What is a Financial Adviser? A Plain English Guide for New Zealanders

Around 9,000 financial advisers are licensed in New Zealand under the FMA's 2021 regime (FMA). The label gets used loosely — by people who sell insurance, mortgage brokers, bank staff, investment specialists, and comprehensive financial planners — and most consumer-facing information online is still written for the rules that applied before 2021. This guide explains what a financial adviser actually is under New Zealand law today, what they're regulated to do, how they get paid, and what they owe you as a client.

The official definition

Under the Financial Markets Conduct Act 2013 and the Financial Services Legislation Amendment Act 2019, a financial adviser is a person who gives regulated financial advice to retail clients on behalf of a Financial Advice Provider (FAP).

Regulated financial advice is a specific recommendation or opinion about a financial product or service, like recommending a particular KiwiSaver fund, suggesting whether to invest in shares or bonds, or advising on insurance cover. General information about how financial products work isn't advice. Once it becomes a recommendation tailored to your situation, it's advice, and the person giving it needs to be licensed.

There are three ways a person can legally give you regulated financial advice in New Zealand:

1. As a financial adviser engaged by a Financial Advice Provider
2. As a nominated representative engaged by a Financial Advice Provider (commonly used by banks and large institutions)
3. As an individual FAP giving advice directly under their own licence

In all three cases, the licence comes from the Financial Markets Authority (FMA). The person and the licensed entity must both appear on the Financial Service Providers Register (FSPR).

The 2021 regime change explained

If you've heard older terms thrown around (AFA, RFA, QFE), here's what happened. Before March 2021, financial advisers were divided into categories. Authorised Financial Advisers (AFAs) could advise on complex investment products. Registered Financial Advisers (RFAs) were limited to simpler products like insurance and mortgages. Qualifying Financial Entities (QFEs) were large institutions whose staff could advise on the institution's own products under a group exemption.

Those categories no longer exist. From 15 March 2021, everyone giving regulated financial advice to retail clients in New Zealand operates under a single regulatory framework (MBIE). Everyone is held to the same Code of Professional Conduct. Everyone must either hold a FAP licence or operate under one.

The change was meant to make things simpler for consumers. The reality is that some advisers still describe themselves using legacy terms in older content, and the underlying differences in scope and specialism didn't disappear. The licence framework matters less than what an individual adviser is actually qualified and authorised to advise on. That comes through in their disclosure documents, which we cover later.

What financial advisers actually help with

The umbrella of financial advice in New Zealand covers six broad areas. Most advisers specialise in one or two. A small number do everything.

KiwiSaver advice

Choosing the right scheme, the right fund within that scheme, and the right contribution rate for your goals. Pre-retirees often get specific glide-path advice about shifting from growth to more conservative funds in the lead up to drawdown.

Investment advice

Recommendations about where to invest money outside KiwiSaver. This might be index funds, managed funds, direct shares, bonds, or term deposits. Good investment advice covers asset allocation (the mix of growth vs defensive assets), product selection, tax efficiency (PIE structure, FIF rules, personal income tax), and ongoing rebalancing.

Retirement and drawdown planning

How much you need, how long it needs to last, when you can stop working, how to draw down without running out, and how NZ Super fits in. This is where the value of advice is often highest because the maths gets complex and the consequences of getting it wrong are large.

Insurance advice

Life, total permanent disability, trauma, income protection, and health insurance. Insurance advisers are typically paid by commission from the insurer rather than fees from you, which is a structural conflict of interest worth understanding before engaging.

Mortgage advice

Mortgage advisers (often called mortgage brokers) work with multiple lenders to find loan structures that suit your circumstances. Like insurance, they're typically paid by commission from the lender.

Comprehensive financial planning

The full picture: cashflow, debt, KiwiSaver, investments, insurance, tax structuring, estate planning, retirement modelling. This is what people generally mean when they say "I want a financial plan". It's usually delivered by fee-based or fee-only advisers who don't take product commissions.

What advisers owe you under the Code

Every financial adviser in New Zealand is bound by the Code of Professional Conduct for Financial Advice Services. It sets four core duties that apply to every interaction:

Give priority to your client's interests. This is the headline duty. Where the adviser's interests and yours conflict, yours come first. This duty is enforceable. It's the reason fee structures and conflicts of interest must be disclosed.

Act with integrity. Honest dealing, no misleading statements, no hidden commissions, no manipulation. This duty applies to everything around the advice, not just the advice itself.

Exercise care, diligence and skill. A reasonable adviser would understand your situation, consider relevant options, and document the basis for their recommendations. Pattern-matching you into a default solution isn't enough.

