INTRODUCTION
As an investment adviser, we are subject to a fiduciary duty requiring that we act and provide
investment advice in our clients’ best interest. We also are required to provide full and fair
disclosure of material facts associated with our services and investment advice. We must act to
avoid conflicts of interest or disclose these conflicts to our clients. This brochure is designed to
explain our services and how we provide investment advice and to disclose conflicts of interest
associated with our services and advice.
We provide investment advice through investment adviser representatives registered with our
firm. We refer to these financial advisors as “Advisors” in this brochure. Our primary methods of
providing investment advisory services are: 1) Advisor managed accounts; 2) third-party
recommendations; 3) financial planning; 4) wrap-fee programs; 5) individual retirement planning
services; and 6) qualified and non-qualified retirement plan services. We describe these
services in more detail below. If you are a retirement plan client, please refer to our Retirement
Plan Brochure.
Generally, prior to opening an advisory account with us, your Advisor will meet with you to
understand your investment experience, investment objectives, risk tolerance and current
financial circumstances in order to create an investment profile for you. This investment profile
helps your Advisor determine appropriate investment products and services for you. Should you
engage our firm, you will enter into an agreement with us setting forth terms and conditions of
the advisory services relationship, including fees to be charged and authorization for the Advisor
to purchase and sell securities on your behalf consistent with your defined investment
objectives. Generally, your Advisor will recommend, purchase, or sell mutual funds, variable
insurance products and investments in their sub-accounts, exchange-traded funds, equities
(stocks) and fixed income securities (bonds). Your Advisor may also recommend various
alternative investments, typically designed to diversify your portfolio, and a portion of your
account may also remain in cash, a cash product, or a money market fund.
Our firm supports independent Advisors, and while we oversee their advice and asset
management, subject to our fiduciary duty and rules of suitability, we do not dictate the
products, platforms, or services your Advisor recommends to you within the scope of available
options we make available to your Advisor. We offer a variety of investment advisory platforms,
custodians, and brokers, including our own affiliated broker-dealer. Most of our Advisors are
also registered representatives of our affiliated broker-dealer, Kestra Investment Services, LLC
(Kestra IS). Please refer to the Brokerage Practices section for additional information
regarding our broker-dealer affiliate.
In addition, many of our Advisors also act as insurance agents independent from our firm. To
the extent your Advisor provides fixed insurance products or services to you (other than fixed
indexed annuities), he or she does so outside of our firm and supervision.
Some of our Advisors are also involved in other business activities, such as accounting, legal,
tax, and other non-investment services for which we are not responsible. Unless otherwise
provided by applicable law and the particular circumstances, services provided by our Advisors
outside of our company will not be subject to a fiduciary standard. Our firm does not provide
legal or tax advice and you should consult your own attorney or tax advisor for guidance relative
to your specific circumstances.
ADVISOR MANAGED ACCOUNTS
With an Advisor Managed Account, your Advisor will be responsible for managing your account
consistent with your defined objectives and risk tolerance and may assist you to develop a
personalized asset allocation program and custom-tailored portfolio. The recommended portfolio
will typically include investments such as mutual funds, exchange-traded funds, variable
annuities, stocks, bonds, direct participation programs or a combination of these products. A
portion of your account may also remain in cash or a money market fund.
In an Advisor Managed Account, your Advisor typically will diversify your holdings across
various asset classes unless your objective is to invest in specific assets. The percentage
weightings within the asset classes will be based on your risk profile, investment objectives,
individual preferences and availability. You will have the opportunity to meet with your Advisor to
periodically review the assets in your Advisor Managed Account. We recommend you and your
Advisor meet on a regular basis to review your financial situation, investment objectives and
current holdings, and you should let your Advisor know about any changes to your
circumstances in the meantime.
You will maintain full and complete ownership of all assets held in your Advisor Managed
Account. This means you retain the right to add or withdraw securities or cash, pledge
securities, and vote securities. We will not pool your Advisor Managed Account assets with
assets in other accounts. You will receive periodic statements from the account custodian.
We offer both discretionary and non-discretionary portfolio management services. If you want
your Advisor to have discretion over the timing and amount of securities purchased or sold in
your account, you will be asked to sign an addendum authorizing your Advisor to place orders
for your account without contacting you in advance.
