Fidelity chief executive Milton Jennings said the majority of advisers made their own decision to quit as "it doesn't make sense to spend $7,000 or $8,000 to sell KiwiSaver."

"They'll make more money giving advice on risk."

He said the low cost nature of the product meant there was little money to be made for advisers who faced what he described as a "double hit" from the new regulation.

Not only did they have to pay to sit the exams, but the time commitment reduced time they could be earning.

Jennings said Fidelity terminated any adviser not looking to gain AFA status.

"We had two to three hundred advisers selling our KiwiSaver product and that number is now down to between 20 and 30. The volume of new business has certainly reduced," he said.

Jennings also cited competition from banks able to capitalise on greater brand recognition.

Problems of customer churn were also highlighted as KiwiSaver regulations place the cost burden of transferring schemes onto the provider.

"They should put in some rules around it - some people are transferring two to three times a year. It's not good for the person doing it and it's not good for the providers."

However, he said the company's KiwiSaver funds were on course to hit the $200 million mark and that he saw a future in the investment side of KiwiSaver as balances begin to grow.

He also cited the departure of the likes of Asteron from investment management as a positive, as "gaps are opening up."