Founded in 2015, Principly, Inc. is a Delaware corporation and an investment adviser that
is registered with and regulated by the SEC under the Advisers Act as an internet adviser,
and is offering its services under the tradename Backer. Backer is backed by leading
venture capital firms and its principal owner is its founder and CEO, Jordan Lee.
As an internet adviser, Backer provides investment advice to our clients exclusively
through our interactive website and iOS and Android mobile applications. Through the
website and mobile applications, interactive computer software-based applications
receive the information that our clients submit and help us provide an investment advisory
service that is based on the personal information that the client inputs but does not
otherwise purport to meet the overall objectives or needs of a specific client. Rather,
Backer’s intent is to encourage 529 plan investing as further outlined below. Backer does
not plan to provide investment advice through other means, such as in person, by
telephone, or via email. If you require investment advice other than through an interactive
website or mobile application, Backer is not the adviser for you.
Backer’s Focus on 529 Plans
As background, 529 plans are tax-advantaged investment plans adopted in accordance
with Section 529 of the Internal Revenue Code. Withdrawals from 529 plans for qualified
education expenses remain free of federal income tax, among other benefits, terms, and
conditions. The 50 states and several territories have adopted various kinds of 529 plans,
which commonly offer various investment options, or prepaid tuition plans.
529 plans are often recommended to families looking to save for future college costs or
other qualified education expenses. Yet Backer believes that 529 plan investing is
underutilized, in part because of the complexities in opening accounts, settling on an
investment option, accessing account information, collecting contributions from multiple
sources, and sharing goals and progress with family and friends.
Backer’s mission is to further popularize 529 plan investing by making it easier to
understand and simpler to invest on behalf of the 529 plans’ beneficiaries (the “Students”).
Backer was founded to develop a technology solution for 529 plan investing that keeps the
investment side of the business simple while developing features that encourage gifting
into 529 plans and help families find new ways to save more for education.
Backer’s focus is on encouraging you to start the process of saving and investing on
behalf of a Student, and helping you do so with the help of family and friends, rather than
on chasing specific kinds of investment returns. Note that by investing through Backer,
you might sacrifice certain tax benefits (such as state tax deductions or credits) that might
be available to you, which could be material. You should investigate your other options
before investing with Backer. You may determine that it is most advantageous to open a
529 plan from your state of residence before or in addition to utilizing Backer. There is no
limitation on the number of 529 plan accounts that you can have at one time.
The following are elements of Backer’s current focus:
• Opening accounts
Backer has a philosophy that simplicity can go a long way in encouraging family
and friends to invest on behalf of a Student. We offer a user-friendly way to quickly
open a 529 plan account for a Student through our interactive website and mobile
applications. Once the account has been set up, our clients can immediately begin
adding investment contributions to the Student’s 529 plan account and can
publicize the account with family and friends.
• Settling on an investment option
The 50 states and several territories have adopted various kinds of 529 plans,
prepaid tuition plans, or other vehicles for education savings, which offer various
investment options. Cumulatively, all of these options can be intimidating or
confusing, and might deter a Student’s family or friends from making the effort to
invest in a 529 plan for the Student. Backer keeps it simple and recommends one
or a few options for the client. Backer does not currently advise on prepaid tuition
plans but may do so in the future.
• Collecting contributions from multiple sources
We help our clients collect contributions to their 529 plan account from multiple
sources. We have
created product features to make it easy for our clients to solicit
and collect gifts from friends and family by sharing a gifting page that is unique to
the Student.
• Accessing account information
We have implemented a technology solution to make it easy and intuitive for our
clients to access their 529 plan account information on our website and mobile
applications. Our platform allows our clients to access information about their
investments, add one-time or recurring contributions, track their progress, and
share their gifting page with family and friends.
• Sharing goals and progress with family and friends
We make it easier for family and friends to discover that a Student has an existing
529 plan and to begin contributing investments into the Student’s 529 plan
account without having to pull together the Student’s personal information and fill
out an account application. We also created product features that allow our clients
to share a gifting page to collect contributions and to share their goals and
progress with authorized family and friends.
• Connecting an existing account
For clients who already have a 529 plan account that is technologically compatible
with Backer’s platform, Backer helps the client connect their existing account to
Backer’s platform so that they can take advantage of Backer’s programs and
features, such as accessing account information through Backer’s website or
mobile applications, adding one-time or recurring contributions, tracking their
progress, and sharing their gifting page with family and friends to collect
contributions. Technological compatibility with a 529 plan does not mean that
Backer is affiliated with or otherwise has a relationship with that particular 529
plan.
Additional details about these aspects of Backer’s business can be found on our website
and mobile applications. Backer is always innovating on new programs and features
designed to help its clients save more for education and may announce such additions on
its website or mobile applications.
The Investment Choices
Backer offers advice on investing and, as part of its services to investment advisory
clients, provides technology and account-opening solutions intended to make it easier for
family and friends to support the Students in their life by funding 529 plans for them.
All of Backer’s clients are advised on a non-discretionary basis, which means that you,
rather than Backer, will select your investment. Upon selecting an investment, you may be
required to provide additional information or complete additional documentation that the
investment requires in order to open a 529 plan account, which Backer will provide
assistance with.
Backer provides investment advice on only certain 529 plans, and on only certain of the
investment options available in those 529 plans. This Brochure refers to those investment
options as “Investment Choices.” Backer’s recommendation as to a particular Investment
Choice will depend on the information you provide during the account-opening phase. In
that sense, Backer’s advice is tailored, but it remains impersonal, and Backer will not
provide investment advice on other securities besides the Investment Choices or respond
to specific requests for advice on purchasing other securities. Other 529 plans that are
not offered as Investment Choices may be more suitable for you.
Backer will offer Investment Choices based on various factors, including ease of
administration, the ability of Backer to coordinate its technological processes with the 529
plan, the level of fees charged by the 529 plan, the reputation of the investment managers
of the 529 plan’s investment options, the overall terms, and the available investment
options, among other factors. Backer began by recommending investment in a single 529
plan but will add and subtract 529 plans from its recommendations from time to time.
Backer receives no fees or other compensation from the 529 plans for recommending
investments in those 529 plans. Backer receives fees and compensation solely as
described in Items 5 and 14 below, including compensation from 529 plans that Backer
receives for providing technological services to the 529 plans, but these services are
unrelated to the investment advisory services that Backer provides to its advisory clients.
Client Assets
Backer advises on approximately $32 million in client assets as of March 31, 2023.