But the investment services community may be in for a big shock next year when regulators start putting muscle on the new law’s bones.

Not only will we all have to deal with greater documentation, but the SEC is on track to broaden the definition of who in our business has a fiduciary responsibility to customers. It’s a distinction with a huge difference.

Many who thought they were working for the folks who signed their checks—the broker-dealers—will discover they’ve got a new boss known as the client, and quite a bit of explaining and educating to do to meet new, higher standards.

To get a sense of what the future holds, a glance at the table of contents for Title IX of the new act; the one entitled “Investor Protections,” reveals that the SEC will be formulating new rules regarding, among other things, the fiduciary obligations of brokers, dealers and investment advisors; enhanced exams for advisors; financial literacy of investors; conflicts of interest; investor access to information on investment advisors and broker-dealers; and increased enforcement.

Having been in the independent investment advisor arena for three decades, I’m wary of the counter-productive effect of a proliferation of disclosure forms—what the British refer to as “boiler-plate fungus.” More disclosure is hardly helpful if it produces rivers of fine print that clients will be unlikely to read or, if they do, get much value from.

Furthermore, at a recent industry conference to discuss the new rules, University of Texas Professor Robert Prentice reported that many studies show that greater disclosure does not encourage greater ethical behavior among financial professionals. Yet, he said,  “… lawmakers and regulators seem to default to disclosure as the key remedy for even the most dramatic ills of the financial and securities systems.”

One thing seems clear from reading the act: new regulations will require a higher level of expertise among financial services professionals, more objectivity about products, and more transparency about how we do business. That will be a big challenge for the hundreds of thousands of people who have been trained and are compensated for being good at selling products.

For targeted advisors and broker-dealers to be successful going forward, they will need to retool from thinking as marketers to thinking like educators.

Consider a few passages from the fine print of the new law that outline the SEC’s mandate:

• “increase the transparency of expenses and conflicts of interests in transactions involving investment services and products”
• “study the most effective existing private and public efforts to educate investors”
• “study the effectiveness of State and Federal regulations to protect investors and other consumers from individuals who hold themselves out as financial planners through the use of misleading titles, designations, or marketing materials”
• “study the ability of investors and other consumers to understand licensing requirements and standards of care that apply to individuals who hold themselves out as financial planners or as otherwise providing financial planning services”
• “consider … regulations needed to protect investors and other consumers, including but not limited to the need to establish competency standards, practice standards, ethical guidelines, disciplinary authority, and transparency to investors and other consumers”

No matter what new regulations come out of this process, the financial services industry finds itself at a crossroads with a decision to make: do we fight government regulation and then exploit the loopholes as we find them; or do we acknowledge that we’ve collectively done an inadequate job and anticipate regulators by finding common sense ways to help clients understand what we do, how we get paid, and to present investment options objectively?

My choice is the latter and it begins with the premise that investment professionals should be paid for their expertise and advice, not for their ability to close sales. This is an issue that was hotly debated in the U.K. before that nation’s Financial Services Authority, the principal regulatory agency governing investment advice and the sale of investment products, adopted new rules that by 2012 will replace the commission-driven system with upfront fees paid by clients or deducted from their investments.

If this sounds like a radical solution, consider that we financial professionals provide a service almost as intimate and often more life-changing than do doctors. We accept that doctors should be paid for their advice and expertise—we wouldn’t want our medical care to be driven by how much of a commission the surgeon would earn for selling complex bypass surgery versus a simple stent.

It’s unlikely that the SEC is going to come up with anything quite so dramatic as the Brits did, but why shouldn’t we have a system that requires us to disclose the compensation schedule for the products we recommend? If we are truly committed to providing the best advice for clients, why should we be afraid to show them how we earn our keep? It’s a practice I follow in my business because it works: clients are more trusting, they feel more empowered, and they are more loyal as a result.

We’ve come a long way from the pre-1980s days when a broker was a commissioned sales person, and a financial advisor was someone you paid for advice. Today brokers call themselves advisors or planners and it is difficult or impossible for the average investor to tell the difference. That’s likely to change when the SEC gets done writing the new rules and the savvy independent advisor should get busy now—he or she is going to have a lot of explaining to do.