All of this leads to another watchword for 2009–and 2010: reform. Americans have very major reforms underway in healthcare, financial services and taxes. These are not your everyday reforms, oh no. They are sweeping changes. They are by no means perfect, but a lot of them will be good for Americans, and ultimately companies, and perhaps even taxpayers. Health insurance coverage for more Americans is good–even though 2014 seems too far off.

Enabling regulators to oversee immense risks to the stability of the financial system, and demanding transparency–requirements like having to keep assets and liabilities on the books instead of buried somewhere–are good. It would be great to prevent companies from making leveraged bets against other firms that pay off if the other firm goes under. Legislation and regulation that requires all who provide advice to individual investors to abide by the fiduciary standard–which puts the investor’s interests first, and demands prudence, full disclosure of conflicts of interest and resolution of those conflicts in the investor’s favor–is very, very good. Because what’s good for investors will ultimately be good for financial services. All of this is possible now as we emerge from the rubble. This gives me great hope.

Change is not easy.

What are the things wealth managers’ clients may be thinking about as they end 2009 and make their way into the new year? The changes in regulation and law regarding healthcare and financial services will affect wealth managers, their firms and their clients. The financial services reforms will vastly alter the way Wall Street, insurance and banking work. Wealth managers within registered investment advisory firms may not face the kinds of changes broker dealers and investment banks will endure, but the status quo is shattered, and that’s not necessarily a bad thing.

Starting with putting client’s interests first (as many of you already do), will be a change that will be awesome over the long term even for the firms that will have to make fundamental changes to do this.

One large open item for wealth managers is: if all providers of financial and investment advice to individual investors will must provide their services as fiduciaries, who will oversee the advisory lot? SEC? FINRA? Some other entity? Even though FINRA’s bid to oversee the broker/dealer-RIA firms was stripped out of the House version of financial services reform, the Senate version still is in play, and the there will be reconciliation before any of it becomes law, so this is a large uncertainty.

Wealth managers are also left to wonder about the effects of Congress’s inability to pass estate and gift tax laws that would address the 2001 Tax Act’s (EGTRRA) sunset provision, effectively throwing much tax planning into chaos. See “Lawmakers Unable to Pass Estate Tax Reforms.” I’m not picking on Congress-they’ve been busy–really, really busy.

For clients, the issues continue to be trust, concern, hope and maybe some disgust. Trust that you, their trusted advisor, have been doing and will continue to do the right thing by them. For clients who had advisors that did not put client’s best interests first, who are disgusted by what has happened over the past couple of years, there’s hope that these clients will make a good move to an advisor whom they can trust, but there’s also great uncertainty among clients about whom and what to believe and how to find that trustworthy wealth manager.

For wealth managers, making sure that the prudent processes and procedures are in place, in practice, and conveyed to current and potential clients will differentiate a firm that can thrive in the new regulatory environment from one that may not.

Clients will want to know how the new health reforms will affect them. After all, many clients are business owners. The changes in the healthcare will undoubtedly affect their business, and probably their tax situation, when these changes begin to take effect. There is a fairly long lead time, but it’s not too soon to start thinking about how these changes will matter.

The changes that will be required if the proposed reforms go through are not trivial. But I am hopeful. Hopeful that the changes we face together in the next year and decade will be worthwhile. I am ever hopeful that 2010 opens a new year and era of transparency for investors, regulation that works as intended, and a time when we can look back and see that what came out of this historically difficult period–which we all hope is mostly behind us–leaves a legacy for the greater good.

To all of our readers: Wishing you a wonderful 2010, and thank you.

Kate McBride (kmcbride@wealthmanagerweb.com) is editor in chief of Wealth Manager and a member of The Committee for the Fiduciary Standard.

Read more Wealth Manager: Viewpoint blog posts:

Schapiro’s Call for Fiduciary Standard Reflects SEC’s Original Mandate December 07, 2009 “I believe that all securities professionals should be subject to the same fiduciary duty,” says SEC Chair Mary L. Schapiro…. Mr. Dodd’s Message from Washington November 16, 2009 Now that we have heard from both the House and Senate committees on finance and banking about investor protection, let’s not misinterpret what they are saying. Can the DJIA at 10,000 Inspire “Animal Spirits?” October 16, 2009 The Dow Jones Industrial Average hit a year-to-date high and jumped above 10,000 on Oct. 14, and the next day hit another high of 10,062.94. Unless you are short, this is good news for you and for your clients. “Federal” versus “Authentic” Fiduciary Duty October 08, 2009 Both investment advisors and broker/dealer registered representatives routinely give financial and investment advice to clients. What is still different is the rules that protect those investors….