Fee-Only vs Commission Financial Advisers in NZ (2026): How Advisers Get Paid and Why It Matters

Most NZ advisers are paid by the product provider, not you. Here is how fee-only, commission and hybrid models work, what the 2025 Code makes them disclose, and the questions to ask.

TL;DR: New Zealand advisers are paid one of three ways: a fee you pay directly (fee-only), commission from the product provider (most common, so the first meeting usually costs you nothing), or a hybrid of both. Commission can be large — 60% to 230% of your first year's premium on life cover ⁵ — so under the 2025 Code an adviser must disclose exactly how they earn before you act.

The first meeting with a financial adviser almost always costs you nothing. That is a clue about how the adviser gets paid. Most New Zealand advisers earn very little in upfront fees because they are paid by the product provider once you take out a policy or sign up to a fund ¹.

Neither model is automatically "good" or "bad". But the way an adviser is paid quietly shapes what they are nudged towards, and the updated Code of Professional Conduct now forces that to be put in writing. This guide breaks down fee-only, commission and hybrid advice with real NZ numbers, then gives you the exact questions to ask.

What is fee-only advice, and is it common in NZ?

Fee-only means you pay the adviser directly, and the adviser takes no commission, rebate or kickback from any product provider. The fee is the adviser's only income from your file, so the recommendation has no built-in product bias.

In New Zealand, this is the minority model. MoneyHub notes that very few advisers charge an upfront fee at all, because the commission system makes "free" advice the default expectation ¹. Where fees do exist, they take a few shapes:

• A one-off plan fee. A standalone financial plan typically runs $750 to $4,000 plus GST, with comprehensive plans cited at $1,500 to $5,000, or hourly rates of $200 to $400 ³.
• An ongoing percentage. Advice firms managing your investments commonly charge around 1% of the portfolio per year (roughly $1,000 a year on $100,000), usually tapering as the balance grows ².
• Flat fee-for-advice. Firms like Opes Partners' Radical Investment publish set prices, for example $2,000 for a Wealth Plan, from $1,950 for coaching, and up to $500 for an Investment Plan; some coaching firms charge $1,999 to $12,499 a year ¹⁴.

A genuinely fee-only firm like Frank Wealth takes no commission or rebates at all, and rebates anything it does receive back to the client, paying its advisers a salary instead of commission ¹⁴. That structure is the cleanest version of "no product incentive", and it is rare in NZ.

What is commission-based advice, and where does the money come from?

Commission-based advice is the NZ default. You usually pay the adviser nothing directly; the product provider pays the adviser when you take out their product ¹. The money is real, it is just paid by the insurer or fund manager out of your premiums or balance rather than invoiced to you.

The size of the commission varies enormously by product type.

On KiwiSaver and managed-fund platforms, commission-style or platform-linked arrangements typically pay the adviser around 0.25% to 1%+ of the invested amount per year, i.e. $250 to $1,000 a year on a $100,000 balance ⁴.

On life and disability insurance, the numbers are far larger. NZ advisers can earn an upfront (first-year) commission of 60% to 230% of the first year's premium, plus an ongoing/renewal commission of 5% to 30% ⁵. Medical insurance pays 40% to 130% upfront and 5% to 20% renewal ⁵. The FMA puts life upfront commission at up to 200% of the annual premium including bonuses, with 5% to 25% servicing commission in later years ⁶.

That is the crux of the conflict critics point to: if a policy carries a $2,000 annual premium, a 200% upfront commission is a $4,000 payment to the adviser in year one. The FMA notes that clawback periods (usually two years) apply if you cancel early, which is partly why an adviser may be reluctant to "churn" you to a new policy ⁶. From 20 October 2025, Chubb NZ changed its clawback to be calculated on months elapsed within a 24-month period rather than premiums paid ¹⁵.

Worth knowing: some insurers compete on lower commission. Fidelity Life, NZ's largest locally owned insurer, markets a reduced commission structure with lower upfront and ongoing commissions than most competitors, against a typical industry initial commission of 100% to 200% of the first-year premium ¹⁶.

