The joke, "My 401(k) is now a 201(k)" has now fully made its rounds through both the consumer and professional circuit. However, it is no laughing matter and completely avoidable, according to Phil Rosensweig, head of equity research for Your 401K Department.

"Some employees are receiving bad advice, while others are receiving no advice at all," Rosensweig said, leveling harsh criticism against the industry. While many investors are gravitating towards bond funds and guaranteed investment contracts, "This is one of the biggest mistakes I currently see in employees’ portfolios."

Active management of 401(k) assets through outside advice is the way to go, Rosensweig said. His firm’s clients netted double-digit returns in 2002, he said, ranging between 13.5% for those with a short-term horizon to 18.54% for those with a long-term horizon.

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