What Westpac actually did
From 1 June 2026, Westpac New Zealand moves to an upfront-only commission structure on new home loan settlements: 0.90% of the value of new lending, replacing the previous 0.60% upfront plus 0.20% trail.
The part that matters for valuation is what happened to the trail already in force. It was not grandfathered, and it was not left to run off. Westpac bought the books out.
Financial Advice New Zealand was publicly critical of exactly this point, describing it as forcing the sale of existing trail commission books rather than allowing them to run off naturally, and noting that trail can account for up to half of some firms' annual income.
From what we have seen in the market, those buyouts have landed at around 2× annual trail. That figure has not been published by the lender and individual arrangements will vary, so treat it as an observed level rather than a rate card.
A buyout is a book sale you did not get to negotiate
Put the buyout next to the range a mortgage trail book normally transacts at, and the shape of what happened becomes clear.
1.5×–2.5× annual recurring trail revenue
The indicative range for a New Zealand mortgage trail book sold on the open market. Where a book sits in that range depends on client quality, retention, lender spread, loan balances, remaining terms and data quality.
A buyout at around 2× sits in the middle of that range. For an average book, that is not an unreasonable number in isolation.
But a normal sale is not just a multiple. It is a process with several things in it that a buyout has none of:
- Competitive tension. More than one interested buyer is what moves a price off the middle of a range.
- Book-specific pricing. A strong book — young borrowers, high balances, long remaining terms, clean records — is priced above an average one. A buyout applies one number to everybody.
- Choice of buyer. Who ends up with the client relationship, and how they will treat it.
- Structure. Timing of payment, deferred consideration, retention adjustments, what happens to clients lost after settlement.
- The option to decline. The most valuable term in any negotiation is the ability to walk away.
So the adviser with a genuinely good book was paid roughly what the adviser with a poor one was paid. That is the real cost, and it is invisible if you only look at the multiple.
The arithmetic on a concentrated book
Take an adviser with $120,000 of annual recurring trail revenue, 45% of it Westpac.
What the buyout produced
Example only
- Westpac share of trail revenue
- $54,000
- Buyout at approximately 2×
- $108,000
- Cash received, one line
- $108,000
What is left to sell
Example only
- Remaining recurring trail revenue
- $66,000
- Indicative multiple
- 1.5×–2.5×
- Indicative value of the balance
- $99,000–$165,000
Combined, that adviser is looking at roughly $207,000 to $273,000 across the two events.
Had the whole $120,000 been trail-paying revenue sold as a single book, the indicative range would have been $180,000 to $300,000.
Which is the interesting part
At the bottom of the range, the buyout made that adviser better off. At the top, it made them meaningfully worse off.
A forced buyout at a flat multiple is a floor under a weak book and a ceiling on a strong one. If your book was always going to price at the bottom of the range, Westpac did you a favour. If it was a book that would have attracted competing offers, you have been paid an average price for an above-average asset, and there is no mechanism to recover the difference.
The figures above are illustrative and use round numbers deliberately. The point is the shape of the outcome, not the precision of it.
What this does not mean
It would be wrong to read this as mortgage books becoming worthless. Several things cut the other way.
- Upfront commission went up, from 0.60% to 0.90%. For an adviser still actively writing, that is not a bad trade.
- The client relationship still transfers, and still has value to a buyer with the capacity to service it.
- A settled borrower with a refix ahead of them is a commercial opportunity, and a buyer moving to an upfront-weighted world may value that opportunity more highly than before, not less.
- Lenders that have retained trail continue to produce recurring revenue on exactly the same basis.
What has changed is the form the value takes. Less of it sits in a predictable recurring stream that can be valued on a multiple, and more of it sits in the ability to re-engage a client at the right moment. That is a real asset, but it is harder to evidence and harder to price — which means the seller who can evidence it will be paid for it, and the seller who cannot will not.
What buyers will ask for now
The practical consequence for anyone thinking about selling is that one item on the diligence list stops being optional.
- Recurring trail revenue broken down by lender, not as a single figure.
- Which lenders in that split still pay trail, and on what basis.
- Total outstanding mortgage balances and their expected run-off.
- The spread of remaining loan terms and upcoming refix dates.
- How much historical run-off was refinance away to another adviser rather than repayment.
- Whether client records support contacting borrowers ahead of a refix.
- Whether a buyout has already been taken on any part of the book.
An adviser who can produce a lender split on request negotiates from a better position than one who cannot, because a buyer forced to guess will guess conservatively.
The wider point about concentration
Lender concentration has always sat somewhere on a buyer's checklist. What happened here moved it to the top, and for a reason that outlasts this particular decision.
The recurring revenue underneath a trail book is not a contract between the adviser and the borrower. It is a commercial arrangement between the adviser and a lender, and it can be varied or ended by the lender. One bank has now demonstrated that it can be ended, unilaterally, and settled at a price the adviser had no part in setting.
That is a risk a buyer will price from now on, whatever any other lender does next. A book spread across lenders carries less of it than a concentrated one, and that difference will show up in offers.
For an adviser thinking about an exit in the next few years, the useful response is not to speculate about which bank moves next. It is to know your own numbers — what proportion of your recurring revenue sits with any single lender, and what is left after the buyout — before someone else works it out during diligence.
Frequently asked questions
Was existing Westpac trail grandfathered?
No.
Existing trail was not left to run off. Westpac bought the books out, an approach Financial Advice New Zealand publicly criticised as forcing the sale of existing trail commission books rather than allowing them to run off naturally.
What multiple were advisers paid for their Westpac trail?
From what we have observed in the market, buyouts have landed at around 2× annual trail. That is not a figure published by the lender, and individual arrangements will vary, so advisers should confirm their own position directly with Westpac or their group.
Is 2× a good price for a trail book?
It depends entirely on the book.
New Zealand mortgage trail books indicatively transact between 1.5× and 2.5× recurring trail revenue. A flat 2× is therefore a reasonable outcome for an average book, a good outcome for a weak one, and a poor outcome for a strong one — because it removes the competitive tension, the book-specific pricing and the negotiated structure that move a good book toward the top of the range.
What is left of my book to sell after the buyout?
Whatever recurring revenue sits with lenders that still pay trail, plus the client relationships themselves.
Westpac clients no longer generate trail, so they contribute nothing to a revenue-multiple valuation. They can still hold strategic value to a buyer who intends to service and refix them, but that value has to be evidenced rather than assumed.
What is the new Westpac commission structure?
From 1 June 2026, Westpac New Zealand pays 0.90% upfront on the value of new home loan settlements, with no trail. The previous structure was 0.60% upfront plus 0.20% trail.
Should I sell the rest of my book now?
That is a commercial decision that depends on your book, not a general rule.
The relevant inputs are what proportion of your remaining revenue still pays trail, whether you were planning to exit in any case, and whether you have time to improve the position before going to market. Knowing your post-buyout lender split is the sensible first step either way.
Indicative information only, and general in nature. This is commentary on a market development, not advice on your book, your contract or your commercial position. Buyout terms described here reflect what we have observed in the market rather than figures published by any lender, and advisers should confirm their own position directly with the lender or their group. Actual market value can fall above or below the ranges discussed. This content is not legal, financial, accounting or tax advice.
