Milford wants to make sure advisers are getting paid for giving advice around its KiwiSaver funds, but has chosen not to go down the trail commission route like other managers.

Under its new model, called an "Advice Facilitation Fee", advisers can be paid either a $150 upfront consultation fee for giving advice or the client can pay the adviser out of their funds under management. With the latter option a 20 basis point fee on the sum invested is paid from the KiwiSaver member's account to the adviser.

Michael Robson, Milford head of intermediary distribution, says "advisers need to be paid for the advice given".

"There is a cost to giving advice and this is a way of remunerating advisers."

To make this cost neutral Milford will also rebate its management fee by the same amount. Robson says this is fair as the fund manager no longer has to service the member.

Robson says the advice fee will be clearly disclosed on each KiwiSaver members statement each month. This makes the fee transparent and ensures members are aware it is being paid to the adviser. 

One difference between Milford and other managers working with advisers in the KiwiSaver space is that it is only offering this service to authorised financial advisers. Other managers, including Generate, NZ Funds and Booster are highly active in the registered financial adviser space.

Robson says Milford may at a later date extend this fee model to RFAs, but not at the start.

He says many advisers use Milford's unit trust products, but this model isn't currently available for those funds. He says many of the advisers using the unit trusts for their clients operate on a fee-for-service basis.

He said the manager may look at this in the future, and the model recently launched may evolve over time.

"We could adapt and add more options in the future," Robson says.

"I wouldn't be surprised if this is where the industry moves to," Robson says of this new model.

Robson says Milford consulted the Financial Markets Authority on its new model.