Kestra Advisory Services, LLC
Kestra Advisory Services is an investment advisory firm based in Austin, Texas, with more than $40 billion in assets under management (AUM). It’s powered by more than 1,000 investment advisor representatives (IARs) who are registered with the firm. Many of these advisors are also affiliated with third-party accounting, legal and tax-planning businesses.
Kestra Advisory Serivces is a fee-based advisory firm, meaning it or its advisors are compensated by client fees and third-party commissions for selling financial products or services. This is different from a fee-only firm, whose compensation comes solely from the fees that clients pay for advisory services.
Kestra Advisory Services Background
Kestra Advisory Services formed in 1997. It's owned by the Kingfisher Holding, LP.
As mentioned earlier, the firm has headquarters in Austin, Texas, but its IARs have offices across the country.
Kestra Advisory Services Client Types and Minimum Account Sizes
Kestra Advisory Services works with advisors. This is why its website doesn't address retail clients. Its IARs, in turn, work with various types of clients including:
- Individuals
- Banking and thrift institutions
- Pension and profit-sharing plans
- Charitable organizations
- Insurance companies
- Corporations and other business organizations
Account minimums depend on the advisor, external advisor or platform they use. Generally, the minimum requirement is $25,000, but account minimums for certain platforms can range from $10,000 to $1 million.
Services Offered by Kestra Advisory Services
Kestra generally provides investment advice through its IARs, who utilize a variety of technologies and tools to help their clients reach their financial goals. IARs also offer the following services:
- Advisor-managed investment accounts
- Third-party recommendations
- Financial planning services
- Individual retirement planning services
- Qualified and non-qualified retirement plan services
Kestra Advisory Services Investment Philosophy
Kestra Advisory Services doesn't adhere to one single philosophy. Instead, it seeks to provide every kind of strategy that may be appropriate to a client's profile and needs. If an IAR doesn't have the needed specialization, they will refer the client to a third-party advisor or model portfolio. Generally, IARs may recommend investing in mutual funds, exchange-traded funds (ETFs), individual stocks and bonds. IARs also may turn to alternative investments and cash alternatives.
IARs evaluate these securities by reviewing publicly available research sources. They may utilize such analytical strategies as charting, fundamental analysis, technical analysis and cyclical analysis.
Fees Under Kestra Advisory Services
Advisors charge an asset-based fee that depends on several factors such as the size of your account and the types of services provided. Typically, this asset-based fee ranges up to a maximum 2.5% of client assets under management (AUM). This maximum is nearly 2.5 times the industry average of 1.02%, according to a 2021 study from Advisory HQ.
The client pays an asset-based fee typically on a quarterly basis in advance or arrears, as determined between the client and the advisor. The advisory or management fee is exclusive of other expenses associated with your account such as brokerage and custodian fees.
What to Watch Out For
Kestra Advisory Services has 14 disclosures of disciplinary events on its most recent Form ADV filed with the U.S. Securities and Exchange Commission (SEC). Of those cases, four are attributed to Kestra, while 10 are attributed to affiliated advisors.
In 2016, Kestra paid a $100,000 fine after the Commonwealth of Massachusetts alleged the firm had failed to register investment advisor representatives who conducted business in Massachusetts. In 2019, Kestra paid a $5,628,383.60 disgorgement, plus $567,895.75 in interest, after the Securities and Exchange Commission alleged the firm recommended mutual fund share classes that generated compensation for the firm's affiliated broker-dealer "without adequate disclosure of such compensation." Kestra also accepted a censure and an order to cease and desist "from such activity" as part of the case, according to its Form ADV.
Also worth noting: Kestra's IARs may be affiliated with other companies independent of Kestra. These affiliations may present conflicts of interest that don't exist for advisors who have no additional affiliations. Also, most Kestra IARs have multiple roles so when you receive a recommendation, be sure you know which hat the IAR is wearing when making it.
All information is accurate as of the writing of this article.
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