Katie, a great question. Over the past 40 years I have witnessed the economy inflict terrible wrongs upon people, which affected their hard-earned savings, retirement funds, homes, etc. It is indeed unfortunate for anyone to lose their retirement funds whether it is due to losses in the stock market from inappropriate investments, an employer bankruptcy affecting their pension plan, a lack of health insurance, etc. I note that you did not indicate how your friend's retirement funds were lost. Thus, at this point, I would presume that your friend's retirement funds were most likely invested in the stock markets via their employer's profit sharing plan or in their own individual retirement account. There are cost-effective and legitimate products in which you can invest your funds that provide limited types of insurance. These products ensure that your funds are protected to the extent you receive a portion or all of the monies you have invested. Because these products vary widely and can be very costly to you in terms of hidden fees, I recommend you retain the services of an experienced, independent financial planner who charges an upfront hourly fee and to whom you can address this question to more specifically.
Good luck! Roger Bell