If you run a financial advice business in New Zealand with multiple advisers, one of the biggest challenges you’ll face is structuring remuneration for your advisers. It’s a topic that comes up frequently, and there’s no one-size-fits-all answer. 

The two most common models are:

1. Commission split

2. Base salary with bonus

Both options have their pros and cons.

Commission split: lower monetary risk, but harder to retain advisers long-term

A commission split model means advisers earn a percentage of the revenue they generate. This reduces the financial risk for the business owner since you’re not paying fixed salaries regardless of performance. Instead, advisers ‘clip the ticket’—they get paid based on their success.

Common commission split models

Commission splits can vary significantly, from as high as 50% down to as little as 5% of commission. Typically, an adviser can expect a split in the 20–30% range. 

Business owners and advisers need to clearly communicate who covers key business expenses such as PI insurance, aggregation fees, compliance, software, marketing, and office costs. Some businesses cover these, while others require advisers to pay their share.

Pros

• Lower monetary risk for the business, as advisers only get paid when they generate revenue.

• Encourages performance-driven advisers who are motivated by higher earnings.

• No pressure on the business to cover fixed salaries in slow months.

• Simple for the adviser to understand exactly what they’re going to earn.

Cons

• Advisers may leave if they don’t want to share their commission and run their own business.

• Due to this, it can be harder to maintain a stable team over time.

• Advisers may not want to help in other areas of the business as they’re only paid on deals settled

• If new to the industry, it can take a couple of years before a new adviser is profitable while they learn their trade.

Temporary commission structures when hiring new advisers

• Some businesses take a higher commission split initially to recover training costs.

• Others provide a lower base salary for six months before transitioning to full commission.

• New advisers should have at least six months’ worth of financial reserves to cover expenses before their first deals settle.

Salary + bonus: stability, but higher fixed costs

The salary model provides advisers with a consistent income, often supplemented by bonuses tied to performance. While this can offer stability and attract those who prefer a steady paycheck, it also comes with higher risk for the business. If done well, this can also be a more profitable option for a business owner.

Pros

• Easier to attract and retain advisers looking for financial stability.

• Encourages teamwork and alignment with company goals rather than individual commissions.

• Advisers don’t have to worry about covering business expenses.

• Can be a more profitable if structured correctly.

Cons

• Higher fixed costs for the business, which can be risky if advisers aren’t producing enough revenue.

• Less incentive for top performers to push for higher earnings if bonuses aren't structured well.

• Difficult to balance remuneration in a way that ensures profitability while keeping advisers motivated.

• Bonuses need to be structured in a way that doesn't come at the cost of poor customer outcomes.

The real key to retaining advisers long-term

No matter which model you choose, retaining quality advisers isn’t just about money. Advisers will stick with your business if they see long-term benefits that outweigh the temptation to go independent or to other companies. Here’s what can make the difference:

• Company culture: A positive work environment, strong leadership, growth opportunities, and a sense of belonging can go a long way.

• Lead generation: If your business provides a steady flow of quality leads, advisers will see value in staying. This could be through referral networks or a strong marketing strategy.

• Business ownership opportunities: Some businesses offer advisers a stake in the company over time, creating long-term loyalty.

• Client ownership: Consider allowing advisers to ‘own’ their clients or trail book after hitting revenue or time-based milestones. This gives them a reason to stay and continue building relationships within your firm.

Final thoughts

Choosing the right remuneration structure depends on your business model, growth plans, and risk tolerance.

A hybrid or tailored approach might be the best solution for your business. Take the time to evaluate what aligns with your goals and ensures a profitable, sustainable future.

Having honest, open conversations with your team is crucial for keeping your business strong and your best advisers on board.