What you need to know before getting financial advice, and knowing your rights if you are unhappy with that advice.

Financial advice and the role of financial advisers

Financial advice is advice on whether to buy or sell financial products, such as insurance, investments or savings schemes. A 'financial adviser' gives financial advice. Financial planners, mortgage and insurance brokers, and banks and building societies are examples of financial advisers. Advisers providing advice on complex financial products must be authorised by the Financial Markets Authority (FMA).

Fnancial advisers should when advising you:

  • put your needs first
  • not mislead you
  • use reasonable care and skill. 

Sometimes this doesn't happen. The FMA has a list of problems(external link) that can arise with financial advisers and how to deal with any complaints.

Types of financial advisers

There are three types of financial advisers to choose from. The one that’s right for you will depend on the level of advice you need and the type of products you’re interested in:

  • An authorised financial advisers (AFA) has been authorised by the FMA and has met minimum qualification and professional standards. They can give advice on complex investment products, like KiwiSaver, managed funds, and shares.
  • A registered financial adviser (RFA) can give advice on insurance, mortgages or simple investments such as bank term deposits.
  • A qualifying financial entity adviser (QFE adviser) is linked to an organisation, for example a bank. They can provide advice on products provided by their company, such as their own KiwiSaver, mortgages, or term deposits.

What to look out for

Before you get financial advice, make sure you:

  • check the Financial Service Providers Register(external link) to confirm your adviser is registered, to see what type of adviser they are and which services they are registered to provide
  • find out what qualifications and experience your adviser has
  • be wary of signing a power of attorney for a financial adviser to act on your behalf. If you do so, get written confirmation of what they can do and what they can't do, on your behalf and regular updates
  • ask how your adviser is paid (ie do they get a commission, or are they limited to certain investments)
  • understand the investment risk – you may get low returns or lose all your money
  • understand that past investment performance does not guarantee future returns
  • be wary of investment offers that promise very high returns – usually these are scams or very high risk
  • find out what the adviser's complaints process is if you are unhappy with their service
  • watch out for churning (this refers to when an adviser recommends you change your insurance or investment products so they can earn a commission)
  • understand when your financial product eg insurance policies can be converted into a different product.

See also:

Know your rights

Under the Financial Advisers Act, your financial adviser must:

  • exercise care, diligence and skill
  • only provide financial services they are registered for
  • provide you with key information
  • not mislead or deceive you.

Under the Financial Markets Conduct Act (FMCA), financial advisers must not:

  • mislead or be deceptive
  • make false or misleading representations
  • make unsubstantiated representations
  • in the course of unsolicited meetings, offer financial products that you didn’t ask for.

All financial advisers in New Zealand or their employers must be registered on the Financial Service Providers Register(external link) . They must also belong to an independent dispute resolution scheme(external link) under the Financial Services Providers (Registration and Dispute Resolution) Act.

Authorised financial advisers must also follow their Code of Professional Conduct. Among other things, the code requires them to place the client's interests first, and act with integrity.

Under the Consumer Guarantees Act, financial advisers must ensure their advice:

  • is given with a reasonable degree of care and skill
  • meets the purpose you are seeking advice for
  • is given in a timely way
  • is reasonably priced, if a price is not agreed beforehand.

If the advice leads to problems, you can get your adviser to sort them, or ask for your money back. If the problem can’t be fixed, you can ask for compensation.

Read Faulty or unsatisfactory services to find out more.

Even with low risk products you can still lose your money.

What a financial adviser must tell you

A financial adviser must provide information about himself/herself, as well as the services provided. The adviser must also disclose:

  • if he/she has been bankrupted, or disciplined, or has any criminal convictions
  • how you can make a complaint, and which dispute resolution scheme you can go to.

An authorised financial adviser must also give you a written statement that tells you about:

  • the services offered and any limitations
  • the fees, and how the fees are charged
  • any relevant conflicts of interest.

See What good advice looks like (external link) on the Financial Markets Authority (FMA's) website to find out more.

Payment by fees or commission

Ask your financial adviser to explain what fees they charge and how they are paid. It is important to know that many financial advisers are paid on commission from the product provider.

See Paying for advice (external link) on the FMA's website to find out more.

Peer-to-peer lending and crowdfunding

New forms of non-bank lending are becoming popular, mostly done over the internet. However, crowdfunding providers and peer-to-peer lenders still have to be licensed by the FMA.

See Peer-to-peer lending and crowdfunding on the FMA's website for more information.

Contact your financial adviser first

If you are unhappy with the financial advice you receive, you need to complain to your financial adviser first of all.

Next steps


If you are unable to resolve your issue directly with the financial adviser, you should contact their independent dispute resolution scheme. You’ll find details of the scheme in your adviser’s disclosure documents or on the Financial Service Providers Register(external link) . Our Resolve It tool also has information to help you take the next steps.

Resolve it: Banking, finance and insurance

Need more help?

Contact us for more guidance.


Common situations

What advice can a registered financial adviser give?

John is a registered financial adviser. As a registered financial adviser he is able to give advice on insurance, mortgages or more simple investments, such as bank term deposits.  He offers to advise Olivia on an insurance policy as well as a new mortgage product. John is not qualified to provide advice on investment products like KiwiSaver, managed funds, shares or investment planning services.  

Conflict of interest

Tobias, who is an authorised financial adviser, advises Tarquin on a new investment offering which Tobias’ firm is involved with. However, Tobias does not tell Tarquin about this involvement or that he’ll receive an additional commission on this transaction. Tarquin later finds this out and is unhappy about the advice he received, as the investment is very high risk and not suited to his risk profile. Tarquin can complain to the firm who employs Tobias. If he is not satisfied with the firm’s proposed resolution, he can go through their dispute resolution scheme to get his money back. He can also complain to the Financial Markets Authority(external link)