Meet standards of competence, knowledge and skill. All financial advisers must hold or be working towards the New Zealand Certificate in Financial Services (Level 5) (Code Working Group). More experienced or specialist advisers often hold additional qualifications such as the Certified Financial Planner (CFP) designation, which is the global gold standard.

These duties aren't aspirational. They're legal obligations under the FMC Act, enforced by the FMA, with civil and criminal penalties for serious breaches.

How financial advisers get paid

There are five main fee models in New Zealand. Each has trade-offs. Knowing which applies to a given adviser is one of the most important things you can establish before engaging.

Fee-only

You pay the adviser directly for their time or work product. They take no commission from any product provider. Genuine fee-only is the most aligned model because the adviser has no financial reason to recommend one product over another. It tends to be more common with investment and comprehensive planning advisers, less common with insurance and mortgage specialists.

Fee-based

You pay fees, and the adviser may also accept commissions or product-related payments in certain circumstances. The structure covers many investment advice firms in New Zealand and is workable as long as conflicts are properly disclosed and managed.

Percentage of assets under management (AUM)

A common model with investment advisers. The fee is typically 0.5% to 1.5% per year of the portfolio value. This aligns the adviser's incentive with portfolio growth, which is broadly client-friendly, but the dollar cost rises automatically with your wealth even if the work doesn't.

Commission

Standard for insurance and mortgage advice. The product provider (insurer or lender) pays the adviser when you take out a policy or loan. You don't write a cheque, but the cost is built into the product. Commission creates a conflict where the recommendation may favour higher-commission products over better-suited ones. Disclosure rules now require commissions to be clearly stated.

Fixed fee

A flat dollar amount for a defined piece of work, like a one-off financial plan or a KiwiSaver review. Increasingly common with newer fee-based advisory firms. Transparent and easy to compare.

Many advisers use combinations. A comprehensive planner might charge a fixed fee for the plan, then an AUM fee for ongoing portfolio management, and accept commission on any insurance they arrange. Whichever model applies, it must be disclosed to you in writing before advice is given.

How to verify someone is licensed

Every financial adviser in New Zealand must appear on the Financial Service Providers Register (FSPR), a public, free register maintained by the Companies Office.

Search by name or company at fsp-register.companiesoffice.govt.nz. The register confirms:

• Whether the person is registered to provide financial advice
• Which Financial Advice Provider they're engaged by
• The licence class held by that FAP (Class 1 for sole advisers, Class 2 for multi-adviser firms, Class 3 for large firms with nominated representatives)
• The dispute resolution scheme they belong to
• Any disciplinary actions on record

This check takes a minute and is worth doing for anyone offering you advice, whether you found them through a referral, advertising, or social media. Anyone giving regulated advice without being on the FSPR is breaking the law.

Public disclosure: the document to read first

Every FAP that has a website must publish a public disclosure statement (FMA). This is the document to look at before booking a meeting. It must include:

• The FAP's licence class and any conditions on it
• The nature and scope of the advice the firm provides (and what's outside scope)
• Any limitations on the products they can advise on
• Fee structure and how they get paid
• Conflicts of interest, including commissions and any related-party product providers
• The dispute resolution scheme they belong to
• Any past disciplinary action

If you can't find the disclosure on a firm's website, that's a flag. They're required to make it available.

What financial advisers don't do

Useful to know what's outside an adviser's scope, so you know when to engage a different professional.

They don't give tax advice. Some advisers have tax expertise and can flag tax considerations, but specific tax advice (filing positions, IRD correspondence, complex restructuring) is the domain of accountants and tax specialists. Most advisers will work alongside your accountant.

They don't draft legal documents. Wills, trust deeds, enduring powers of attorney, and shareholder agreements are legal work and need a solicitor. Advisers often coordinate with your lawyer on estate planning.

They don't manage portfolios discretionarily by default. Most NZ advisers give recommendations that you choose whether to implement. Discretionary investment management, where the adviser makes trades on your behalf without checking each time, requires an additional Discretionary Investment Management Service (DIMS) licence.

They don't sell products as their primary role. Selling a product (taking your money to put into something) is different to giving advice about which product to choose. An adviser advises. The product provider provides the product.

What to read next

• How to choose a financial adviser in New Zealand — a four-step process, the questions worth asking, and the red flags to walk away from.
• Is a financial adviser worth the money? — what the research from Canada, the UK, and Vanguard actually shows about the value of advice.

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Last updated: 25 May 2026. Sources: FMA (fma.govt.nz), MBIE (mbie.govt.nz), Financial Advice NZ (financialadvice.nz). This is educational content, not financial advice.