As 2012 comes to a close, it’s time to make predictions for next year. With no election, I at first thought it might be difficult to come up with predictions, but as I began to write down some ideas, I found that there is indeed a lot going on worthy of discussion. Unfortunately, I am anticipating a difficult 2013, in large part driven by political uncertainty here and abroad. Here goes:

10 – Regardless of how the current fiscal cliff negotiations end (I am thinking there will be a small deal to get us through either just before or just after Dec. 31), no grand bargain will take place next year – on either tax reform or entitlement reform. Obama’s continued campaigning to rally public support for his ideas has ensured that Republicans will do almost anything to block him next year. Not saying that this behavior is right – it’s just inevitable.

9 – The one area where we will see major legislation is immigration reform. The Republicans desperately need an image boost here, and so this is the one exception where the two parties will work together to pass something. (Given the events in Newtown next week, there will be some movement on gun control, perhaps a ban on assault weapons, but more far-reaching gun control will be hard to attain.)

8 – The Euro crisis will deepen once again after a relatively quiet 2012. Italian elections could become a farce, and Greece, Spain and Portugal remain trouble spots. I don’t see any exits from the Euro in 2013, but I do expect more dissent from the populaces of the Northern European countries.

7 – By the end of 2013 Hillary Clinton will strongly signal (if not outright declare) her intention to run for President in 2016.

6 – Merkel will win re-election in Germany, but her victory will be very small and her party will be weakened as German voters show their displeasure over the continued drain the Euro crisis is having on the country.

5 – The stock market will be down for the year, perhaps by 10%. I think January is going to be a very tough month as realty sets in that the country’s finances are in real trouble. Even if the fiscal cliff is partially solved, it will hit home that tax rates are going to go up (in part because of some of the provisions of Obamacare going into effect) and people will realize that the recovery is not as strong as believed. Encouraging employment numbers will reverse, and the reality will set in that the numbers have been skewed by more people leaving the work force – which is not a positive sign.

4 – The US economy will not go into a major  recession, though it may come close and may even technically experience a minor recession. As stated above, I see growth slowing. I also see declines in consumer sentiment and business confidence, but I don’t think the slowdown will be enough to push us into a major downdraft.

Specifically for financial services:

3 – I do see a major deal being announced among the major wirehouses – Bank of America Merrill Lynch, UBS, Morgan Stanley and Wells Fargo. I’m not sure what it’s going to look like – perhaps a bank selling off its wealth management division – but something major is going to take place.

2 – I see continued consolidation in the asset management arena, with a number of major deals being announced. Firms will continue to find it hard to go it alone, and will benefit from the operational synergies of combining forces.

1 – RIAs will continue to make news by taking advisors from the wirehouses, but I think the wirehouses will hold their own and have a pretty decent year. The negative news about the brokerage arms of these institutions will continue to abate.

Those are my top ten – but as I am doing them – I realize that I have to add two more:

11 – While I don’t see major changes to Dodd/Frank, I do think the banks are going to be beat-up on by Elizabeth Warren in her new role on the Senate Banking Committee. Bashing banks seems to be in vogue, and perhaps if my other predictions of other major legislation getting bogged down come true, the Democrats might use the banks as their way to show how tough they are.

12 – Alabama will win the BCS Championship and the 49ers the Super Bowl. You can’t have predictions without sports, now can you?

As we approach the new year, according to at least one poll, advisors and their clients aren’t on the same page. Clients are  more worried about the outlook for the economy in 2013 than their advisors are, with implication that advisors should put their optimism aside for a minute and concentrate on how they can address their client’s concerns.

First, the poll itself, which was conducted by SEI, a provider of fund processing and investment management outsourcing services. 86% of the 275 advisors polled felt that the economy will be better or the same in 2013 than it was in 2012. However, 73% of these advisors also said that their clients are apprehensive or fearful about the prospects for the year ahead. Less than 1% felt that their clients were optimistic about the year ahead.

Additionally, while 75% of the advisors polled said that they were better off than they were in 2012 as compared to four years ago, only 55% thought that their clients would share that opinion about themselves.  This second point is pretty scary if you think about it. If more advisors think that they are better off than their clients are, what does that say about how they have performed over the time period? If I felt that way about my clients, I would be very worried about losing many of them, wouldn’t you?

Many of these same advisors expressed concern over what is going on with the fiscal cliff and government dysfunction, which is somewhat at odds with their optimism for the economy. In any case, the most important implication for advisors is that regardless of your personal feelings for the outlook for the year ahead, it’s vital that you put these feelings aside and ask yourself  how you can reassure your clients about their concerns.

Hey, it’s great if you are optimistic about the coming year and beyond. But you and your clients will be best served if you can frame this optimism and explain it in such a way that it makes clients feel better and helps them feel more comfortable about their own financial futures. After all, that is what your job is. And only if clients feel better about their own outlook will they remain loyal to you. Remember – it should always be about them, not about you.