Financial Adviser Fees in NZ: What Advice May Cost

"How much does a financial adviser cost?" is a sensible question to ask before the first meeting. The answer depends on the service, the adviser and whether a product provider pays commission. Here are the main models and the information to request.

Provider-paid commission

An insurer, lender or KiwiSaver provider may pay an adviser if a client takes up a product. The amount and structure can vary by provider and product. Commission can create a conflict of interest, so the adviser should explain how they are paid and how they manage that conflict.

Commission does not remove the need to check the product's price, terms and suitability. Ask which providers the adviser can consider, whether any options sit outside that scope, and whether a direct fee could still apply.

Client-paid fees

An adviser may charge a direct fee for advice, implementation, ongoing service or another agreed piece of work. Common structures include:

• a fixed fee for a defined service;
• an hourly or time-based fee;
• an ongoing fee, which may be expressed as a dollar amount or a percentage; or
• a fee that becomes payable in a stated circumstance, such as when agreed commission is reversed.

Hybrid models

Some advisers receive commission and also charge a fee. The important point is not the label; it is whether the adviser clearly explains the service, the amount or basis of any fee, when it becomes payable, relevant commissions, and conflicts that could materially influence the advice.

New Zealand's disclosure rules require specified information about fees, commissions and other incentives to be made available at particular stages of the advice process. You can read the requirements in Schedule 21A of the Financial Markets Conduct Regulations 2014.

What to actually ask before your first meeting

• Are you paid by commission, fee, or both?
• If commission, which providers do you receive commission from, and does that limit what you can recommend?
• If fee-based, what's the total cost for what I need done?
• Is the first meeting free, and is there any obligation to proceed?

Read the adviser's disclosure information and ask for clarification before agreeing to proceed. A useful answer should identify the service, the scope of providers considered, how the adviser is paid, and any amount or basis of a fee that could become payable.

The bottom line

Do not rely on a blanket claim that financial advice is free. Confirm the cost for your particular service and read the disclosure information. Mutual Solutions' initial consultation is free. Provider commission commonly funds our standard insurance, home-loan and KiwiSaver services, while client-paid fees can apply in the circumstances described in our disclosure statement. Our commission guide explains the model and conflict controls in plain language.

If you are in Manawatū, the relevant local service pages explain the scope and next step for a personal insurance adviser in Palmerston North or a mortgage broker in Palmerston North.