Sources with knowledge of the FMA's plans have told Good Returns it is looking into how to enable the provision of more "low cost" advice, in particular around general budgeting/money management and KiwiSaver.

It is understood to be looking closely at the Australian model, where the recently introduced Future of Financial Advice (FOFA) regulations encourage upfront hourly fees and ban commissions on certain types of investment products.

"Where Australia goes Sean [Hughes] will surely follow," one source said.

The FMA says, in a statement, it "is not currently working on the issue of “low cost” advice, although it would expect the market to be looking at accessibility to cost effective advice. FMA is also following Australian reforms with interest.”

However, Institute of Financial Advisers president Nigel Tate said there was a problem with the hourly rate model around consumer attitudes towards financial advice, with a common perception being that it should be free.

"Generally speaking advice in New Zealand isn't paid for," he said. "In general terms the majority of advisers get paid by either charging an on-going fee for investment or take a brokerage fee for risk.

"Clients need to recognise the value in advice and advisers need to show the value they add."

Tate said advisers hadn't helped themselves in this regard by giving away their services.

"One of the mistakes practitioners have made in the past is they've offered free advice; there's no such thing.  When they give away free consultations people start to assume and expect it's free.

"I like to tell my clients that the best thing I can do for you is to be here in ten years' time.  If I try to do things on the cheap and my business falls over tomorrow that's no good for anyone."