Wall Street doesn't want you

However, no revolution goes on forever. In the past 10 years, this one has lost its energy. After an experiment in offering semicustomized financial planning to the masses, Wall Street seems to have exited the advice business, even cutting back on the number of analysts issuing public prophecies. Instead of major innovations, we're getting line extensions like exchange-traded funds (ETFs) and online money-market accounts. The 401(k) do-it-yourself formula has been replicated in college savings plans, health savings accounts and on and on.

The party's over for the middle class

Today's current debt-market crisis clearly demonstrates that this era of innovation for the middle class is over. The debt crisis will likely see a dismantling of some of that revolution's innovations, such as the financial supermarket that Sandy Weill built at Citigroup. The revolution that, in Joseph Nocera's words, made the middle class part of the money class is history. Wall Street has moved on. (Nocera's 1994 book, "A Piece of the Action: How the Middle Class Joined the Money Class," is by far the best history of this revolution.)

It's not that Wall Street has lost its creative edge. It's just that the energy has been directed at creating products for big institutions and wealthy private traders rather than for middle-class investors and savers. So, during the same period when Wall Street hasn't rolled out much for individuals, we've seen an explosion of new products for packaging, slicing and then redistributing the risk of mortgages, buyouts, credit cards and more.

• Talk back: Do you feel abandoned by Wall Street?

We've seen a proliferation of products for hedging financial assets and commodities. We've seen new offerings in insurance for risk. Wall Street has invented new ways to raise money and new methods of financial magic that can turn risky mortgages into AAA-rated debt.

Individual investors are out of luck

Maybe we should be grateful. Some of those businesses at Wall Street's biggest companies have blown up. Write-offs at Citigroup were at $11.3 billion to $14.3 billion and counting, as of Nov. 6. Projections for industrywide write-offs from the current mess are in the range of $230 billion.

But even the stunning size of these losses is not going to turn Wall Street's attention back to the individual investor or saver. The best minds of Wall Street are going to continue to put their time and effort elsewhere, because Wall Street is still convinced that's where the money is. Investors with a few hundred thousand or even a few million in assets, even if that represents the work of a lifetime, can't expect more than a passing thought from the giants of finance.

That's so profoundly wrong that it makes my hair -- what remains of it -- stand on end. That Wall Street would want to abandon financial innovation for the middle class just as the baby-boom generation hits its peak earning and saving years is beyond comprehension to me. And that it would call quits to a revolution in financial services and products for the middle class just halfway through signifies a profound failure of imagination.

Maybe Wall Street is just too intent on building ephemeral empires such as Citigroup and Bank of America (BAC, news, msgs) to care about these opportunities. But not everyone can be Goldman Sachs, nor should everyone aspire to.

A revolution for you and me?

What could be the next steps in the middle-class financial revolution?

How about a product that adopts the financial-futures market to support the glorious but not immediately lucrative careers of violinists, writers, artists, physicists or wildlife biologists? The product would provide current income for promising careers in exchange for a piece of future income. Think what a 1985 investment -- the year she won the Toronto's International Bach Piano Competition -- in pianist Angela Hewitt might have been worth in 2006 when she was named Gramophone Artist of the Year. Or how about taking just a bit of the energy that went developing the subprime-mortgage market and inventing income-based loans in which the rate of interest fluctuates with the borrower's income? A loan tied to an individual's rising earnings power could be a huge winner for an investor.

Both of these products would address major middle-class problems of how to finance an education and how to level out income over a lifetime so that the young don't starve in a garret and the old in McMansions. (I don't claim either of these ideas are original with me. They both come from Robert Shiller's not-very-obscure 2003 book, "The New Financial Order: Risk in the 21st Century." )

The list of middle-class financial problems awaiting solution is lengthy:

• How do we pay for boomers' retirements without busting the economy?

• How do we compensate workers who wind up permanently unemployable because of the global economy?

• How do we finance decent end-of-life care for the chronically ill?

• How do we finance college and graduate school without loading grads with hundreds of thousands in loans?

Want to brainstorm some solutions? Join me on my Market Talk message board.

I think Wall Street could make a killing inventing and selling products that solved those problems.

Of course, after the subprime-mortgage, collateralized-debt, credit-ratings disaster now in progress, Wall Street does have one additional hurdle to jump with many middle-class investors: Do we have enough trust in any product that these guys invent to put real money into it?

Continued: Updates to Jubak's Picks

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