If you're here, you're probably interested in becoming a mortgage adviser (often incorrectly referred to as a mortgage broker). You might be wondering: What steps do I need to take? Where do I start?

We’re here to guide you through the essential steps to get started, explain why they’re important, and answer some of the common questions in this field.

How long will it take to get up and running?

The process to get up and running can take between 4 weeks and 6 months depending on your qualifications and experience.

How much will I earn?

A career in mortgage advice and financial services can be very rewarding and lucrative if done well. The earning potential for a mortgage adviser varies significantly as it's based on commission. That means the earning potential is quite broad and could range from $0 to  $1,500,000 per year, with the average income sitting around $100,000-$150,000 per year. 

What do I need to do to become a mortgage broker?

We'll clarify each step below, but here's a quick list of what you'll need to do, all of which are non-negotiables!

• Completion of your level 5 qualifications

• Registering yourself on the FSPR

• Being linked to a Financial Advice Provider (FAP) licence on the FSPR

• Get your Professional Indemnity Insurance

• Be a member of a Dispute Resolution Scheme (DRS)

• Get your Bank Accreditation with New Zealand’s top lenders

A bit of background before we continue to get a better picture of the ‘why’.

Mortgage advisers are considered financial advisers as part of the updated Financial Services Legislation Amendment Act (FSLAA) that came into force in March 2021. The amendment sought to improve financial advice in New Zealand by regulating conduct and the level of client-care as well as to build trust in the industry.

Get your level 5 qualifications

One of the requirements of FSLAA, is that a financial adviser is to demonstrate knowledge, competency, and skill. 

The best and fastest way of doing this is by completing the level 5 papers at one of the facilitators in NZ.

Here is a list of some of the most common providers:

• Strategi (Completion of the Core Strand + completion of the Residential Property Lending Strand)

• Open Polytechnic (New Zealand Certificate in Financial Services)

• Massey University (Certificate in Financial Advice – CertFinAdvice)

Register yourself on the FSPR

To become a financial adviser in New Zealand, you need to be registered as an individual entity on the Financial Services Provider Register. This is a legal requirement under the Financial Service Providers Act 2008.

To get started you’ll need a RealMe login and the cost to register is roughly $1000.

Link yourself to a Financial Advice Provider (FAP)

Once your individual entity is registered, you will need to link yourself to a licensed Financial Advice Provider before giving advice. 

You have a couple of options:

• Creating your own licensed business 

• or joining an existing licensed business

Registering a new business on the FSPR is also about $1000 and applying for a FAP licence for that business is roughly $900.

Those costs are upfront costs and there is an annual renewal fee that is around $400 for your business.

Wondering what a FAP is? This article goes into detail about what the different licensing structures in New Zealand are.

Get PI Insurance 

Professional Indemnity insurance is a requirement of lenders before they allow you to advise on their products (mortgages etc), this is in case something goes wrong and the adviser and/or business is liable.

If you’re joining a business, they will add you to their policy. 

If you’re starting your own, you should speak to a few providers and get quotes as the cost can vary significantly. 

The cost is usually based on revenue. Usually, your mortgage aggregator, such as KAN, will have a competitive group scheme in place. Group schemes can give significant discounts to their members on their annual PI bill.

A single mortgage adviser business can expect to pay from $1800-$4000 per year for PI and a larger entity sometimes pay over $10k.

This changes often and has a lot of variables.

Belong to a Disputes Resolution Scheme

Every financial adviser in NZ needs to belong to a DRS. If a client makes a complaint about you and you’re unable to resolve this between yourselves, it will be escalated to your DRS.

This is a comprehensive article on the different providers 

Join a Mortgage Aggregator

Mortgage advisers advise on behalf of NZ’s biggest banks and financial institutions. The banks usually do not hold direct agreements with advisers. Rather, they hold agreements with mortgage aggregation groups who facilitate the relationship between adviser and bank. 

This means that the bank has relationships with about a dozen aggregator groups rather than agreements with 1800+ advisers.

If you’re joining an existing business, they will add you to their current agreement with their aggregator.

If you’re starting your own business or you're adding mortgages to your suite of services, you’ll have a few aggregators to choose from. Finding the right aggregator for your business will depend on what your business goals are and the best structure to achieve your goals.

Here's how KAN compares to the competition

Get your Bank Accreditations

Once you have the above sorted, it is time to apply for your bank accreditations through your aggregator group. This is your aggregator obtaining approval from the lender to work with you; it allows them to do their due diligence before engaging with you as an adviser.

New to industry

If you’re new to the industry, some of the lenders require you to have a mentor for the first 12 months. If you’re joining an existing business they will likely fulfill this mentoring role for you as long as they have sufficient experience to be a mentor.

If you're starting your own business as a new adviser, and do not have the relevant lending experience (detailed below), you'll need a mentor for your first 12 months. Finding a mentor can be challenging unless you have a close personal relationship with an adviser, as mentoring is time-consuming and can divert them from their other business activities.

Currently working in a bank or relevant role

There is an exception to the mentoring rule if you have recent and relevant industry experience. 

Relevant industry experience means you’ve had a role that is heavily involved in residential lending at a bank or similar financial institution. A mobile mortgage manager at a large bank is a common example of a new-to-industry adviser who is usually successful in their accreditation process.

Important to note: if you’ve worked at a bank before, your aggregator group will apply to the bank you worked at first. If that bank says yes, usually the other banks will follow suit. It’s important to disclose to your aggregator group if you’ve had any conduct issues whilst at your previous employer. 

Your aggregator group will gather documentation from you to submit to the lenders including credit and criminal history background checks. You will also need a recent verified ID and proof of address to apply.

Final Word

Becoming a mortgage adviser in New Zealand is an exciting journey full of potential. While there are some essential steps to complete, these will help you build the knowledge and foundation for a successful career in mortgage advice.

If you're passionate about helping people reach their financial goals and are ready to invest in your future, mortgage brokering could be a highly rewarding path for you.