Wealth management businesses, which contribute six to 10 per cent of the earnings of the big banks, face a number of costly adjustments to their businesses next year as a series of reforms take effect. Banks looking for a fillip from wealth management to make up for modest loan growth may be disappointed.After years of government talk about reforming both the superannuation system and the financial advice industry, draft legislation is making its way through Parliament. The most important new laws are the Future of Financial Advice and MySuper. In addition, the Australian Prudential Regulation Authority has been given authority to set prudential standards for superannuation funds. APRA is also changing the life insurance industry's capital requirements.The overall impact of the regulatory changes will be to reduce funds' management fees, facilitate low-cost advice, encourage the development of cheaper product and consolidate small inactive superannuation accounts.In a major report on the impact of these changes, titled "Trends in Wealth Management", Citi analyst Nigel Pittaway said wealth managers were likely to have to make considerable adjustments to systems to deal with matters such as adviser opt-in and the banning of volume rebates.Pittaway said: "We expect to see a short-term impact on the productivity of listed advisory groups, as advisers undertake professional development to understand the implications of the new legislation."The changes proposed are likely to lead to lower industry margins. MySuper [a low-cost fund option that all super funds will have to offer] will cause revenue margins to contract about five or six per cent."Wealth managers may see more action taken against advisers by the Australian Securities and Investments Commission because of the enhancement of its licensing and banning powers.On the positive side, Pittaway said the introduction of scaled advice (the ability to offer less comprehensive financial plans where customers request advice on a specific product) might provide a significant growth opportunity, as wealth managers attempt to extend the reach of advice to those who have not previously accessed it.Valuations could rise if legislation is passed to increase the super guarantee contribution from nine to 12 per cent. The rise, to happen over six years, is a "slow, long-term positive" for the sector, Pittaway said. The first step is scheduled for July 2013, when the superannuation guarantee contribution will rise to 9.25 per cent. The increase is linked to the passage of the Mineral Resource Rent Tax legislation.The change in the compulsory contribution levels will increase superannuation inflows by seven to nine per cent a year by the end of the decade. The Government also plans to extend the super guarantee to workers aged over 70; a change that it is estimated will benefit about 33,000 employees. This change will have a marginal impact on the current industry. But, with increased life expectancy and increased workforce participation by older people, the impact could be substantial in future.The introduction of prudential standards for super funds could be a positive for wealth management companies; they are likely to be already complying, whereas smaller industry