NEW YORK ( TheStreet) - Leveraged ETFs need to mount a new sales effort or they may go the way of the dodo.

In the wake of Edward Jones' decision to stop offering the products, UBS followed with a similar decision, citing its long-term bias and the short-term nature of these products (in nearly all cases, one day).

According to the Wall Street Journal, Wells Fargo ( WFC) is reviewing its policy as well and Ameriprise Financial "told its advisers to stop soliciting the purchase of the products."

It's clear that advisers with a greater fiduciary responsibility are quickly moving to remove these products from their offerings, which FINRA has said are unsuitable for retail investors (although they recently softened their position on the products, saying they are suitable as part of sophisticated strategies monitored by financial professionals).

The SPDR 2009 ETF Mid-Year Review shows that institutional ownership of SPDR S&P 500 ( SPY), SPDR Gold Shares ( GLD) (GLD) and iShares MSCI Emerging Markets ( EEM) was 88 percent, 45 percent and 66 percent, respectively, at the end of June.

Of two ProShares UltraShort funds, 20+ Year Treasury ( TBT) (TBT), S&P 500 (SDS), and Ultra Financials ( UYG), institutional ownership was 24 percent, 11 percent, and 10 percent, respectively.

These numbers may slightly overstate the involvement of retail investors. Several of the leveraged funds have a very high daily turnover-- Direxion Financials Bull 3x ( FAS) traded $36 billion worth of shares but finished June with $1.7 billion in assets. Even if that's the case, it does show that of those investors holding these products over multiple periods--a strategy which FINRA says should be done by professionals--most are retail investors.

The real test for leveraged funds will come from the "do-it-yourself" brokerages, such as E*Trade ( EFTC)(ETFC) and Ameritrade ( AMTD). These firms have less responsibility to their clients because they are not in the position of making recommendations, although they may also decide to step up investor education and/or restrict access in a manner similar to options and other more complex products.

If retail investors are regulated or restricted from these products, the supply of funds for the leveraged segment of the ETF market will be reduced and affect the viability of less frequently traded products.

The current environment is one where fear of litigation and regulation is high following a financial crisis that was precipitated, in part, by complex financial instruments.

Leveraged ETFs run the risk of being painted as the boogeyman by opportunistic regulators or politicians looking to show they are "doing something," and investors may suffer by having markets closed to them by law, or as a byproduct of liquidity reducing regulations.

That financial professionals are using these products is evidence of their value to the marketplace. In many cases, maybe in most, that value does not extend to unsophisticated retail investors.

Brokers are wise to restrict access to clients who cannot make use of options and other more complex financial instruments. As I've argued previously: "It is important to remember that "ETFs" have spent more than a decade establishing themselves as transparent, low-cost products. New, exotic, high-cost ETF strategies are masquerading as approachable funds and could dupe investors."

Educating and protecting those investors is one of the most important things advisers can do for their clients.

Reported by Don Dion in Williamstown, Mass.
At the time of publication, Dion did own any funds mentioned.

Don Dion is the publisher of the Fidelity Independent Adviser family of newsletters, which provides to a broad range of investors his commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With more than 100,000 subscribers in the U.S. and 29 other countries, Fidelity Independent Adviser publishes six monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers.

Dion is also president and founder of Dion Money Management, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Mass., Dion Money Management manages assets for clients in 49 states and 11 countries. Dion is a licensed attorney in Massachusetts and Maine and has more than 25 years' experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management.