New Zealand financial advice sector rebounds with digital growth and stricter regulation

The New Zealand financial advice sector is showing signs of recovery and adaptation as it settles under the full Financial Advice Provider (FAP) licensing regime, according to the latest regulatory data from the Financial Markets Authority (FMA). Over the year to 30 June 2025, the number of financial advisers linked to licensed firms rose notably by more than 700, reaching 9,184 advisers, up from 8,472 a year earlier.

This growth follows a period of contraction that coincided with the introduction and gradual implementation of the full-licencing framework, which officially came into force in March 2023, ending the transitional phase that began in March 2021. During that transitional phase, the number of FAPs fell from 1,820 to 1,360, and adviser numbers dropped significantly from 10,750 to 8,838 as firms adjusted to the new regulatory standards. The latest figures, showing an increase to 1,550 financial advice providers under full licencing, suggest the initial industry disruptions and adviser attrition have eased.

Romil Ghelani, head of financial advice at the FMA, noted that the sector is continuing to embed the regulatory framework, with firms increasingly finding efficiencies. He commented that the time, energy, and cost of compliance are beginning to feel like “business as usual,” indicating a maturing phase in the regulatory transition.

A continuing trend captured by the FMA’s regulatory returns highlights life and health insurance as the most commonly advised products across the industry. Additionally, digital advice services are rapidly expanding. The number of financial advice providers offering digital advice nearly doubled over the past year, climbing to 49 providers serving 164,841 retail clients who acquired financial products through digital channels, representing a 90% year-on-year increase, albeit from a relatively small base. This shift towards digital service delivery signals a growing market preference and diversification in how advice is provided.

While the numbers reflect positive growth, the FMA remains vigilant. Since 30 June, the authority has approved almost 60 new FAP licences but also increased its scrutiny under a new financial conduct agenda introduced in June 2025. This initiative includes 16 monitoring engagements focusing on areas such as custodial arrangements, transparency regarding fees and commissions, and the treatment of vulnerable clients or situations where things go wrong. The FMA also handled over 100 enquiries related to FAPs from July onwards, half concerning regulatory returns, along with 42 misconduct reports and the revocation of two advisory firm licences. These enforcement actions demonstrate the regulator’s ongoing commitment to maintaining high standards in the industry.

In a broader context, the FMA launched a comprehensive review in April 2025 aimed at improving consumer access and outcomes in the financial advice sector. This review examines consumer preferences, industry business models, and digital advice delivery, alongside the ease of providing advice itself. FMA Chief Executive Samantha Barrass emphasised the goal of ensuring that quality financial advice is accessible to more New Zealanders. The review also seeks to identify and eliminate unnecessary regulatory burdens that might impede advice availability. Public consultation on the review’s terms of reference was open until late May 2025, reflecting the regulator’s openness to stakeholder feedback in shaping the sector’s future.

The current regulatory environment, strengthened since the obligatory full licensing of all financial advice providers in March 2023, aims to boost consumer confidence by ensuring advisers meet professional and ethical standards. This transformation aligns with global trends towards higher regulatory expectations in financial services, underscoring New Zealand’s intention to enhance both the quality and accessibility of financial advice.

Industry data further reveals encouraging operational outcomes, with 97 to 97.5% of complaints being resolved within three months, signalling effective dispute resolution processes within the sector. This contributes to building trust alongside regulatory oversight and industry adaptation.

In summary, the New Zealand financial advice industry appears to be stabilising and growing after initial disruptions caused by the transition to full licensing. Increased adviser numbers, expanding digital advice options, and active regulatory engagement paint a picture of an evolving sector focused on compliance, consumer protection, and improved accessibility, key priorities highlighted both by industry players and the Financial Markets Authority.