Yu Financial Advice, LLC
17295 Chesterfield Airport Road, Suite 200
Chesterfield, MO 63005
Form ADV Part 2A – Firm Brochure
April 11, 2019
This Brochure provides information about the qualifications and business practices of Yu Financial Advice, LLC, “Yu Financial Advice”. If you have any questions about the contents of this Brochure, please contact us at (636) 733-7519. The information in this Brochure has not been approved or verified by the United States Securities and Exchange Commission or by any state securities authority.
Yu Financial Advice, LLC is registered as an Investment Adviser with the States of Missouri, California, and Texas. Registration of an Investment Adviser does not imply any level of skill or training.
Additional information about Yu Financial Advice is available on the SEC’s website at www.adviserinfo.sec.govwhich can be found using the firm’s identification (“CRD”) number 192517.
YU Financial Advice has made changes in service fee arrangements. Some corrections were made in the documents for consistency with the fact that we do not manage investments.
Yu Financial Advice, LLC is registered as an Investment Adviser with the States of Missouri, California, and Texas.We were founded in March 2015. Misook Yu, CFP®, is the principal owner of Yu Financial Advice. Because Yu Financial Advice does not manage investments, there is no Assets Under Management to report.
Investment Management Services
Our firm does not provide investment management service.
The investment adviser, or an affiliate or associated person of the investment adviser, at YU Financial Advice does not receive commissions from any financial products or transactions recommended in the financial plan. The only parties that pay for our service are our clients. We have no conflict of interest.
If the client elects to act on any of the recommendations, the client is under no obligation to effect the transaction through the investment adviser or the associated person when such person is employed as an agent with a licensed broker-dealer or is licensed as a broker-dealer or through any associate or affiliate of such person.
Financial planning is a comprehensive evaluation of a client’s current and future financial state by using currently known variables to predict future cash flows, asset values and withdrawal plans. The key defining aspect of financial planning is that through the financial planning process, all questions, information and analysis will be considered as they impact and are impacted by the entire financial and life situation of the client. Clients purchasing this service will receive a written or an electronic report, providing the client with a detailed financial plan designed to achieve his or her stated financial goals and objectives.
In general, the financial plan will address any or all of the following areas of concern. The client and advisor will work together to select the specific areas to cover. These areas may include, but are not limited to, the following:
- Business Planning: We provide consulting services for clients who currently operate their own business, are considering starting a business, or are planning for an exit from their current business. Under this type of engagement, we work with you to assess your current situation, identify your objectives, and develop a plan aimed at achieving your goals.
- Cash Flow and Debt Management: We will conduct a review of your income and expenses to determine your current surplus or deficit along with advice on prioritizing how any surplus should be used or how to reduce expenses if they exceed your income. Advice may also be provided on which debts to pay off first based on factors such as the interest rate of the debt and any income tax ramifications. We may also recommend what we believe to be an appropriate cash reserve that should be considered for emergencies and other financial goals, along with a review of accounts (such as money market funds) for such reserves, plus strategies to save desired amounts.
- College Savings: Includes projecting the amount that will be needed to achieve college or other post-secondary education funding goals, along with advice on ways for you to save the desired amount. Recommendations as to savings strategies are included, and, if needed, we will review your financial picture as it relates to eligibility for financial aid or the best way to contribute to grandchildren (if appropriate).
- Employee Benefits Optimization: We will provide review and analysis as to whether you, as an employee, are taking the maximum advantage possible of your employee benefits. If you are a business owner, we will consider and/or recommend the various benefit programs that can be structured to meet both business and personal retirement goals.
- Estate Planning: This usually includes an analysis of your exposure to estate taxes and your current estate plan, which may include whether you have a will, powers of attorney, trusts and other related documents. Our advice also typically includes ways for you to minimize or avoid future estate taxes by implementing appropriate estate planning strategies such as the use of applicable trusts.
We always recommend that you consult with a qualified attorney when you initiate, update, or complete estate planning activities. We may provide you with contact information for attorneys who specialize in estate planning when you wish to hire an attorney for such purposes. From time-to-time, we will participate in meetings or phone calls between you and your attorney with your approval or request.
