Survive funds' change with a money manager

If investors have little chance of success in these markets, what are we supposed to do with the money we need for retirement?

Dear E.P.: The universal problem with most 403(b), 401(k) plans in a volatile market is that they own mutual funds that, like the big box stores, are mass-produced assembly-line concepts designed for volume investing rather than an individual's risk tolerances, goals or specific needs.

Mutual funds are an inflexible investment medium; they almost always fully remain invested, decisions are made by committees, their stock selections are restricted by the prospectus and if you're worried about how your fund is doing, you can't ask the fund manager for buy, sell, or hold advice. Basically, you're on your own.

If you own a tech fund, and tech issues are out of favor, what can you do or from whom do you seek advice? And from whom will you seek advice if sector investments like your value funds, utility funds, high-yield funds, foreign funds, or single country funds are out of favor?

So, depending on your age and stage, you're stuck below water, and many investors may not have enough air remaining in their tanks. Now, is this a sensible way to invest for your future, which is one of the most important stages of your life?

Mutual funds do well in a rising market because as you know, a rising tide lifts all boats. But in a flat, falling or volatile market, your investments can be exposed to enormous risks. Mutual funds, mindful of Voltaire's quote from more than 300 years ago about "the masses” — sadly, for investors — designed their business models accordingly.