Almost every financial adviser in New Zealand describes themselves as independent, and almost every one of them means something slightly different by it. The word is on our website too. So rather than ask you to believe it, here is what the terms actually mean, what they do not mean, and the three checks that let you verify any adviser in about five minutes.

What “no commission” means in practice

A commission is a payment made to the adviser by the provider of the product you end up holding. It can be paid once when you take the product out, or paid every year for as long as you hold it, and it is usually funded out of what you pay the provider.

No commission means the adviser refuses those payments. The consequence is simple and it is the entire point: if nobody but you is paying, then no product can be worth more to the adviser than any other product. The recommendation and the payment stop pointing at the same place.

That is a different claim from “we compare the whole market”, and a much easier one to check. Comparison is a description of effort. Payment is a matter of fact.

What “independent” does not tell you

New Zealand has no single legal badge that the word maps to, so it is worth knowing what it can quietly leave out.

  • A limited product range. An adviser can take no commission at all and still only ever recommend from a short list. Ask what the range is and why it is that shape.
  • Who owns the adviser. Where the advice business and the product are parts of the same group, the incentive can sit above the individual adviser rather than inside their pay.
  • Soft benefits. Conferences, training, sponsorships and other non-cash support from providers are not commission, and they are not nothing either.
  • What happens after the advice. Some arrangements pay nothing up front and a great deal later, through ongoing product fees.

None of these are automatically wrong. They are simply the things the word “independent” does not settle, which is why the checks below are about evidence rather than adjectives.

Three checks you can run on any adviser in five minutes

  1. Read their disclosure, not their homepage. Licensed advisers in New Zealand must make information about their fees, their conflicts of interest and their complaints process available to you. It is usually a page called disclosure or similar. If it does not say plainly how they are paid, that is your answer. Ours is here.
  2. Check the licence and the register. Financial advice in New Zealand is a licensed activity, overseen by the Financial Markets Authority, and providers appear on the public Financial Service Providers Register. Look up the name and the registration number rather than taking the logo on the website as proof. Ours is FSP1010421.
  3. Ask the question in writing. “Is anyone other than me paying you, in any form, in connection with this advice?” A licensed adviser will answer it directly. The answer, and the willingness to put it in an email, tells you most of what you need.

How we are paid

One place: the client. We receive no commissions and no incentives from banks, fund providers or product issuers for the investment advice we give, which is published in our disclosure rather than only asserted here.

What that looks like in practice is a single fixed fee agreed in writing before any chargeable work starts, and a free first consultation before that. The whole structure is set out on what a financial adviser costs in New Zealand, including the number.

You may still pay fees to product providers, for example a fund manager’s own management fee. Nobody advising you can make those disappear. The relevant question is whether any part of them comes back to the person giving you the advice, and here none does.

Why this changes the advice, not just the invoice

The cost of commission-paid advice is rarely the commission. It is the shape of the recommendation.

An adviser paid by product providers can only be paid when you hold a product. That makes some perfectly sensible answers structurally unavailable: pay the mortgage down first, fix your tax setting before investing anything, keep more in cash for two years because you will need it, or do nothing at all for now. An adviser paid only by you can say all four, because none of them costs them anything.

It also changes what you receive. When the product is the product, the plan is a means to a sale. When the advice is the product, the written plan is the thing you are buying, and you own it whether or not you ever come back. That is why our deliverable is a Statement of Advice rather than an application form.

When commission-paid advice is still the sensible choice

An honest page has to include this. If you need one specific product decision, and nothing else about your finances is in question, a specialist paid by commission may get you there for no visible cost, and paying a separate advice fee for a single decision can be poor value.

Fee-only advice earns its cost when the decisions interact: a mortgage, a KiwiSaver setting, a tax position and an investment plan that all affect each other, where the expensive mistake is doing the right things in the wrong order. That is the case we are built for, and if your situation is not that, we will say so at the free consultation rather than sell you a plan you do not need.

Related

VIS.finance™ is a licensed Financial Advice Provider (FSP1010421). This page is general information, not personalised financial advice.

VIS.finance™ App

See what your money is actually doing.

Your accounts, KiwiSaver, spending and investments on one dashboard, so you can see the drag and do something about it. Free to start, and free for as long as you like.

Create your free accountSee what’s inside

The app’s free tools and this page are general information only, not personalised financial advice. See our disclosure for details.

All VIS.finance guides