Hybrid models and KiwiSaver platform fees: the grey area explained

Most NZ advisers are neither purely fee-only nor purely commission. They are hybrid: a fee for some work, commission for other work, or a mix on the same product.

This is also where KiwiSaver gets murky, because the "commission" is often buried inside the fund's management fee rather than billed separately. You do not see a line item; it comes out of your returns. And those fees vary a lot:

Table: representative KiwiSaver fund charges, per annum, by provider.

Across the whole KiwiSaver sector, total fees sat at around 0.70% of funds under management in 2025, with $868.5 million deducted across all schemes; the FMA reports that fee level held steady even as funds under management grew about 10% (to roughly $123 billion) ¹². On Sorted's Smart Investor, a low-cost balanced fund's combined fee can be as low as 0.93% per year versus around 0.35% for a low-cost default-style fund, while the average balanced fund sits nearer 1.01% — a gap that compounds heavily over a working life ¹³.

The hybrid grey area is this: a higher-fee active fund may genuinely outperform, or it may simply pay the adviser/platform more. The fee alone does not tell you which. What matters is whether the adviser is transparent about how the fund's cost connects to their own pay.

Fee-only vs commission financial advisers in NZ: side-by-side

This is the figure to screenshot. Table: how fee-only, commission and hybrid advice compare on who pays, cost and conflict risk. (Source: MoneyHub ¹³; JRI disclosure ⁵; FMA Code of Conduct 2025 ⁷.)

The honest summary: cost transparency is highest in fee-only, conflict risk is highest in pure commission, and hybrid lands in the middle, where the disclosure document does the heavy lifting.

What the 2025 Code of Conduct requires advisers to disclose

The updated Code of Professional Conduct for Financial Advice Services 2025 took effect on 1 November 2025. It sets nine standards in total: Standards 1 to 5 cover ethical behaviour, conduct and client care — treat clients fairly, act with integrity, give advice that is suitable, ensure the client understands the advice, and protect client information — while Standards 6 to 9 cover competence, knowledge, skill and ongoing professional development ⁷.

In practice, before you act on advice an adviser must disclose how they are paid, including any commission, the rough amount or range, and any clawback arrangements ⁶. The FMA is explicit that you should be told how much commission will be paid and what happens if you cancel a policy early ⁶.

By the time you sign anything, you should already have a written disclosure naming who pays your adviser and how much. If you do not have it, ask. A reluctance to put pay in writing is itself an answer.

Independent vs tied: why "no in-house product" changes the incentive

There is a second axis that matters as much as fee vs commission: independent vs tied.

A tied adviser works for, or is aligned to, a single product provider (think a bank selling its own KiwiSaver scheme). The product set is the employer's. An independent adviser has no in-house product to sell and compares across the market.

The right to use the word "independent" is policed not by the Code but by the Financial Markets Conduct (Regulated Financial Advice Disclosure) Regulations and the FMA's disclosure guidance. Under those rules an adviser must not describe their advice as independent if a reasonable client would conclude otherwise — for example where a related person or employer is the product provider, or where commission or brokerage is received that is not rebated to the client or retained only as salary ⁸. In other words, you cannot bank a 200% commission and still call yourself independent.

This is why "no in-house product" changes everything. If an adviser's only way to be paid is by recommending a product, the incentive is to recommend a product. An adviser with nothing of their own to sell, comparing every major NZ insurer and KiwiSaver provider, is structurally freer to say "stay where you are" or "you do not need this".

The 6 questions to ask any adviser about how they're paid

Print these. Ask them in the first meeting, before any product is discussed.

1. Are you fee-only, commission-based, or hybrid? Make them name it plainly.

2. Who pays you for advising me, me or the provider, and how much? Ask for the dollar figure or percentage, not "it varies".

3. Do you receive different commission from different providers? Different rates create a quiet pull toward the higher payer.

4. Do you call yourself independent, and do you have any in-house or related products? Cross-check against the FMA disclosure rules on independence ⁸.

5. What happens to your pay if I cancel within two years? This surfaces clawback and "churn" incentives ⁶.

6. Will you give me this in writing before I sign anything? A "yes" is the Code working as intended ⁷.

A good adviser will not flinch at any of these.