We place most transactions in Advisor Managed Accounts through our affiliated broker-dealer,
Kestra IS, and its unaffiliated clearing broker-dealer and custodian, National Financial Services,
LLC (NFS), but also use other broker-dealers and custodians. Please refer to the Brokerage
Practices section for additional information.
ADVISORY PLATFORMS
Through our relationships with NFS and other custodial and clearing firms, we make available
platforms (Advisory Platforms) to assist our Advisors to provide you an Advisor Managed
Account. Examples of our Advisory Platforms include the AdvisorEnterpriseSM Platform, Horizon,
and AdvisorChoice Platforms described in more detail below. Through these Advisory
Platforms, our Advisors provide investment advice to you combined with portfolio administration
and reporting services, advisory fee processing, and account reconciliation.
AdvisorEnterprise Platform
Our relationship with Envestnet Asset Management, Inc. (Envestnet), an unaffiliated company,
allows our Advisors to provide you with an Advisor as Portfolio Manager (APM) Account using
tools, resources, and technology provided by Envestnet as part of the AdvisorEnterprise
Platform. This includes the ability to produce an investment proposal, model building, trading
and rebalancing, research tools, and performance reporting. Through an AdvisorEnterprise
APM account, your Advisor generally invests your assets in individual equity or fixed income
securities, as well as pooled investment vehicles such as mutual funds and/or ETFs available
through the AdvisorEnterprise Platform.
You will pay more for this platform than you will for our other advisory platforms, which do not
offer our Advisors the same resources and technology as the AdvisorEnterprise Platform. We
earn more on assets managed on the AdvisorEnterprise Platform than through other available
platforms which serves as an incentive to place your assets on this platform and is therefore a
conflict of interest.
On the AdvisorEnterprise Platform, we offer two APM programs; APM-Tickets and APM-Wrap.
They differ based on whether transaction charges are assessed separately (APM-Tickets) or
are included in the total client fee (APM-Wrap). We assess a Program Fee for accounts on the
AdvisorEnterprise Platform. The Program Fee includes fees for Kestra AS and its affiliates’
maintenance of the advisory platform.
The cost Kestra and its affiliates pay Envestnet is based on the number of accounts and the
amount of client assets we have on the AdvisorEnterprise Platform. Our costs will decrease as
our advisors put more client assets on the AdvisorEnterprise Platform. When our costs
decrease, the savings are not shared with you or our Advisors. As a result, we have an
incentive to recommend the AdvisorEnterprise Platform, creating a conflict of interest.
Horizon and AdvisorChoice Platforms
Both the Horizon and AdvisorChoice Platforms offer Advisor as Portfolio Manager (APM)
programs. The Horizon Platform is provided through NFS. The AdvisorChoice Platform is
provided through NFS and other custodians such as Charles Schwab & Co. (Schwab) and
Fidelity IWS. Through these platforms, our Advisors recommend and invest in individual equity
or fixed income securities as well as pooled investment vehicles such as mutual funds and
ETFs. The minimum account size for Horizon is $5000 and the minimum account size for
AdvisorChoice is $10,000. We may waive the account minimum at our discretion. The trading
charges and administrative costs as well as the tools, technology, and services available to you
and your Advisor will vary by custodian and platform, which means that your costs will vary for
similar services.
THIRD PARTY PROVIDER ADVISORY PLATFORMS
Our Advisors can delegate investment advisory responsibilities or discretionary authority to a
third-party investment adviser through external advisory platforms that are offered at Kestra.
Typically, you will enter into an agreement directly with that third party, which will outline, among
other things, the fees and trading of your account by that investment adviser. Depending on the
Advisory Program, you either pay us directly or pay one fee to the third-party investment
adviser, who will then remit a portion of the fee to us. You will receive a copy of both the third-
party investment adviser’s brochure as well as this document if we and the third party are acting
as co-investment advisers. If investment advisory services are delegated to a third-party
investment adviser, your Advisor will monitor your assets and will provide services such as, but
not limited to, helping you choose the third-party investment adviser, reviewing your accounts,
and assisting you with administrative functions related to your portfolio.
Our Advisor will conduct periodic reviews of your account(s) in the Advisory Program, monitor
performance of the account, and be available to meet with you upon reasonable request. You
and your Advisor should meet on a regular basis to review your financial situation, investment
objectives and current holdings, and you should let your Advisor know about any changes to
your financial goals or circumstances.
