Trump's Wall Street Plan Puts 'Mom and Pop' Investors at Risk, Advocates Warn
On a summer day in 2018, Cathy Shubert, then 58, drove to the Jacksonville, Florida office of investment adviser Mario Payne at Raymond James. Unhappy with her bank job, she sought advice about retiring. "He said what I was retiring with would carry me and everything would be wonderful," she recalled. After leaving her job, Shubert handed over more than $250,000 in retirement savings to Payne, who invested it in structured notes, leveraged ETFs, and other risky products typically reserved for wealthy, sophisticated investors.
By 2024, her attorney said many of these investments had tanked, wiping out more than half her money. "I feel like I'm in a financial prison," said another investor, Kathleen McCauley, 69, who lost substantial savings after trusting a financial adviser with her retirement funds. These stories highlight what advocates describe as perilous times for small investors.
The Push for Alternative Investments
Wall Street firms are eyeing the $48 trillion in US retirement accounts, seeking to sell more high-risk "alternative investments" to everyday Americans. Retirement accounts are "a pot of gold that all sorts of industry players want to get their hands on," said Barbara Roper, former senior adviser at the US Securities and Exchange Commission (SEC).
In August, Donald Trump issued an executive order titled "Democratizing Access to Alternative Assets for 401(k) Investors," promising to make it easier for Americans to include cutting-edge investments in retirement accounts. The order touts "the potential growth and diversification opportunities" of alternative assets. Americans had $13.9 trillion in 401(k)s and other employer-based plans at the end of September 2025.
Three months later, Trump commuted the prison sentence of former GPB Capital Holdings CEO David Gentile, convicted in 2024 for his role in a $1.6 billion fraud that harmed thousands of teachers, nurses, and less experienced investors. "It's a signal that it is not a priority to protect your mom and pop investors," said Adam Gana, a lawyer representing clients who lost money in GPB deals.
Risks and Realities for Small Investors
Alternative investments—often called "alts"—include private placements, promissory notes, structured products, and cryptocurrencies. These products receive less regulatory scrutiny and lack the disclosure requirements of traditional stocks and bonds. The complexity makes it nearly impossible for small investors to understand what they're buying.
Michael Bixby, a Florida securities lawyer representing Shubert and over 100 others, said none of his clients understood the investments they purchased. "On the structured products, I can barely understand it," he admitted. When asked about investor losses, Mario Payne hung up on a reporter. Regulatory records show he remains licensed with the SEC.
Lawsuits allege Payne misled investors by calling high-risk investments "safe" and "guaranteed." Raymond James, where Payne previously worked, has asked for dismissal, arguing the plaintiffs failed to file suits timely and many became clients after Payne left the firm. Spokespeople for Raymond James did not respond to requests for comment.
High Fees and Hidden Dangers
Along with risks of losses and fraud, alternative assets often carry high fees that eat into returns. Studies by economist Craig McCann show that upfront fees in private offerings reduce returns and create "perverse incentives and conflicts of interest." For example, private real estate investment trusts (REITs) averaged 6.3% annual returns, compared to 11.6% for publicly traded REITs, with more than half the underperformance due to fees pocketed by salespeople.
In one case, a Massachusetts investor lost $125,000 of $132,000 invested in a private real estate offering, while the broker made a 6% commission. The brokerage firm Concorde Investment Services said offering documents "clearly disclosed" substantial risks, citing market disruptions from the Covid-19 pandemic.
Investor Vulnerabilities and Deregulation
The push to sell riskier products comes as 92% of US retirees fear inflation is eroding their assets, according to a Schroders survey. "These concerns can leave small investors vulnerable to come-ons for products that promise high yields and protection from inflation," experts warn.
At the SEC, chairman Paul Atkins said he was "delighted" by Trump's order to increase small investor access to alternative assets. Yet a 2025 Financial Industry Regulatory Authority (Finra) study found the public lacks basic financial knowledge—when asked if they would invest in a product promising a "guaranteed, risk-free 25% annual return," half said yes.
Protections for investors have weakened over decades. Regulation D in 1982 expanded private securities sales, designating investors with $1 million net worth or $200,000 annual income as "accredited investors"—a standard critics say is fictional. "Most accredited investors lack the market power to demand access to information and lack the financial sophistication to value those securities," Roper said.
Broader Implications and Future Projections
In December, the House passed the Invest Act, which would reduce regulations and make alternative investments more available to the public. The Deloitte Center for Financial Services projects retail investors' allocations to private investments will grow from $80 billion to $2.4 trillion by 2030.
Investor advocates worry smaller investors will face more downsides. "If you have a really good investment opportunity, you are probably not going to try to sell to every random truck driver," said Benjamin Edwards, a corporate governance expert. "So firms offering these to retail investors probably can't find anyone else to buy it."
Seeking justice is also challenging. Financial firms require customers to agree to arbitration, where hearings are private and documents not public. Nicholas Guiliano, a lawyer representing investors, said it is "exceedingly difficult" to find lawyers for small cases. Meanwhile, Wall Street's lobbying group has pressed Finra to make arbitration less investor-friendly.
With the SEC now having a 3-0 Republican lineup after the departure of Democrat Caroline Crenshaw, critics warn of a "one-party echo chamber." In her last speech, Crenshaw said the regulatory environment resembles "the period prior to the stock market crash in 1929," predicting that opening private markets to mom and pop investors "will come back to bite regulators—but not before Main Street Americans' savings have been looted."
