Conflicts Of Interest And Incentives

A conflict of interest may arise where the interests of an adviser, Aurora Financial or our Authorised Bodies may be perceived to materially influence the advice.

The descriptions listed below outline potential conflicts of interests that may arise:

Aurora Financial
  1. Commissions from product providers

    We will generally receive a commission when you decide to take out insurance products through the following financial advice services we provide:

    • Personal risk insurance (Life, disability and health)
    • Fire and general insurance

    The commission will be payable to Aurora Financial by our insurance product providers. The amount of commission received varies as it is generally calculated as a percentage of the insurance premium you pay.

    For KiwiSaver (general advice), we will generally receive a commission from Aurora Capital when you decide to take our general advice and invest in the Aurora KiwiSaver Scheme. The amount of commission is based on your KiwiSaver balance.

    For Home Mortgage, we will generally receive a commission from the bank (or lender) with whom we arrange the mortgage. If you decide to take out the mortgage, the bank will pay a commission to Aurora Financial. The amount depends on which lender, what type of mortgage is decided, and the amount of the mortgage.

    From time to time, product providers may also reward us for the overall business we provide to them. They may give us tickets to sports events, hampers, or other incentives.

  2. Aurora Capital Limited

    Aurora Financial and its advisers only provide recommendations in respect of financial products in the Aurora KiwiSaver Scheme (Scheme), for which Aurora Capital Limited, a related party of Aurora Financial, is the investment manager. This has the potential to influence Aurora Financial and its advisers to advise clients to invest in the Scheme when it may not be in clients' best interests.

    When you seek general advice from Aurora Financial and invest in the Scheme, you will pay a fee that forms part of the annual fund charges charged to you in respect of your membership of the Scheme. These payments create potential conflicts of interest and, as such, have the potential to influence the general advice provided if advice processes are not properly managed.

    You may wish to consider whether these fees are likely to materially influence the general advice you get and whether your adviser or Aurora Financial, or another person connected with them, has any other interests likely to materially influence the general advice you get.

  3. Adviser remuneration

    Our advisers are full-time employees and their remuneration is comprised of a fixed salary, discretionary performance bonus and additional discretionary "good client outcome" bonus, payable at the discretion of our Board.

    Bonuses are discretionary payments. They are not solely based on individual performance and include consideration of the adviser's conduct as well as reference to our revenue that is attributed to specific financial adviser, quality factors, and compliance factors. The bonus payable is a percentage of the attributed revenue.

    Our advisers do not receive commissions from us nor our product providers.

  4. Shareholdings in Aurora Financial

    Some advisers have a financial interest in the business of Aurora Financial as a shareholder of Aurora Principal Holdings Ltd (holding company). Any payment of dividends or other distributions to shareholders by Aurora Principal Holdings Ltd has no effect on the service provided.

 

 
Our Authorised Bodies

Commissions from product providers

For personal risk insurance (Life, disability and health), our Authorised Bodies will generally receive a commission when you decide to take out insurance products they give advice on.

The commission will be payable to our Authorised Bodies by the insurance product providers. The amount of commission received varies as it is generally calculated as a percentage of the insurance premium you pay.

For KiwiSaver (general advice), our Authorised Bodies will generally receive a commission from Aurora Capital when you decide to take their general advice and invest in the Aurora KiwiSaver Scheme. The amount of commission is based on your KiwiSaver balance.

From time to time, product providers may also reward our Authorised Bodies for the overall business they provide to them. They may give our Authorised Bodies tickets to sports events, hampers, or other incentives.

To prioritise your interests above their own, Aurora Financial and its advisers (including Authorised Bodies) follow an advice process that ensures recommendations are made on the basis of your personal circumstances and goals (unless it is general advice; or where limitations are disclosed).

For KiwiSaver general advice process, our advisers (including Authorised Bodies) generally give advice via a fund profiler and is based on predefined characteristics such as your age and investment timeframe. It does not take into account your personal circumstances or goals.

Aurora Financial maintains a comprehensive and robust framework of policies and processes to manage conflicts of interest. Conflicts of interest are managed by various means including use of appropriate disclosures, separation of functions, compliance policies and declining to act. Our policies, procedures and practise include gifts and benefit policy, and managing personal conflicts of interest. Our Board oversees employee compensation including any discretionary bonus.

Our advisers (including Authorised Bodies) undergo annual training about how to manage conflicts of interest. We undertake a review of our compliance programme annually by our internal compliance team. In addition, we monitor the compliance of our Authorised Bodies, provide additional training to their advisers where required, and perform an annual review of their compliance programme.

Aurora Financial and its advisers (including Authorised Bodies) take the following additional steps to ensure that any conflicts of interest are identified and managed, and that your interests are always put first. These are:

  • disclosing the existence of conflicts of interest to you, including in the disclosure above;
  • communicating the limits of KiwiSaver general advice to you;
  • the Code of Business Conduct, which applies to our advisers and Authorised Bodies. This Code provides that advisers must never permit their personal interests to conflict with or to appear to conflict with, the interests of clients. Advisers must make all reasonable efforts to avoid conflicts of interest and ensure that you are fairly treated;
  • compliance by advisers with the Code of Professional Conduct for Financial Advice Services; and
  • monitoring by internal compliance team to ensure that our directors and employees comply with our duties to clients and all other relevant laws and rules, and regular reporting on compliance-related issues to our Board.