How much does KiwiSaver advice cost you, really?

Because KiwiSaver advice is usually paid via the fund's fees, the cost is easy to underestimate. Here is the same $100,000 balance across three fee levels, ignoring growth, to show the annual drag.

Table: annual fee drag on a $100,000 KiwiSaver balance at three fee levels.

The point is not "cheapest wins". A higher fee can be worth it for genuine outperformance or hands-on advice. The point is that you should know which part of that fee, if any, pays your adviser, and decide if the advice is worth it. A free KiwiSaver review will lay your current fees and adviser arrangement out in plain numbers.

Two 2026 changes make getting this right more valuable, not less. From 1 July 2025 the government contribution was halved to 25c per $1, capping the max at $260.72 (down from $521.43), with members earning over $180,000 no longer eligible ⁹¹⁰. And the default contribution rate rises from 3% to 3.5% on 1 April 2026, then to 4% from 1 April 2028 ¹¹. More of your own money is going in, so the fee you pay on it matters more.

It is common for KiwiSaver members to sit in a higher-fee fund they were placed in years ago and never reviewed, without knowing how much of that fee pays an adviser. A clear conversation about pay closes that gap.

How Smiths is paid

Smiths holds no in-house products, so we compare across every major NZ insurer and KiwiSaver provider rather than steering you to our own. See our approach and the providers we compare.

On insurance, we are typically paid commission by the provider you choose, which is why the advice and review cost you nothing directly. On KiwiSaver and investment advice, arrangements are explained in writing before you act. We disclose how we are paid in every case, name the figure or range, and tell you about clawback — as the 2025 Code of Conduct requires ⁷. If anything we recommend would pay us, we will tell you. If you do not need a product, we will tell you that too.

Frequently asked questions

Is fee-only advice better than commission advice in NZ? Not automatically. Fee-only removes the product incentive but you pay directly, often $750 to $4,000 plus GST for a plan ³. Commission advice costs you nothing upfront but the adviser's pay rises with the product sold ⁵. What matters most is full disclosure of how the adviser is paid, which the 2025 Code now requires ⁷.

How much commission does a NZ adviser earn on life insurance? A lot, relative to your premium. Upfront commission can run 60% to 230% of the first year's premium, with the FMA citing up to 200% including bonuses, plus 5% to 25% servicing commission in later years ⁵⁶. On a $2,000 annual premium, 200% upfront is a $4,000 payment in year one.

Do I pay my adviser anything for KiwiSaver advice? Usually not directly. The cost is generally inside the fund's management fee, around 0.24% to 1.3%+ per year, of which a slice may go to the adviser or platform ⁴¹³. Always ask which part of the fee pays your adviser.

What does the 2025 Code of Conduct say about adviser pay? The Code (effective 1 November 2025) sets nine standards — five covering ethical behaviour and client care, and four covering competence — and requires advisers to act with integrity and ensure you understand the advice ⁷. In practice you must be told, before you act, how the adviser is paid, including commission amounts and clawback terms ⁶.

Can a commission-paid adviser call themselves "independent"? Generally no. Under the FMA's disclosure rules — the Financial Markets Conduct (Regulated Financial Advice Disclosure) Regulations — an adviser cannot describe their advice as independent if a reasonable client would disagree, including where commission is received and not rebated to the client or retained only as salary ⁸.

What is a commission clawback? If you cancel a policy early, the provider reclaims part of the upfront commission from the adviser, usually within a two-year period ⁶. From 20 October 2025, Chubb NZ calculates clawback on months elapsed within a 24-month window rather than premiums paid ¹⁵.

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General information, not personalised financial advice. Seek advice tailored to your situation before acting. Craig Smith Business Services Ltd (FSP712931), trading as Smiths Financial, holds a Class 2 licence issued by the Financial Markets Authority and is a member of the Financial Dispute Resolution Service (FDRS). Written by Henry Smith, Financial Adviser; reviewed by Craig Smith, Principal Adviser. Last reviewed 16 June 2026.