Smaller advice firms could find the new legislative regime is harder to deal with than they expect if the Australian experience is anything to go by.

Nick Stewart, who runs advice firm Stewart Group and the Boutique Advisers Alliance, said the new Financial Services Legislation Amendment Bill looked set to take New Zealand down a path similar to the UK or Australian regulatory model. “It reads like the Australian regime but instead of calling it a dealer group they are calling it a Financial Advice Provider (FAP).”

The Financial Markets Authority has indicated that it will allow the requirements of licensing to be tailored to fit the needs of smaller firms.

But Stewart said it should be expected that there would be limitations to that. “There’s no carveout for small firms in Australia.”

He said every business there that was registered to provide a service had to meet the same requirements. “At the end of the day it’s consumers that suffer if someone is given a carveout. I understand the regulator wants as many as possible to front up on day one but when the rubber hits the road and you look at what you need to start operating, it could be very onerous.”

Many great financial advice businesses were not well-positioned to be great registered financial service businesses, which would require governance structures, compliance regimes and proven IT support and infrastructure. “That’s a different game.”

Some would be determined to cling to independence and wear the cost of outsourcing what they could not do themselves, he said. Others might decide it was better to get out and sell their books, he said. Still more might opt to continue as financial advisers under the umbrella of a bigger organisation.

“Those might go to others and say ‘can I have what you’ve got and maintain my independence’. You don’t want to have to sell your book to join a dealer group. There will be dealer groups that want a percentage of the ownership of the business. Others are like what we provide with the Boutique Advisers Alliance, they are independent.”

Dealer groups would need to be careful that they did not take on the liability and responsibility for more advisers than they could handle, he said.

The alliance would take care to only take advisers that met its standards, and not to take on too many at once. “If you were to run the business on the style of come one, come all you would increase your risk and lessen the service to those you are already working with.”

It has recently hired Lizzie Hill as service manager to help grow the business and act as secretary for the group’s investment committee.

Boutique Advisers Alliance has its own custodial platform that uses technology to help advisers meet their regulatory requirements. It has a back-office team which aims to let advisers grow their businesses by taking away some of the strain that comes from day-to-day administration.