What a week to rejoin the fray with Professional Planner and Conexus Financial.

After four and a half years working with the leading research and consulting business CoreData, and only a few days back into it, we find ourselves contemplating more regulatory change, earnestly debating the definition of the word “good” and staring at a long-overdue merger of two key professional bodies.

The more things change…

Michelle Levy’s consultation paper for the Quality of Advice Review lobbed on Monday and it’s ironic that even as she proposed a move towards more principles-based regulation for financial advice, the principles set out to achieve that have already seeded uncertainty and debate.

On Thursday the Association of Financial Advisers and the Financial Planning Association of Australia sprang something of a surprise by announcing merger talks. While it’s not a done deal, this move is not before time. For many years the AFA and the FPA have been like those two kids you knew at high school who were clearly at some point going to get together, and they were the only ones who hadn’t figured that out yet.

A merger will create an entity that can truly say it speaks for the advice profession. Sure, there will continue to be splinter groups and vested interests pushing fringe issues, but on important matters the industry will be much better represented, not only in Canberra but in any situation when a voice needs to speak for the profession.

Like on the issue of “good” advice, for example. Next week Levy will be joining Conexus Financial managing editor Julia Newbould on an exclusive webinar, where many of the issues she’s proposed in her paper will be discussed and clarified.

On one reading of Levy’s paper, the proposals it puts forward will lighten the regulatory burden on advisers quite considerably and reinforce the role that professionalism (including the Code of Ethics) plays in the delivery of advice. And so, on this reading, they are welcome. On another reading, the same proposals will open the door to hordes of voracious product salespeople and return us to the bad old days of advice-as-distribution. On this reading, the proposals must be approached with caution.

It’s illuminating two very different interpretations can be derived from a reading of the same set of broad principles. The reality of what they will achieve probably sits somewhere between those extremes, but exactly where isn’t yet clear. These are proposals, and the paper includes a lot of Levy’s impressions and musings on an industry she’s been examining closely for a number of months now.

The financial advice industry is complex, its current regulation isn’t ideal and it’s not surprising that at this stage of things Levy’s thoughts aren’t yet fully formed – at least, she’s not presenting them as such. And even when she makes her final recommendations, the government isn’t duty-bound to adopt them. So there’s still a long way to go.

However, it would be a major error and would run contrary to the broad direction of progress to date if the outcome of Levy’s recommendations was to lower barriers to entry to financial advice and open the possibility of product manufacturers once more treating advisers as mere distributors.

The barriers need to remain high. It should be challenging to become a financial adviser, and the demands made of people wanting to enter the profession should be onerous. Provided the barriers remain significant, it seems unlikely that any financial institution, or other entity, will be able to quickly assemble a large force to go out and sell products.

Besides, if those individuals are giving personal advice (the definition of which would be expanded under Levy’s proposals), they’re going to be subject to the same professional standards, including ethics and placing the client’s interests first, as all other advisers.

Understanding what Levy wants the future regulation of financial advice to look like depends on understanding what she means when she says advisers should be required to deliver “good” advice. We need to know more clearly how “good” is defined and measured, and what happens when advice falls short of these standards.