people with 40 years until retirement could lose as much as $500,000 because of investment fees.

Worse yet. Most people aren’t AWARE they are paying these fees. An incredible 92% of Americans have no idea how much they pay in 401k fees.

We’re going to provide a simple break down of the fees found in your 401k. We’ll also review what, if anything, you can do about them.

Providers Have Three Main Types of 401k Fees

Investment fees are specific to each investment option your plan offers and typically the loftiest type of fee. Luckily, you can usually control – or get help to control – these types of fees. They can be reduced by simply choosing to invest in funds that have lower expense ratios.

Other types of 401k fees, administrative and service fees, are more difficult for you to reduce, as they are an innate part of your provider’s plan.

Here’s the quick overview of the three main types of fees:

  1. Investment fees – Expressed as an “expense ratio” of anywhere from 0.01% – 3%. Our team will call these “fund specific fees” or “fund fees.”They cover the management of the investments within your plan. And they typically represent the largest component of fees. Generally assessed as a percentage of assets invested, they are deducted directly from your investment returns: Investment fees are taken out annually as a percentage of your investment.
    • Sales charges – transaction costs for buying/selling shares
    • Management fees – for managing the assets of the fund, often used to cover administrative expenses
    • Other fees – to address services such as furnishing statements
  2. Plan administration fees – The fees charged to keep your plan running. These fees include recordkeeping, accounting, legal and trustee services that are necessary for administering the plan.
  3. Individual service fees – typically associated with optional features offered under a 401k plan. Some additional services may include access to a customer service representative, educational videos or seminars, planning software, investment advice, or online transactions. The more services provided, the higher the fees. The cost typically corresponds with the size of your employer’s 401k plan, i.e. there are benefits of scale (the following are the typical fees by employer size):
    • 1.4% for small employers
    • 0.85% for medium-size employers
    • 0.5% for larger employers

Investment Fees Pile On – They’re Vermin You Want to Control

We sometimes hear from people that they don’t need to worry about investment fees because their account balance is relatively small. But here’s the rub: Fees negatively affect your 401k (or other employer-sponsored retirement plan) in several ways.

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Wall Street Won't Provide 401k Help

Helping You With Your Retirement Where Wall Street Won’t

After about 20 years of working as financial advisors and helping people reach retirement, Kevin Conard and I knew the financial services business model was broken. No — more pointedly – we knew Wall Street was broken. Don’t believe us? Take a few minutes to learn about the Wall Street neglect that led us to create our 401k management app at blooom. We believe every hard-working American trying to save for retirement deserves to receive expert 401k help! If you watch blooom’s story, you’ll see why we are here to change the culture of saving for retirement:

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Based in Leawood, Kansas, our culture consists of Midwestern values and hard-work. We are a low-cost, online platform created to help improve the way average Americans manage their 401k retirement plans. In just five minutes, anyone with a 401k can receive a free health assessment on their current investment strategy. Then, for those that want professional Do-it-For-You 401k help, blooom can be hired manage your account for a flat, Netflix-like fee of only $10 per month. We don’t even need to move your account.

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401k Management Requires Dissection

What Do an Appendectomy and 401k Management Have in Common?

Picture this. You start to feel a dull sense of pain around your belly button that shifts to your lower right abdomen. Within just a few hours the dull pain has escalated to a sharp pain that can no longer be ignored. When you move, the pain gets excruciating and if by chance you need to cough or sneeze – you’d better be gripping onto something!

At this point, you realize you need to get your butt to the ER. After what seems like a million bumps in the road on the way to the hospital, you check yourself into the ER. The ER doctor then begins the examination. After just a few moments of probing your lower abdomen — she is confident that you have appendicitis.

The doctor explains that if appendicitis is not treated quickly, the appendix can rupture. When that happens, it releases bacteria into the abdomen and potentially leads to other, life-threatening infections.

Because of this danger she explains, appendicitis is considered a medical emergency. It typically needs to be removed within 24 hours of the condition being diagnosed. Given the amount of pain you’re are in, surgery sounds like the least of your worries. So, you tell her, “Let’s do it! Get this thing out of me. Nobody even knows what the heck an appendix does anyway!”

Then comes a response that you were not at all expecting. Instead of starting the process to prep you for the appendectomy, she instead asks you just about the …

Strangest Question You Would Expect a Doctor to Ever Ask

“I would love to perform this appendectomy, but before we can proceed, I need to know how much you have saved for your retirement?”

You are thinking … WTF!  What in the world does my retirement saving have to do with this emergency surgery? But given how much pain you are in, you will answer just about any question if it means getting you closer to the pain meds.

“I have about $70,000 saved up in my 401k,” you answer proudly. Still, you hadn’t seen the 401k management questions in the admittance form. What’s this about?

Her reply leaves you totally dumbfounded. “That is great but, unfortunately, you don’t have enough saved for ME to perform the appendectomy you badly need.”

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