- Financial Goals: We will help clients identify financial goals and develop a plan to reach them. We will identify what you plan to accomplish, what resources you will need to make it happen, how much time you will need to reach the goal, and how much you should budget for your goal.
- Insurance: Review of existing policies to ensure proper coverage for life, health, disability, long-term care, liability, home and automobile.
- Investment Analysis: This may involve developing an asset allocation strategy to meet clients’ financial goals and risk tolerance, providing information on investment vehicles and strategies, reviewing employee stock options, as well as assisting you in establishing your own investment account at a selected broker/dealer or custodian. The strategies and types of investments we may recommend are further discussed in Item 8 of this brochure.
- Retirement Planning: Our retirement planning services typically include projections of your likelihood of achieving your financial goals, typically focusing on financial independence as the primary objective. For situations where projections show less than the desired results, we may make recommendations, including those that may impact the original projections by adjusting certain variables (i.e., working longer, saving more, spending less, taking more risk with investments).
If you are near retirement or already retired, advice may be given on appropriate distribution strategies to minimize the likelihood of running out of money or having to adversely alter spending during your retirement years. We do not receive any commission or kickbacks for recommending financial products.
- Tax Planning Strategies:Advice may include ways to minimize current and future income taxes as a part of your overall financial planning picture. For example, we may make recommendations on which type of account(s) or specific investments should be owned based in part on their “tax efficiency,” with consideration that there is always a possibility of future changes to federal, state or local tax laws and rates that may impact your situation.
We recommend that you consult with a qualified tax professional before initiating any tax planning strategy, and we may provide you with contact information for accountants or attorneys who specialize in this area if you wish to hire someone for such purposes. We will participate in meetings or phone calls between you and your tax professional with your approval.
Comprehensive Financial Planning
This service involves working one-on-one with a planner over an extended period of time. By paying a monthly retainer, clients get continuous access to a planner who will work with them to design their plan. The planner will monitor the plan, recommend any changes and ensure the plan is up to date.
Upon desiring a comprehensive plan, a client will be taken through establishing their goals and values around money. They will be required to provide information to help complete the following areas of analysis: net worth, cash flow, insurance, credit scores/reports, employee benefit, retirement planning, insurance, investments, college planning and estate planning. Once the client’s information is reviewed, their plan will be built and analyzed, and then the findings, analysis and potential changes to their current situation will be reviewed with the client. Clients subscribing to this service will receive a written or an electronic report, providing the client with a detailed financial plan designed to achieve his or her stated financial goals and objectives. If a follow up meeting is required, we will meet at the client's convenience. The plan and the client’s financial situation and goals will be monitored throughout the year and follow-up phone calls and emails will be made to the client to confirm that any agreed upon action steps have been carried out. On an annual basis there will be a full review of this plan to ensure its accuracy and ongoing appropriateness. Any needed updates will be implemented at that time.
Client Tailored Services and Client Imposed Restrictions
We offer the same suite of services to all of our clients. However, specific client financial plans and their implementation are dependent upon the client suitability questionnaire which outlines each client’s current situation (income, tax levels, and risk tolerance levels) and is used to construct a client specific plan to aid in the selection of a portfolio that matches restrictions, needs, and targets.
Wrap Fee Programs
We do not participate in wrap fee programs.
Please note, unless a client has received the firm’s disclosure brochure at least 48 hours prior to signing the investment advisory contract, the investment advisory contract may be terminated by the client within five (5) business days of signing the contract without incurring any advisory fees. How we are paid depends on the type of advisory service we are performing. Please review the fee and compensation information below.Lower fees for comparable services may be available from other sources.
Investment Management Service Fees
Since we do not provide investment management service, there is no fee in this category.
Comprehensive Financial Planning
Comprehensive Financial Planning consists of an initial fee of $1,500 ~ $3,500 and an ongoing fee that is paid monthly, in advance, at the rate between $150.00 and $999.00 per month. The fee is based on complexity of client needs, services provided, and is negotiable in certain cases. This service may be terminated with 30 days’ notice. Upon termination of any account, the fee will be prorated and any unearned fee will be refunded to the client. Yu Financial Advicewill not bill an amount above $500.00 more than 6 months in advance.
