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:
- 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)
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.
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.
- 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.
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.
- Commissions from product providers
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.
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).
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.