Massey University’s Mike Naylor told Good Returns earlier this month that the Government should set guidelines for financial advisers’ commissions, to help ease the perception that their decisions were influenced by what they were paid.

He said the insurance industry needed to move away from high upfront commissions and provide better trail, to bring New Zealand in line with the rest of the world.

Nigel Tate did not think the Government would want to tackle them because it wanted to encourage advisers to sell more insurance, not less.  “That would be way too hard. New Zealanders are all too horribly underinsured and they don’t want to make it worse.”

He said he would like to see the Government legislate for the maximum level of risk brokerage that could be paid. “So we don’t have to rely on the companies,  someone would have to be first.”

But Fidelity Life’s Milton Jennings said his organisation already offered the lowest upfront commission and the highest trail. “That encourages quality advisers to keep their business with us. If you pay a high upfront commission all you are doing is encouraging churn.”                          

He said he doubted the Government would want to tackle commissions, as its counterparts in South Africa had. “I don’t think it’s on their agenda at the moment. They want an open market.”

Tate said risk advice businesses would be worth more if there was less of a focus on upfront commissions. He said it was inevitable that the FMA would introduce some ruling on investment advisers’ commissions.