Limited Service (Fixed Fee)
The area of requested service and the fixed fee will be agreed upon before the start of any work. The fixed fee can range between $1,500.00 and $5,500.00 and is most commonly used by small business owners to set up a retirement plan such as SIMPLE IRA, SEP IRA, Individual 401(k), and Safe Harbor 401(k). The fee is negotiable. If a fixed fee program is chosen, the fee is due at the beginning of process, Client may terminate the service with 3 business days’ notice if the work has not yet been completed. In the event of early termination, any unearned but paid fees will be refunded to the client. This is calculated based on the amount of hours worked multiplied by $275.00.
Hourly Fee Consulting
Financial Planning fee is an hourly rate between $200.00 and $450.00 per hour, depending on complexity. The fee may be negotiable in certain cases and is due at the end of the engagement.
Other Types of Fees and Expenses
Our fees are exclusive of brokerage commissions, transaction fees, and other related costs and expenses which may be incurred by the client. Clients may incur certain charges imposed by custodians, brokers, and other third parties such as custodial fees, deferred sales charges, odd-lot differentials, transfer taxes, wire transfer and electronic fund fees, and other fees and taxes on brokerage accounts and securities transactions. Mutual fund and exchange traded funds also charge internal management fees, which are disclosed in a fund’s prospectus. Such charges, fees and commissions are exclusive of and in addition to our fee, and we shall not receive any portion of these commissions, fees, and costs.
Item 12 further describes the factors that we consider in selecting or recommending broker-dealers for client’s transactions and determining the reasonableness of their compensation (e.g., commissions).
We do not accept compensation for the sale of securities or other investment products including asset-based sales charges or service fees from the sale of mutual funds.
We do not offer performance-based fees.
We provide financial planning and investment management services to individuals and high net-worth individuals. We do not have a minimum account size requirement.
We primarily practice passive investment management. Passive investing involves building portfolios that are comprised of various distinct asset classes. The asset classes are weighted in a manner to achieve a desired relationship between correlation, risk and return. Funds that passively capture the returns of the desired asset classes are placed in the portfolio. The funds that are used to build passive portfolios are typically index mutual funds or exchange traded funds.
Passive investment management is characterized by low portfolio expenses (i.e. the funds inside the portfolio have low internal costs), minimal trading costs (due to infrequent trading activity), and relative tax efficiency (because the funds inside the portfolio are tax efficient and turnover inside the portfolio is minimal).
In contrast, active management involves a single manager or managers who employ some method, strategy or technique to construct a portfolio that is intended to generate returns that are greater than the broader market or a designated benchmark. Academic research indicates most active managers underperform the market.
Material Risks Involved
All investing strategies we offer involve risk and may result in a loss of your original investment which you should be prepared to bear.Many of these risks apply equally to stocks, bonds, commodities and any other investment or security. Material risks associated with our investment strategies are listed below.
Market Risk:Market risk involves the possibility that an investment’s current market value will fall because of a general market decline, reducing the value of the investment regardless of the operational success of the issuer’s operations or its financial condition.
Small and Medium Cap Company Risk:Securities of companies with small and medium market capitalizations are often more volatile and less liquid than investments in larger companies. Small and medium cap companies may face a greater risk of business failure, which could increase the volatility of the client’s portfolio.
Concentration Risk:Certain investment strategies focus on particular asset-classes, industries, sectors or types of investment. From time to time these strategies may be subject to greater risks of adverse developments in such areas of focus than a strategy that is more broadly diversified across a wider variety of investments.
Interest Rate Risk:Bond (fixed income) prices generally fall when interest rates rise, and the value may fall below par value or the principal investment. The opposite is also generally true: bond prices generally rise when interest rates fall. In general, fixed income securities with longer maturities are more sensitive to these price changes. Most other investments are also sensitive to the level and direction of interest rates.
Inflation: Inflation may erode the buying-power of your investment portfolio, even if the dollar value of your investments remains the same.
Apart from the general risks outlined above which apply to all types of investments, specific securities may have other risks.