We make available certain Advisory Platforms offered through third-party advisors to assist our
Advisors in providing you additional options for a Managed Account. Examples of Advisory
Platforms offered at Kestra AS include, but are not limited to, the following: Buckingham
Strategic Partners, Symmetry Partners, SEI and AssetMark.
SEI and AssetMark are described below.
SEI
We have entered into a co-advisory relationship with SEI Investments Management Corporation
(SEI). In conjunction with SEI, we provide portfolio management services, selection of other
investment advisers, mutual fund wrap services, access to separate account managers and
alternative investments. SEI is both an investment adviser and broker-dealer. From the services
and products SEI provides, our Advisor can customize the asset allocation and level of
diversification, and determine the preferred investment vehicle or structure to create your
account portfolio. There generally is no minimum investment for an account in the SEI Program.
Prior to opening an account with SEI, your Advisor will gather information through the use of
SEI-developed questionnaires, software and other materials or through a personal interview.
Your Advisor will also assist you in completing all necessary paperwork, including an agreement
between you and SEI that grants SEI discretionary trading authority in your account. SEI has
created asset allocation programs using mutual funds invested in stocks, bonds and cash to
meet varying client objectives and needs for growth, income and capital preservation. Our
Advisors will rely on the model investment portfolio designations and allocation
recommendations provided by SEI. You may impose conditions in your investment guidelines or
in written instructions to us that limit the discretionary authority implemented through the
rebalancing program. In a select few instances, certain Advisors qualify for SEI’s Enhanced
Advisory Services. In these instances, your account will be managed as generally described
under the Advisor Managed Account section above.
SEI Private Trust Company, an affiliate of SEI, acts as a custodian of all assets in the SEI
Program and you will enter into a separate custodial agreement with the SEI Private Trust
Company. SEI will execute transactions for your account pursuant to your agreement with them.
Your Advisor will conduct periodic reviews of your account in the SEI Program and monitor the
performance of the account.
AssetMark
We have entered into a co-advisory relationship with AssetMark, Inc. (AssetMark). AssetMark is
a registered investment adviser
with the Securities and Exchange Commission (SEC), and
provides consulting services and AssetMark Platform access to your Advisor.
AssetMark makes a number of different Solution Types available to clients through the Platform.
Account minimums range from $10,000 to $1,000,000. We or AssetMark may waive the account
minimum at our discretion. The Solution Types consist of:
1. Guided Portfolios
2. Single Strategy Portfolios
3. Separately Managed Accounts
4. Unified Managed Accounts
5. Multiple Strategy Accounts
Your investments made through the Platform are held in your name by a custodian you select,
pursuant to a custody agreement directly between you and the custodian. Your account will be
held in custody at one of the following firms: Schwab Institutional, Pershing Advisor Solutions,
TD Ameritrade, AssetMark Trust or Fidelity Brokerage Services.
AssetMark makes available periodic reports to your Advisor for use should your Advisor opt to
do so. Your Advisor will conduct periodic reviews of your accounts on the AssetMark Program
and monitor performance of those accounts.
We also have the ability to act in a referral capacity and refer clients to AssetMark. Please see
the THIRD-PARTY REFERRALS section below for more details regarding the services we
provide and how we are compensated in such an arrangement.
LEGACY OFFERINGS
We may enter, or previously have entered, into advisory relationships, programs and platforms
offered through third-party investment advisers either as legacy offerings for our firm or as an
accommodation to an Advisor who joins our company. These relationships are usually limited to
certain Advisors and their existing clients. Details and descriptions of these programs have been
or will be given to you by us, your Advisor and/or the Advisor’s prior firm.
THIRD-PARTY REFERRALS
We have entered into agreements with various third-party investment advisers that participate
in, manage, or sponsor different types of money management services and investment advisory
programs. Depending on our relationship with the third party, our Advisors may refer clients to
such third parties, in which case we will not provide investment advice or have discretionary
authority over your assets. These referral arrangements are structured in accordance with the
marketing rule 206(4)-1 under the Advisers Act which requires, among other things, that we
disclose to you the compensation we will receive for referring you to a third-party adviser.
