According to a Prince and Associates survey conducted during the height of the financial crisis, four out of five high-net-worth investors were planning to take money away from their financial advisors. Surprised? I'm not.

The odds are stacked against us
Especially if we have money invested with a mutual fund conglomerate we saw advertised on TV. And, as you're about to see, the cumulative damage to your long-term wealth can be devastating.

Today, I'll reveal three reasons why I believe we have been set up to fail. Plus, why I'm convinced the stakes have never been higher, and why the mantra "you can't make money buying and holding stocks anymore" is nonsense.

If you agree that what I say makes sense, I'll offer an alternative you can consider. So let's start with the No. 1 reason most U.S. investors fail ...

1. Thinking inside the box
You probably know the Morningstar-style box -- that nine-box grid that shows whether your mutual fund invests in large-cap, mid-cap, or small-cap stocks. And whether the focus is on growth or value -- or some blend of the two. OK, fine. Except for one thing.

The more that the style box was used to classify fund managers, the more they seemed to be pigeonholing themselves (and us) into an investment style. To see how much this might be costing us, consider the path chosen by renegade investor Peter Lynch at Fidelity Magellan Fund. For 13 years, his investors earned 29.2% per year.

Lynch did it by thinking outside the style box. Sometimes he'd stock up on growth, other times value.

If he were running Magellan today, he'd just as likely buy megacap Wal-Mart (NYSE: WMT) -- because retail analysts are underestimating its global growth potential -- as under-the-radar Chinese small cap China Green Agriculture (NYSE: CGA) -- despite the fact it's barely been trading on the NYSE for a year -- or as Devon Energy (NYSE: DVN), the largest independent producer of oil and natural gas in the U.S., as it rids its portfolio of lower-return international properties. (More on these three companies in just a minute.)

In short, Lynch was a financial mercenary who refused to be hemmed in by some "box." That's how he doubled his Magellan shareholders' money in less than three years, then did it again and again for 13 years. That kind of courage is hard to find today, which brings us to the second reason we've been set up to fail.

2. Following the herd
Why anyone would imagine that "following the herd" could make them money in this market is beyond me. But I can tell you (in six words) why professional money managers do it: Picking stocks is a lonely business.

If you're all about keeping your job, it's safer to buy what others buy. Don't believe me? Guess which companies are found in many of the top five holdings of the most widely held mutual funds.

How about Merck (NYSE: MRK), Google (Nasdaq: GOOG), and Microsoft (Nasdaq: MSFT)?

I know, shocker! What's worse, these companies also rank in the top 25 for market cap of the S&P 500 index. Meaning their growth potential is quite limited, and these funds will basically only mirror the performance of the index, with such large allocations to these popular stocks.

Of course, it's pretty much the same with any "large-cap growth" fund your advisor will get you into. You don't need a financial advisor to tell you that owning the same stocks as everybody else is no way to get ahead. Or that you can never expect to beat the market by owning the market. Right?

Here's proof
What I've just described is called closet indexing. It's rampant on Wall Street, and investors pay billions in "management" fees each year for the favor. Yet of the 7,600 or so who invested money for U.S. investors in 2009, you can expect 78% to 95% to fail to beat the market, according to Yale University's David Swenson.

I knew it was bad, but 78% to 95%? That surprised even me. But I got that figure from John Bogle's latest book, Enough, so I believe it. And at the risk of being labeled a Boglehead, I'll cite him again, because no one speaks more eloquently on the third and most important reason investors fail.

3. Getting killed by costs
I don't just mean the fund management fees we've discussed, but investment turnover, too. Not to mention capital gains taxes and trading commissions.

In his book, Bogle shows how, assuming market returns of 8.5% per year, you can expect these intermediation costs to eat up to 80% of your profits over the course of a 40-year investing career. Again, it sounds unlikely, but Bogle runs the numbers in the book; it's worth checking out.

But here's the point
Whether Bogle's 80% figure is high or low, we can agree: Coupled with the constraints placed on fund managers by the style box, and the understandable temptation to follow the herd, investors have a high hurdle to overcome -- especially if they rely on mutual funds.

Add to that a new, bear-market-inspired belief among certain financial advisors that they can -- and should -- help you time the market, and you can see why I say the stakes have never been higher. I mean, come on. You could argue that these market-timing converts might have come in handy in October 2007.

But we sure didn't need them "rotating" us out of stocks at the bottom, even though it meant racking up transaction costs and missing out on the ensuing huge rally. Of course, that's exactly what happened to many U.S. investors this year. Some may stay out of stocks for years -- and that's a crime.

Now, your solution
Listen: None of this is rocket science. Neither is my solution -- namely, that you start managing some of your own investments and thus avoid the three reasons investors fail. If you're a purist like John Bogle, buy a low-cost index fund and be done with it.

Bogle doesn't believe we can beat the market with individual stocks. But I do. In fact, I've seen it.

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This article was originally published October 8, 2009. It has been updated.

Adam J. Wiederman owns no shares of the companies mentioned above. Google, Microsoft, and Wal-Mart Stores are Motley Fool Inside Value picks. Google is a Motley Fool Rule Breakers selection. China Green Agriculture and Wal-Mart Stores are Motley Fool Global Gains recommendations. Motley Fool Options has recommended a diagonal call position on Microsoft. The Fool owns shares of China Green Agriculture, Devon Energy, Google, Microsoft, and Wal-Mart Stores. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.