Common stocks may go up and down in price quite dramatically, and in the event of an issuer’s bankruptcy or restructuring could lose all value. A slower-growth or recessionary economic environment could have an adverse effect on the price of all stocks.
Corporate Bondsare debt securities to borrow money. Generally, issuers pay investors periodic interest and repay the amount borrowed either periodically during the life of the security and/or at maturity. Alternatively, investors can purchase other debt securities, such as zero coupon bonds, which do not pay current interest, but rather are priced at a discount from their face values and their values accrete over time to face value at maturity. The market prices of debt securities fluctuate depending on such factors as interest rates, credit quality, and maturity. In general, market prices of debt securities decline when interest rates rise and increase when interest rates fall. The longer the time to a bond’s maturity, the greater its interest rate risk.
Municipal Bondsare debt obligations generally issued to obtain funds for various public purposes, including the construction of public facilities. Municipal bonds pay a lower rate of return than most other types of bonds. However, because of a municipal bond’s tax-favored status, investors should compare the relative after-tax return to the after-tax return of other bonds, depending on the investor’s tax bracket. Investing in municipal bonds carries the same general risks as investing in bonds in general. Those risks include interest rate risk, reinvestment risk, inflation risk, market risk, call or redemption risk, credit risk, and liquidity and valuation risk.
Investment Companies Risk. When a client invests in open end mutual funds or ETFs, the client indirectly bears its proportionate share of any fees and expenses payable directly by those funds. Therefore, the client will incur higher expenses, many of which may be duplicative. In addition, the client’s overall portfolio may be affected by losses of an underlying fund and the level of risk arising from the investment practices of an underlying fund (such as the use of derivatives). ETFs are also subject to the following risks: (i) an ETF’s shares may trade at a market price that is above or below their net asset value; (ii) the ETF may employ an investment strategy that utilizes high leverage ratios; or (iii) trading of an ETF’s shares may be halted if the listing exchange’s officials deem such action appropriate, the shares are de-listed from the exchange, or the activation of market-wide “circuit breakers” (which are tied to large decreases in stock prices) halts stock trading generally. The Adviser has no control over the risks taken by the underlying funds in which client’s invest.
We have no information applicable to this Item.
No Yu Financial employee is registered, or have an application pending to register, as a futures commission merchant, commodity pool operator or a commodity trading advisor.
Yu Financial does not have any related parties. As a result, we do not have a relationship with any related parties.
Yu Financial only receives compensation directly from clients. We do not receive compensation from any outside source. We do not have any conflicts of interest with any outside party.
Item 11: Code of Ethics, Participation or Interest in Client Transactions and Personal Trading
As a fiduciary, our firm and its associates have a duty of utmost good faith to act solely in the best interests of each client. Our clients entrust us with their funds and personal information, which in turn places a high standard on our conduct and integrity. Our fiduciary duty is a core aspect of our Code of Ethics and represents the expected basis of all of our dealings.
This code does not attempt to identify all possible conflicts of interest, and literal compliance with each of its specific provisions will not shield associated persons from liability for personal trading or other conduct that violates a fiduciary duty to advisory clients. A summary of the Code of Ethics' Principles is outlined below.
• Integrity - Associated persons shall offer and provide professional services with integrity.
• Objectivity - Associated persons shall be objective in providing professional services to clients.
• Competence - Associated persons shall provide services to clients competently and maintain the necessary knowledge and skill to continue to do so in those areas in which they are engaged.
• Fairness - Associated persons shall perform professional services in a manner that is fair and reasonable to clients, principals, partners, and employers, and shall disclose conflict(s) of interest in providing such services.
• Confidentiality - Associated persons shall not disclose confidential client information without the specific consent of the client unless in response to proper legal process, or as required by law.
• Professionalism - Associated persons’ conduct in all matter shall reflect credit of the profession.
• Diligence - Associated persons shall act diligently in providing professional services.
We will, upon request, promptly provide a complete code of ethics.
A recommendation made to one client may be different in nature or in timing from a recommendation made to a different client. Clients often have different objectives and risk tolerances.
