KiwiSaver an option for mortgage advisers seeking ongoing income, provider says
Mortgage advisers looking for another stream of income as trail commission becomes harder to find are looking at their options in KiwiSaver, one provider says.
Saturday, June 20th 2026, 3:35PM
Koura founder Rupert Carlyon said, with only Kiwibank and BNZ left paying trail commission, mortgage advisers had lost a key income stream.
Westpac paid advisers a total estimated at about $120 million this week as it brought its trail commission model to an end.
“Mortgage advisers have gone from a world where they could previously build good long-term businesses with good recurring income, which means they can hire staff, invest in systems… to now being businesses that rely on doing a deal to get paid… what’s happening now is mortgage advisers are looking for other sources of income.”
He said they not only needed the cash flow but to improve the value of their businesses.
“Historically businesses have been valued on a multiple of trail income. Given that trail has disappeared, it is unclear what you are buying when you buy a mortgage book and therefore what you should pay for it.”
He said mortgage advisers had been working with insurance advisers for a long time but were now increasingly looking for new and alternative ways of replacing that mortgage trail gap.
“Unlike insurance advisers, mortgage advisers have historically stayed away from KiwiSaver. Despite the fact KiwiSaver is a part of every mortgage conversation, mortgage advisers felt that they were not qualified or did not have the skills to replicate the high quality advice that they deliver with mortgages.
"The new financial services advice regime further reinforced this with the requirement for qualifications and increased FMA focus on the quality of advice.”
He said although KiwiSaver would bring challenges, it also had benefits for mortgage advice businesses.
Balances were growing by about 15% a year, so trail commission kept growing, and customers were sticky.
“The industry runs a 95% retention rate meaning a client is expected to stay with a provider for more htan 20 years. Given the need to diversify their businesses and create recurring income, mortgage advisers can no longer ignore this KiwiSaver opportunity.
"The big question is how can advisers do this in a safe and compliant way while delivering best quality for the clients?”
He said they could either deliver KiwiSaver advice themselves, find a KiwiSaver partner to work with or opt for a KiwiSaver referral scheme. Koura’s referral scheme allows advisers to have clients advised on their behalf.
“Each adviser needs to find the right model for their business, level of knowledge and desire to invest.”
He said Koura currently had 500 mortgage advisers working in its referral programme.
“This is something that customers need - the recent FMA access to advice studies show that nowhere near enough clients are getting advice on what is the largest investment product Kiwis will ever have. Mortgage advisers have the opportunity to change that, delivering exceptional client outcomes whilst also creating stronger business models for themselves.”
David Cunningham chief executive of Squirrel, agreed that some mortgage advisers would be looking at their options, and it could make sense for some of them to opt for something like KiwiSaver to give them recuring income.
“The money that comes in each month without you having to do new work is less than it was.”
He said Squirrel favoured a referral model because it wanted its advisers to focus on delivering the best mortgage advice possible.
Jeremy Andrews, at Key Mortgages, said he had heard advisers who wanted to be able to offer more long-term support to clients were shifting into other areas as well, including KiwiSaver, to ensure they had ongoing income.
“In our loan structure meetings, as part of responsible financial planning we always ask clients about their future goals, including: do they have cover to pay their mortgage if unable to work, do they have a will and does it need updating, and are they in an appropriate KiwiSaver scheme giving good returns for their stage in life.
“Being able to give tailored advice in these areas is a genuine value add for clients. It's a great time to put your KiwiSaver into a strong-performing fund after withdrawing to buy a first home, but as a replacement to trail it's typically lower revenue, especially when clients haven't yet rebuilt a strong balance.”
| « Brand awareness and tech the big issues for merged banks |
Special Offers
Comments from our readers
No comments yet
Sign In to add your comment
|
|
Printable version |
|
Email to a friend |
