Blooom, an online robo-advisor focused on retirement accounts, has doubled its assets under management in the last six months to $2 billion, InvestmentNews writes.
How Has a Focus on 401(k)s Helped Blooom Grow
The firm reached the $1 billion mark a year faster then Betterment and Wealthfront, which shows the demand for help with 401(k)s and 403(b)s, according to Chris Costello, the CEO and co-founder of Blooom, the publication writes. According to Costello, Americans have more than $7 trillion invested in 401(k)s and while it is commonly cited as people’s most valuable retirement asset, they do not like managing it, InvestmentNews writes.
Blooom conducts a free analysis of a person's workplace retirement account to see if they can reduce fees or better align the account with an investor’s retirement goals, according to the publication. The platform can then manage the account—choosing funds and carrying out trades—for a $10 monthly fee, InvestmentNews writes. Costello reported that 47% of those who take part in the free analysis become clients, which shows the interest in online help for retirement accounts, according to the publication.
Blooom is also trying to convert more people to its platform by showing them its cost benefits. Costello says that of the 16,000 accounts analyzed by the company, 79% of the 401(k)s had hidden investment fees, and more than half did not align with investor goals, InvestmentNews writes. Furthermore, 39% of the accounts, which have a median balance of $47,000, were invested in target-date funds with a 45% higher average fee than alternative investments, according to the publication.
