Retail Investors - More handholding needed?

The current debacle concerning retail investors due to the Lehman's bankruptcy brings to my mind a conversation I overhead in August last year.
Was on the trading floor of a Scandinavian bank back in August 2007 when the credit crisis first reared it's ugly head. Global equities suffered a 15% drop, credit markets froze, the bank's corporate clients started getting jittery and began calling in, presumably taken a larger than expected hit.

Head Trader: What are we gonna do with this xxx (client's name). They have been calling us non-stop.
Chief Trader: What do they expect us to do? Hand hold 'em? They are big boys and markets can go down. They should know the risks they are taking.

Do retail investors need hand-holding or in some cases, a bailout by citing ignorance? Are retail investors really that gullible? If someone gives more money for deposits, shouldn't one ask where the 'catch' is? If something is too good to be true, shouldn't one ask why it is so?

There will always be risks involved when dealing with money. Bonds issued by the Singapore government is good only if the government does not go bankrupt. Fixed deposits placed with a bank is only as good as long as the bank does not go bankrupt. There is always a probability that things will not go the way we expect, which is why we have to be prepared for the worst scenario.