Where we act solely as a referrer, you will not enter into an agreement directly with us and we
are not responsible for the services provided by the third-party investment adviser. In such an
arrangement, you establish a direct relationship with the third-party investment adviser, and we
will receive a referral fee from the adviser based on a percentage of the advisory fee they
charge you. The amount of the fee varies by the referral arrangement with a maximum fee of
2.5%. The referral disclosure you receive when you establish an account with the third-party
adviser will specify the total fee you will be charged, and what portion of that fee is payable to
Kestra AS. You should read the third-party adviser’s brochure and any compensation disclosure
statements provided in connection with these referral arrangements for information regarding
the services of the third-party adviser and applicable fees and charges.
Private Fund Advisers
Our affiliated broker-dealer, Kestra IS, has entered into agreements with various private funds
(“Private Funds”) and acts as placement agent in connection with the offering and sale of
securities of such funds to current and prospective clients. While we and Kestra IS are not
current clients and are not investors of the Private Funds, it is possible that we or one or more of
our affiliates or our or their employees or agents may be, or may subsequently become, a client
of or investors in the Private Funds.
Kestra IS and our Advisors receive cash compensation from the sponsors of the Private Funds
for activities as placement agent. We and our affiliates may have additional relationships with
the Private Fund sponsor or other investment vehicles managed by the Private Fund sponsor.
The payment of cash compensation to our affiliate and Advisor, and any additional relationships
that the placement agent or its affiliates may have with the Private Fund or its sponsor or other
investment vehicles managed by the fund’s sponsor creates a conflict of interest for Kestra AS
and its Advisor since we may receive compensation in addition to advisory fees in connection
with the recommendation of a Private Fund.
Affiliated funds of Warburg Pincus, LLC (“Warburg Pincus”) own a majority interest of the
ultimate parent company of Kestra Advisory Services, LLC (“KAS”), Kestra Private Wealth
Services, LLC (“KPWS”) and Kestra Investment Services, LLC (together with KAS and KPWS,
“Kestra”). Kestra makes available investment funds affiliated with Warburg Pincus. The
recommendation of such a fund creates a conflict of interest since the holder of a majority
interest in Kestra’s ultimate parent company would directly or indirectly benefit from an
investment in the fund.
In addition, an affiliate of Warburg Pincus owns a financial interest in the investment adviser to
certain funds available through the alternative investment platform, iCapital, that Kestra uses to
make such investments available. The recommendation of such a fund creates a conflict of
interest since the holder of a majority interest in Kestra’s ultimate parent company, Warburg
Pincus, would directly or indirectly benefit from an investment in the fund.
FINANCIAL PLANNING & FINANCIAL CONSULTING
Many of our Advisors perform financial planning, business consulting, estate planning, and
similar securities investment consulting services for you. In performing financial planning or
consulting services, the Advisor typically reviews your overall financial circumstances, such as
your tax status, insurance needs, overall debt, business ventures, retirement savings and
current investments. An Advisor’s services may also focus on only one or several of these
areas, depending on your specific engagement. You will enter into an agreement with us setting
forth the services our Advisor will provide and other terms and conditions of the relationship,
such as fees for our services. You are under no obligation to accept any of the
recommendations from an Advisor pursuant to a financial planning or consulting engagement,
and you retain discretion and responsibility for implementing the recommendations in the
absence of a contract for such additional services.
WRAP FEE PROGRAMS
Through our relationship with Envestnet, we sponsor a privately labeled wrap fee program on
the AdvisorEnterprise Platform. Our Advisors have access to an Advisor as Portfolio Manager
Wrap (APM-Wrap) program and third party managed wrap programs. We assess a Program
Fee for accounts participating in the wrap program. Except where otherwise indicated, the
Program Fee includes fees for Kestra AS and its affiliates’ maintenance of the advisory platform,
custody and trading services.
Depending on the Advisor Fee determined by your Advisor, the size of the account, the number
of trades placed in your account and the transaction costs associated with those trades, the
APM-Tickets program may cost more or less than the APM-Wrap program. When your Advisor
chooses to pay your transaction charges or where the trades have no associated transaction
charges, the APM-Tickets program is the lowest cost, providing your Advisor does not adjust
their advisory fee to account for their additional expense. While there is no cap on the number of
trades in your account, the APM-Wrap program is priced to accommodate approximately 60
trades per account annually. We reserve the right to assess your Advisor the cost of trades that
exceed this amount which creates an incentive for the Advisor to limit trading in your account to
avoid this cost.
