Active investment management’s weekly magazine for fee-based advisors

Risk management not optional

by Jul 23, 2015Advisor Interviews

Risk management not optional

by Jul 23, 2015Advisor Interviews

Katherine Kennedy, CFP • Plano, TX
KBK Wealth Strategies LLC • First Independent Financial Services, Inc.
Read full biography below
How ORP participants benefit from actively managed strategies.
Proactive Advisor Magazine: Katherine, what motivated you to change careers and enter the advisory business?
I really enjoyed working in corporate America and developed valuable skills along with my own sales process over the years. Digging into a client’s needs and motivations is applicable to both business sales and working with individual financial-planning clients.

In 2000, several factors came together at the same time. I was always interested in being self-employed, and my mother decided to start the transition out of her financial-services practice. She wanted to have complete confidence in someone to take over her clients when she retired. She felt that she could trust me to assist her current clients through the various phases of accumulation, retirement-income planning, and so forth.

I was ready to leave the nonstop travel of corporate sales, and this was perfect timing. I immersed myself in training and licensing in the financial industry and ultimately completed my CFP work. My mother and I really enjoyed working together, and our knowledge complemented each other in various areas—we actually ended up working together for about 14 years.

Did that practice have a specific client focus?
My mother worked for most of her career with clients who have optional retirement plans or ORPs, which are basically a subset of 403(b) plans in the nonprofit area. I continue to focus on the university market, which is a three-part sales process: getting approved by a university administration, getting approved by a plan sponsor, and introducing our services to individual plan participants.

It is a fairly specialized area, and I have developed a deep expertise in the field. Since many ORPs offer participants the opportunity for self-directed investments, I can add value by helping them understand the investment approaches that will benefit them over the long run, while protecting and growing their money.

ORPs are a substantial part of our practice, but we also offer our services to clients with traditional financial planning and investment needs. I get referrals to clients with qualified and nonqualified money and take a full financial and investment planning approach with every client.

What is important to your ORP clients?
It is really no different than any other client relationship. Every individual and family is unique, and the most important first step is identifying their particular circumstances, financial history, and future aspirations. “Life happens,” as we say on our website. As a planner, I need to determine if they are preparing for future significant life events and how, whether it is having adequate income in retirement, putting kids through college, investing in their own business, or properly handling estate planning for heirs or charities.

My ORP clients can be people just entering the workforce or those still working in their late 60s and everywhere in between. They tend to be very busy in their university roles and do not have a lot of time to think about sophisticated financial issues or approaches to investing.

I have been an advocate of active investment management since I started in the business and use highly qualified third-party managers. My clients ultimately want financial security for their ORP money, so we use managers with a focus on risk-managed strategies.

“My clients want financial security for their ORP money, so we use managers with a focus on risk-managed strategies.”
How do you talk about active management with clients?
Once we establish a broad planning framework and move into the investment strategy with clients, we ascertain their risk profile. I have had younger clients be very risk averse. I’ve had older clients that I’ve had to rein in because they’re too aggressive. I explain that active management mainly focuses on not losing capital—preserving assets is the primary focus.

I also explain to those who might be fearful about the equity markets that they can consider being a bit more aggressive, because there is a sophisticated money manager looking at their account on a daily and weekly basis for risk management. Since these managers have models that study trends and other indicators, it should not be a matter of having to worry about every small market movement. It is just the opposite of buying and holding, and hoping that things will go well.

The biggest selling point for active management is the fact that we essentially have several levels of built-in risk management. First, on the big-picture level, my broker-dealer and my firm conduct due diligence on money managers to make sure they are highly qualified at what they do. I explain to my clients that a major part of my job is to study and investigate investment management firms. Second, these managers are applying very sophisticated research and analytical tools to track market trends, their strategies, and client accounts on a continual basis. And, finally, I monitor the managers to confirm they are executing well on their particular investment philosophy and strategies.

Have client attitudes changed during the current bull market?
Not tremendously. I think my clients have a great deal of trust in my approach to investments and are pleased with the results. The great majority of my new clients come in through referrals.

I tend to be conservative in discussing return expectations with clients. As a planner, I am much more concerned with making sure long-term financial goals and objectives are met, rather than focusing on a specific return number. That said, I work very hard to identify and select effective active money managers.

These managers really proved their immense value in the last bear market and should again in the next bear market. It is not a question of if it is going to happen, but when it is going to happen and how long and severe it will be. I think that is one of the most important attributes that I can bring to clients—the fact that they can have an increased measure of peace of mind knowing their investments are being managed in a way that can deal with any market environment. There are no guarantees in anything in life, but, in my opinion, an actively managed portfolio is far superior to a passive investment approach.


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About Us

Katherine Kennedy is the owner of KBK Wealth Strategies LLC, a financial-planning firm located in Plano, Texas. KBK Wealth Strategies offers financial services to a wide variety of clients: those already in or just entering retirement, individuals or couples starting a career or family, or established entrepreneurs in need of financial-planning or wealth-management services. Ms. Kennedy is a registered representative with First Independent Financial Services, Inc.

Ms. Kennedy has been in the investment industry since 2000, dealing primarily with retirement investments. Since establishing her advisory practice, she has also advised clients in financial areas that intertwine with retirement planning, such as Social Security coordination, early distribution issues, and taxation implications. Before entering the financial-services field, Ms. Kennedy had a successful business and sales career as a manufacturer’s representative for high-end office-equipment suppliers.

A graduate of The University of Texas with a degree in business administration, Ms. Kennedy has also completed the Certified Financial Planner Professional Education Program and was awarded her CFP designation in 2007. She was recognized by First Independent Financial Services, Inc., as one of their top fee producers in 2013 and 2014.

Ms. Kennedy is a lifelong resident of Texas, and she and her husband live in Plano. She is an active member of several local charitable organizations, particularly SpiritHorse Therapeutic Center in Corinth, Texas, which assists special needs individuals with a unique equine-based therapy program and riding lessons.

Disclosure: Securities are offered through First Independent Financial Services, member FINRA and SIPC, 6660 S. Sheridan Road, Suite 260, Tulsa, OK 74133-1766, 918-492-9484. Advisory services are offered through First Independent Advisory Services. Neither is affiliated with KBK Wealth Strategies LLC.

Post-publication note: As of this update (Oct. 19, 2021), Ms. Kennedy is registered with Royal Alliance Associates Inc.

Photography by Robert Hart


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