Kestra Financial COO On Challenges And 2023 Trends For Operations

Janeesa Hollingshead, Executive Editor, Wealth Solutions Report

The Operational Challenges Of 2022, Trends In Technology And Outsourcing, And Advice For Streamlining Operations In 2023

Take the best tennis players in the world – and put wooden rackets from the 60s in their hands. No matter their skill level, the adoration of millions of fans or a positive can-do attitude, their performance must drop precipitously with outdated equipment. It’s physics – the more advanced the materials and design of the racket, the better the athlete performs.

 Outdated

In the same way players must leverage advancements in tennis rackets, financial advisors and professionals must stay at the cutting edge of improvements and trends across a range of operational issues – technology, human resources, workflow capacity, outsourcing and more – or their performance will lag.

We caught up with Kris Chester, EVP and Chief Operating Officer at Kestra Financial, which supports 1,800 financial professionals, a subsidiary of WSR Wealth Exemplar Award winner Kestra Holdings, with 2,400 financial professionals. 

Chester oversees technology, program management, sales supervision, onboarding, operations and client service at the firm. In 2022, her teams helped service the transition of 50 new financial professionals and $4.1 billion in new assets at Kestra Financial and its wirehouse breakaway-focused arm Kestra Private Wealth Services.

We asked Chester about the top operational challenges firms faced in 2022, key trends going into the new year and her advice on streamlining business operations in 2023. 

WSR: What were the top operational challenges faced by financial advisory firms in 2022? Which business areas were most affected? Are those challenges continuing, or are firms broadly adopting solutions?

Chester: Capacity. Despite poor market conditions, firms continued to bring in assets, creating more work for financial professionals and staff members. Larger firms with adequate staff were able to handle the increase, but smaller firms quickly ran into capacity issues. This issue has remained unsolved, with many places still struggling to find the right talent. We’ve seen firms start to outsource different functions like financial planning and investments, but capacity remains a pain point.

Hire, train, retain

Staffing. Retaining, attracting and managing the new demands of remote versus in-office staffing continues to challenge firms.

The digital experience firms are creating for their clients. The demand for technology like client portals is high right now. 

Human capital. Challenges range from hiring to training and retaining talent, as well as building a career path for their key contributors and tenured team members to grow into future roles. 

Disparate technology. I often encounter firms that want to connect disparate technology solutions that they utilize in their particular firm into an integrated platform that supports their business, their client’s needs and their niche or targeted market. This is a huge productivity and time drag. 

There’s a significant market for offering technology consulting services to help firms better integrate and utilize technology solutions they’re already investing in to run their firms with more efficiency, ease and insight. 

WSR: What trends in business operations are gaining traction that will carry momentum in 2023?

Chester: Incorporating technology. As firms struggled to staff their teams, many started to find ways to visualize and, in some cases, automate operations. The increased visibility into who is doing the work and where bottlenecks occur has helped to fine-tune processes and increase capacity. 

Find the bottlenecks

Outsourcing to gain scale. More firms are looking for ways to outsource non-client-facing activities and work. For example, I’ve been increasingly hearing about outsourcing CFO work, investment management and planning.

Outsourced solutions and technology automation improve continuously, ranging from marketing automation and turnkey compliance submissions to utilizing virtual outsourced assistants or paraplanners and leveraging tech solutions for routine tasks like automated billing and payment for financial planning. Outsourcing and automating routine non-client-facing functions have become table stakes for any firm that is serious about streamlining and scaling.

WSR: What advice would you give to the head of operations or business manager at a small financial advisory firm who asks what they need to consider to best streamline their business operations in 2023? 

Chester: Audit your current workflows and work with your home office to create efficient processes for all team members to follow. Workloads often overwhelm staff members who may not be aware that there are new or faster ways of doing tasks. Correctly assigning tasks can help you identify which role you should hire for next. 

To survive, you need to continue to build size and scale. Prioritize and plan for your future. Find ways to outsource non-differentiated services. 

Review and refine any desktop procedures and standard operating procedures. What worked well pre-COVID may be less efficient or even impractical in today’s hybrid/flex working environment. Poor, inefficient procedures cause bad client experiences.

Review and refine your processes around protecting client assets and Personal Identifiable Information annually to counter fraudulent schemes, which continue to morph with technology uses.

We generally have four levers at our disposal to streamline our operations and increase scale and capacity – we can hire, automate, outsource or delegate. Often, there is no single, magic solution to solve business challenges. For example, the oft-cited solution, “Just hire more people,” can be expensive and fail to produce the intended result. 

No magic solution

Rather, we tend to see substantial gains when we focus on incremental improvements or solutions across two or more levers. (e.g., hire and delegate; hire and automate; outsource and automate; or a combination of three). Incremental improvements across the levers can produce exponential results – streamlining and scaling operations, enhancing the clients’ experiences and the firm owner’s or leader’s experience.

Janeesa Hollingshead, Executive Editor at Wealth Solutions Report, can be reached at editor@wealthsolutionsreport.com

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