If you’ve clicked here, you’re probably interested in what it takes to become an insurance adviser (sometimes incorrectly referred to as an insurance broker) - here, in New Zealand. So what do I need to do? Where do I start?

We’re here to walk you through the essential steps to get started, explain why these steps matter, and answer some of the frequently asked questions in this field.

This guide is based around giving personal risk insurance advice rather than fire and general insurance advice.

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 insurance advice and financial services can be very rewarding and lucrative if done well. The earning potential for an insurance 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 somewhere around $100,000-$250,000 per year. 

What do I need to do to become an insurance adviser?

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 insurance agencies with New Zealand’s top insurers

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

Insurance 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 the industry providers before they allow you to advise on their products (insurance policies, 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 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 insurance 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 an Insurance Aggregator (optional)

Unlike mortgage advisers, insurance advisers do not need to belong to aggregator groups and can often hold direct agencies with insurance companies.

Some insurers will only issue agencies if you have sufficient industry experience (two years minimum) and some will help you with your agency agreement straight away. Due to this, new-to-industry advisers will likely join an existing FAP or an aggregator to help with their training, development and access to the top insurers.

If you’re joining an existing business, they will add you to their current agencies and/or agreement with their aggregator (if applicable).

Different aggregators charge their members in a variety of ways. It could be one or a combination of the options below

• Flat monthly fee

• Aggregator receives an override commission from the insurers (override is an additional commission of around 20% that is paid to the FAP/aggregator)

• Aggregator takes a cut of your commission

Like any ‘free’ service, if it’s free, it’s because you’re the product. It’s important to check any commercial agreements with your aggregator group to make sure you’re getting a fair deal.

Get your Insurance Agencies

Once you have the above sorted, it is time to apply for your insurance agencies through your employer, aggregator group or direct with the insurer. 

The respective parties above will use this as an onboarding tool as well as an opportunity 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 insurers require you to have a mentor for the first 24 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 insurance experience (detailed below), you'll need a mentor for your first 24 months or you’ll need to sit under a head agency (likely an aggregator).

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 for an insurer or relevant role and applying for head agencies

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 personal risk insurance at an insurer, bank, or similar financial institution. An insurance adviser at a large insurer is a common example of a new-to-industry adviser who may be successful in their agency application.

Final Word

Becoming an insurance adviser in New Zealand is a great venture with a lot of potential for growth. There are a few key steps to take, but they’ll give you the knowledge and foundation you need for beginning a successful career in financial advice.

If you love helping people protect their assets, achieve their financial goals and are ready to invest in your future, insurance advice could be a highly rewarding path for you.