In wrap program accounts, you will not be responsible for paying transaction charges to our
affiliated broker-dealer but will be responsible for paying any account maintenance charges as
detailed in the fee schedule of our affiliated broker-dealer. You are also responsible for paying
any charges imposed by the issuers of investments in your account or their affiliates.
Please see our Wrap Fee Program Brochure for details and corresponding fee schedules
regarding this wrap-fee program.
INDIVIDUAL RETIREMENT PLANNING SERVICES
Our Advisors also provide services in connection with clients’ retirement accounts, such as
individual retirement accounts (IRAs). Our services to IRA clients include those described
above.
If you are participating in an employer sponsored retirement plan (such as 401(k) plan) and are
no longer with that employer, you typically have four options (and may engage in a combination
of these options): i) leave the money in the former employer’s plan, if permitted, ii) roll over the
assets to a new employer’s plan, if one is available and rollovers are permitted, iii) rollover to an
IRA, or iv) cash out the account value (which could, depending on your age, result in adverse
tax consequences). To the extent you are a retirement plan client, please refer to our
Retirement Plan Brochure.
Our Advisors may recommend that you roll over plan assets to an IRA under our management.
As a result, we generally earn an asset-based fee. NFS assesses IRA accounts an annual
charge of $35, which is shared with Kestra IS in an increasing proportion as the number of total
accounts custodied at NFS increases. This payment arrangement NFS has with Kestra IS
serves as an incentive to open IRA accounts with NFS. However, no portion of this fee is
shared with our Advisors.
If you leave plan assets with your old employer’s plan, or roll the assets to a plan sponsored by
a new employer, we cannot manage the assets and will earn no compensation unless we are
engaged to monitor or consult on your assets in the retirement plan. We have a financial
incentive to encourage you to roll plan assets into an IRA that we will manage.
There are various factors you should consider before rolling over assets from a retirement plan
to an IRA. These factors include: 1) the investment options available in the plan versus the
investment options available in an IRA; 2) fees and expenses in the plan versus the fees and
expenses in an IRA; 3) the services and responsiveness of the plan’s investment professionals
versus ours; 4) strategies for the protection of assets from creditors and legal judgments; 5)
required minimum distributions and age considerations; and 6) employer stock tax
consequences, if any. No client is under any obligation to roll over plan assets to an IRA
managed by us or to engage our Advisors to monitor and/or consult on an account maintained
in an existing retirement plan. A recommendation to roll assets out of an employer-sponsored
plan into an IRA will most likely result in more expenses and charges than if the assets were to
remain in the plan.
QUALIFIED AND NON-QUALIFED RETIREMENT PLAN SERVICES
Please see our Retirement Plan Brochure for more information on retirement plan services.
OTHER INFORMATION ABOUT OUR ADVISORY SERVICES
In some instances, we and our Advisors may independently consider a security a client is trying
to sell appropriate for another one of our clients. We and our Advisors advise numerous clients
with similar or identical investment objectives or advise clients with different objectives that may
trade in the same securities. Despite such similarities, portfolio recommendations relating to
your investments and the performance resulting from such recommendations will differ from
client to client. We will not necessarily recommend, purchase, or sell the same securities at the
same time or in the same amounts for all eligible clients. In some cases, such as the
recommendations of private placements or oversubscribed public offerings, due to the
availability of, or qualifications necessary to buy the investment, it may not be possible or
feasible for you to buy a certain security. Therefore, you will not necessarily be able to
participate in the same investment opportunities or participate on the same basis with our other
clients. To the extent our Advisors have investment discretion over your account, it is our policy
that the Advisor allocate, to the extent practicable, investment opportunities on a basis that the
Advisor in good faith believes is fair and equitable to each client over time.
We utilize BTS, an unaffiliated third party strategist, to provide investment subadvisory services
as a model signal provider to a limited number of Advisors who utilize that data to inform their
own asset allocation models.
You should promptly notify us if there is a change in your financial circumstances or
investment objectives so we may confirm any prior recommendations remain appropriate
going forward, or advise you as to any proposed changes.
As of December 31, 2023, we managed approximately $48,324,319,629 in assets for
approximately 140,425 clients. Approximately $35,495,163,831 is managed on a discretionary
basis, and approximately $12,829,155,798 is managed on a non-discretionary basis.