Giving to a child’s future can be very rewarding. But when giving involves a UGMA (Uniform Gift to Minors Act) account, giving can get complex.
You need the account info before you can give. This might even include sensitive information such as Social Security numbers. Depending on how well you know the child’s parents, it can get a little awkward.
EarlyBird solves this problem by connecting you with the recipient’s UGMA account through its mobile app. Both parties will need an EarlyBird account but once that is done, giving is very easy. You can even include a video with your gift to make it more memorable. In this article, we’ll review how EarlyBird works. Open an account with EarlyBird here >>>
- App-based UGMA custodial accounts
- Simplifies giving to children
- Monthly fee of $1/month per child
$1/month (first $200 is managed free)
$2 per gift (for the giver)
Who Is EarlyBird?
EarlyBird (EarlyBird Central Inc.) is a full service Registered Investment Advisor (RIA) that allows parents/guardians to set up a UGMA account for gifting to their children. They also setup a portfolio (like a robo-advisor), allow recurring investments, and encourage gifting.
EarlyBird's founders are Jordan Wexler and Caleb Frankel. Wexler is the CEO of the company.
EarlyBird provides a convenient way to give money to a child. Funds can be used for anything. EarlyBird isn’t a 529 Plan. Money gifted into a 529 Plan must be used for qualified educational expenses in order to take full advantage of its tax breaks.
EarlyBird uses UGMA accounts. Funds in a UGMA account can be used for anything typically once the child reaches 18 years of age. This provides a lot more flexibility when it comes time to use those funds. However, all unearned income above $2,500 is subject to the "kiddie tax."
What Do They Offer?
EarlyBird focuses on helping parents and families start investing for their children's future.
Setting Up A UGMA Account
The first big feature that EarlyBird offers is the setting up of a Uniform Gift To Minors (UGMA) account to allow you to invest for your child. This type of account is basically a taxable brokerage account that allows you to hold assets in the name of a child/minor.
This is a great way to open a general investing account for a child. This is in contrast to a 529 plan, which is a special account opened to specifically be used for educational expenses.
EarlyBird sets up the account, and also helps you to customize your investment portfolio.
Gifting is a great way to families and their community to help build wealth for a child.
The process to gift through EarlyBird is to download the app and open an EarlyBird account. When gifting, givers can record a video to go along with their gift.
If someone wants to give, but the recipient doesn't have an EarlyBird account, they can text (from the EarlyBird app) the recipient's phone number. The recipient will get the message and can open an EarlyBird account.
For parents or guardians, rather than choosing stocks, ETFs, bonds, and funds on your own, EarlyBird allows you to select from five different portfolios. The portfolios range from conservative (100% bond ETFs) to aggressive (100% stock ETFs). All portfolios use ETFs. This removes the complexity of having to research specific types of investments.
Are There Any Fees?
Yes. EarlyBird charges a flat $2.95 per month for one child, and $4.95 per month for multiple children.
Note: EarlyBird has a "Baby Fund" level where the account is free until your little one is born and the funds are invested. This is a great starter way to use for things like a baby shower gift!
Each gift also incurs a 2% processing fee paid for by the giver.
$2.95/mo for one child
$4.95 per month for multiple children
2% processing fee per gift
(For the giver)
$1.99 per contribution
(For the giver)
3.5% + $0.99 processing fee
(For the giver)
How Do I Open An Account?
EarlyBird is a an app-based service, but it does have a web portal as well. You can do everything online and via the app.
Once you've downloaded the app, you can begin creating your account.
Is My Money Safe?
Yes, EarlyBird Central Inc. is an SEC-registered investment advisor (RIA) and is highly regulated. Its broker is Apex Clearing. You'll have SIPC protection of up to $500,000 against fraud. EarlyBird's website is also encrypted.
Is It Worth It?
When you gift money to a UGMA account, you aren’t just giving money to a child to spend on whatever they want when they want. Instead, the child will have to wait until they reach age 18 to use the money. This might better ensure they put it to good use. Of course, there are no guarantees.
If your child already has a UGMA or 529 Plan account, why do you need EarlyBird? EarlyBird removes all of the complications involved with gifting to these accounts. Without EarlyBird, you’ll need to get the child’s account number, probably Social Security number, and contact info. It isn’t so straightforward. EarlyBird makes the gifting process much simpler.
For parents who want to set up a UGMA account that people can gift to, it may be a matter of knowing if those people will be comfortable enough using EarlyBird. Some may resist. And with the UGMA account locked up in EarlyBird, there isn't a way to bypass EarlyBird and gift directly. You'd need a stand-alone UGMA account for that.
Finally, if you're sure that the recipient will eventually use your gift towards education expenses, you'd probably be better off contributing to a 529 Plan to save on taxes. Check out our full list of 529 plans by state >>>
UGMA (custodial) accounts
$2.95 to $4.95 per month
2% per gift charged to the giver
Five pre-built ETF portfolios
Brokerage Services Provider
Apex Clearing Corporation
Yes, up to $500,000
Customer Service Options
Customer Service Email Address
Mobile App Availability
iOS and Android
Features and Tools
Ease of Use
EarlyBird is a platform that allows friends and family to easily contribute money that is invested for a child’s future. They are a full-service RIA that focuses on custodial accounts.
- Send gifts to children in seconds
- Personalize your gift with a video
- Invest in prebuilt ETF portfolios
- Monthly fee to use the service
- Processing fee charged on every gift
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him on the About Page, or on his personal site RobertFarrington.com.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.
Editor: Clint Proctor