If there’s one thing that investor advocates and investment industry executives can agree on, it’s that regulators must improve their enforcement performance. Even though that’s easier said than done, it can be done — with a combination of institutional ingenuity and effective leadership.

Self-styled champions of the small investor rightly recognize that regulators should be doing more to defend their charges’ interests. After all, the primary purpose of regulation is to correct market failure, and the risk of failure is most pernicious when it involves retail investors who are at a great disadvantage when dealing with secu-rities firms — such investors have much less knowledge, no market power and little ability to pursue legal recourse for themselves.

Much of the industry also sees the value of strong enforcement. Enlightened industry types recognize that weak enforcement undermines investor confidence, which impedes market participation and hampers liquidity. And free market ideologues also often cite the importance of enforcement — claiming that new rules are unnecessary; the rules we have just need to be enforced.

The latter is a rather safe, cynical position to take, knowing that regulators have shown little aptitude for enforcing the rules we already have. Nevertheless, let’s take them at their word and assume that we can all agree that enforcement needs to improve. The dilemma is how to do it.

Throwing money at the problem has not proven successful. Regulators used to complain that they couldn’t afford effective enforcement. Over the past few years, their resources have greatly expanded, yet enforcement remains inadequate.

Rather, the solution is likely to be multi-faceted. Policy-makers need to consider upgrading the tools that regulators and police have to work with. The policy-makers must also tackle some of the structural problems that persist.

Although legislators may be in the best position to bring about the most significant changes, regulators can’t sit around waiting for legislators to act. In the meantime, regulators need to retool their approach, refine their operations and rededicate themselves to excellence in their enforcement departments. They must stop simply talking the talk and start walking the walk.

The payoff from these efforts won’t be evident overnight. But if, at the end of the day, enforcement improves, both the industry and investors will owe regulators a hefty debt of gratitude.