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How does Backer charge for its service? What fees will I pay?

Backer offers the most features with the best pricing.

As the first and only robo-advisor focused exclusively on education savings, we offer the most comprehensive college savings platform for a low monthly fee.

To reach as many families as possible, we let you choose your own fee.

Your first month is free, so you have time to make sure Backer is right for your family.

 

Here's how we compare:

 

Backer

Brokers & traditional advisors

Pricing

$1 per month for the family
(most choose to pay $5 per month)
Upfront commission or initial sales charge (~5%)
+ annual asset-based fee (~1%)

Underlying 529 plan expenses

0.16% - 0.18% per year 0.89% per year on average for advisor-sold plans

Hidden Fees

None Enrollment or other one-time fees

Gifting Platform

Free Limited with service fees or not offered

Cashback Rewards

Free Not offered
 
 

Here are additional details about our pricing:

 

Backer's Investment Advisory Fee

We think it's important for every family to have a college savings plan, so we let you decide what fee to pay us. Most families choose to pay us $5 per month, but you can choose anywhere from $1 to $10 a month.

  • We charge a monthly fee, instead of an asset-based fee, so that you are not paying more as you save more.
  • The fee also covers the entire family so that you are not paying more if you have multiple funds for multiple children.
  • Unlike brokers, we do not charge any commissions or initial sales charges.
  • We also do not have any hidden fees or charge extra for our gifting platform or cashback rewards program.

We simply ask that you to pay us a monthly fee in the amount that you believe is fair, with $1 per month as the minimum, and you can change your fee at any time online.

Our mission is to make college affordable for every American family, so if you cannot afford the $1 minimum fee, please contact us, as we want to include every family!

529 Plan Fees

Please note that our investment advisory fee is separate and apart from any distribution or transaction fees charged by the 529 plan or its affiliates. Information about these other fees is disclosed in the 529 plan disclosure documents, which are provided to you upon enrollment. We do not collect those fees and we do not receive revenue from any 529 plan or its affiliates, nor from any funds that make up the 529 plan portfolio, nor from any fund manager.

529 plan fees can vary widely. State-sold 529 plans charge on average around 0.60% per year, while advisor-sold 529 plans charge on average around 0.89% per year. Backer makes sure to only recommend a 529 plan and associated portfolio with low fees. As of 2020, the average fund fees for the 529 plan and portfolios recommended by Backer ranged from 0.16% – 0.18% per year, or approximately $16 to $18 per year on a $10,000 investment.

Below is a chart that compares the average 529 plan fees with the investment option that Backer recommends:

529 Plan

Average fees charged

Average fees charged on hypothetical $10,000 investment

Direct-sold 529 plan
(
These are 529 plans distributed directly by a state)

0.60% per year

$60 per year

Advisor-sold 529 plan
(These are 529 plans distributed by an intermediary, such as a broker-dealer)

0.89% per year

$89 per year

Backer-recommended 529 plan
(We recommend a direct-sold 529 plan with low fees and help facilitate your enrollment)

0.16% - 0.18% per year

$16 - $18 per year

We believe it is important to recommend a 529 plan with low fees because it will help you save more in the long term. You will pay fees and costs whether you make or lose money on your investments. Fees and costs will reduce any amount of money you make on your investments over time.

 

How much more will I save?

Compared to a broker, you could save $37,000 over the life of your account.*

* This hypothetical pricing comparison calculation is for informational purposes only and is based on the following assumptions. You start a college fund for your child with an initial investment of $5,000 in a 529 plan and contribute $250 every month to the fund over 18 years. You start a second college fund when your second child turns 4 years old with the same initial investment and recurring contributions. Your investment has an annual return of 8%. You pay us a $1 monthly advisory fee with no upfront commissions or initial sales charges, and your 529 plan has an underlying expense fee of 0.17% per year. This is compared to a hypothetical financial advisor who charges you a 5% upfront commission or initial sales charge and an annual asset-based fee of 1% for your 529 plan investment, and a hypothetical 529 plan that has an underlying expense fee of 0.89% per year (which was the industry average for advisor-sold 529 plans as of 2020). This does not include additional fees that the hypothetical advisor or 529 plan may charge, such as fees for rollovers or withdrawals, which are free with Backer. The actual costs of working with a financial advisor may be different from these assumptions and your account may perform differently due to changes in recurring investments, time horizon, or returns.

 

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