In an effort to reduce or eliminate certain conflicts of interest involving the firm or personal trading, our policy may require that we restrict or prohibit associates’ transactions in specific securities transactions. Any exceptions or trading pre‐clearance must be approved by our Chief Compliance Officer in advance of the transaction in an account, and we maintain the required personal securities transaction records per regulation.
Yu Financial Advice, LLC does not have any affiliation with Broker-Dealers. Specific custodian recommendations are made to client based on their need for such services. We may recommend custodians based on the reputation and services provided by the firm.
1. Research and Other Soft-Dollar Benefits
We do not receive soft dollar benefits.
2. Brokerage for Client Referrals
We receive no referrals from a broker-dealer or third party in exchange for using that broker-dealer or third party.
3. Clients Directing Which Broker/Dealer/Custodian to Use
Aggregating (Block) Trading for Multiple Client Accounts
Since we do not manage investments or trade securities on Clients’ behalf, we do not engage in block trading.
Client accounts with the Comprehensive Financial Planning Service with on-going monthly service fee(s) will be reviewed Misook Yu, CFP®,regularly on a bi-annual basis or otherwise agreed by the Client. The account is reviewed with regards to the client’s investment policies and risk tolerance levels.
Clients will receive confirmations from the broker(s) for each transaction in their accounts as well as monthly or quarterly statements and annual tax reporting statements from their custodian showing all activity in the accounts, such as receipt of dividends and interest.
Yu Financial Advice will not provide written reports to Clients regarding their account activities.
We do not receive any economic benefit, directly or indirectly from any third party for advice rendered to our clients. Nor do we directly or indirectly compensate any person who is not advisory personnel for client referrals.
Yu Financial Advice does not accept custody of client funds and does not deduct advisory fees from client accounts.
We do not provide investment management services or have trading authority to manage portfolio on non-discretionary basis. We have reasonably disclosed all material conflicts of interest.
We do not receive or vote Client proxies. Therefore, Clients maintain exclusive responsibility for: (1) voting proxies, and (2) acting on corporate actions pertaining to the Client’s investment assets. The Client shall instruct the Client’s qualified custodian to forward to the Client copies of all proxies and shareholder communications relating to the Client’s investment assets. If the client would like our opinion on a particular proxy vote, they may contact us at the number listed on the cover of this brochure.
We have no financial commitment that impairs our ability to meet contractual and fiduciary commitments to clients, and we have not been the subject of a bankruptcy proceeding.
We do not have custody of client funds or securities or require or solicit prepayment of more than $500 in fees per client six months in advance.
Item 19: Requirements for State-Registered Advisers
Misook Yu, CFP®
- 2012 – B.S. Finance, University of Missouri – St. Louis
- 1998 – A.A. Applied Science-Programing, St. Louis Community College
- 10/2017 – Present, Yu & Money, Founder & Author
- 03/2015 – Present, Yu Financial Advice, LLC, President and CCO
- 03/2014 – 03/2015, Edward Jones, Financial Advisor
- 01/2013 – 07/2013, Diversified Financial Advisors, Assistant for Financial Advisor
Other Business Activities
Misook Yu, CFP®,is current employed as Founder & Author at YU & Money, a book publishing company. This activity accounts for less than 5% of her time.
Performance Based Fees
Yu Financial Advice is not compensated by performance-based fees.
Material Disciplinary Disclosures
No management person at Yu Financial Advice, LLC has ever been involved in an arbitration claim of any kind or been found liable in a civil, self-regulatory organization, or administrative proceeding.
Material Relationships That Management Persons Have With Issuers of Securities
Yu Financial Advice, LLC, nor Misook Yu, CFP®,have any relationship or arrangement with issuers of securities.
Misook Yu does not receive any economic benefit from any person, company, or organization, in exchange for providing clients advisory services through Yu Financial Advice.
Misook Yu, as President and Chief Compliance Officer of Yu Financial Advice, is responsible for supervision. She may be contacted at the phone number on this brochure supplement.
Requirements for State Registered Advisers
Misook Yu has NOT been involved in an arbitration, civil proceeding, self-regulatory proceeding, administrative proceeding, or a bankruptcy petition.