No sooner does the mutual fund industry come up with an innovative solution to the retirement income problem than the financial media has to tear it down.

No matter the killjoys. The recent array of guaranteed dividend-paying, pre-laddered, simplified suites of funds from DWS Scudder, Fidelity Investments, Charles Schwab, Russell Investments Vanguard, and the like, including one in SEC registration from John Hancock, mark a bold and refreshing attempt by the mutual fund industry to solve the dual problems of elegantly capturing rollover assets and serving investors' looming longevity and healthcare needs.

But let's take a look at last week's criticisms to fend them and any other spoilsports off. Dow Jones knocks managed-payout funds' regular income payouts and professionally run portfolios by noting that the sustainable payouts are not entirely guaranteed and vary from year to year. The fact that fund companies are pursuing Baby Boomers with new products at all speaks to the fact that they would not even go there if they were not confident in the guarantees, for starters. Second, the companies make it clear that the rates of return vary, depending on market returns and levels of risk assumed.

The offerings also differ on the alternating goals of preserving capital versus maximizing payout, as well as time horizon and rebalancing. To criticize one investment manager's product array because it doesn't offer some of the perks of another firm's doesn't seem like a fair argument.

What does possibly make a sound argument, however, is whether a conservative payout rate in the 4.5% to 5% range is possibly more realistic than the 7% available in one of Vanguard's three versions or the 6% in Schwab's. It also may behoove investors, and become more commonplace at that, to look under the hood at the composition of the managed accounts.

Finally, personal finance writers, websites and broadcast programs are increasingly advising investors to seek personalized, tax-managed choices from financial advisers, rather than to rely on the mutual fund industry, which has prided itself on low-cost aggregate solutions.

Certainly, the industry shouldn't take these knocks on the chin but should persevere with these and other simplified retirement income solutions.

(c) 2008 Money Management Executive and SourceMedia, Inc. All Rights Reserved.

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