This is a great question that has no easy answer.
We know investors need the services that are provided by the financial services industry. We also know, compared to Wall Street, investors really are powerless. This does not bode well for meaningful change.
Wall Street executives are protected by influential politicians who pass regulations that protect the executives from prosecution when they defraud investors. Instead of jail time for executives, Wall Street companies are allowed to pay fines without admitting guilt.
Can investors stop these two corrupt entities from working together?
Investors are voters. They can get rid of the politicians that pass regulations that protect Wall Street executives. However, history says this is not likely to happen. Investors believe they are powerless so they accept the consequences of corrupt business practices with barely a peep.
A more practical solution is for investors to stop buying products from major Wall Street firms. They should begin using the services of small, independent Registered Investment Advisory firms that are required to put their financial interests first. These firms do a better job than their Wall Street counterparts for less money.
Investors may not be able to change Washington, but they can stop doing business with Wall Street Robber Barons that have long histories of cheating investors to maximize their own incomes.
If you won’t use the ballot box, then vote with your assets. Move them to investor friendly, independent firms.
This would be a worthy cause for Occupy Wall Street if they can get their act together.