Not alone in seeing annuities as a fix to the retirement-income conundrum. ING US Financial Services says it's out to help its clients' manage retirement-savings and income-distribution by creating separate wealth-management and insurance platforms. Kathleen Murphy will be CEO of ING US Wealth Management; Catherine Smith will be CEO of ING US Insurance.

"With our scaled presence in the individual retirement-product market and the defined-contribution product market, plus the insurance product market, ING is uniquely positioned to help U.S. consumers create [comprehensive retirement-savings plans] that [integrate] their defined contribution retirement plans at their workplace with their personal investments outside the workplace," says Tom McInerney, chairman and CEO of ING Insurance Americas.

ING says the move comes as baby boomers grow anxious about their savings and post-career income streams against a backdrop of increasing fear -- in no way abated by insurance companies -- about the sustainability of government safety-net programs.

Marrying two worlds

Murphy, previously group president of ING's U.S. Worksite and Institutional Services group, says that the bulk of retirement savings are accumulating in defined-contribution plans but that retail products have greater flexibility to create income streams and downside protection.

"By marrying these two worlds, ING's U.S. Wealth Management business is creating a more holistic approach to helping consumers manage their retirement portfolios," says Murphy. "This evolution in the retirement savings marketplace has resulted in a steady transformation of the role of the financial services company in the twenty-first century and creates the need for this broader approach, which we're calling Wealth Management."

ING provides retirement plans in its 401(k), 403(b) and 457 defined-contribution market segments as well as fixed and variable annuities. It also has a large independent broker-dealer network of almost 9,000 registered representatives.

ING US Wealth Management will focus on long-term retirement savings, retirement income, and comprehensive financial planning. This will include ING's defined-contribution businesses, its rollover and payout business and its retail annuity business.

To assist Murphy, Valerie Brown, previously president of ING Advisors Network, has been named to the newly created role of executive vice president, Annuity and Wealth Management. Actually she'll be doing double duty, working "on an integration strategy that will benefit the full range of ING stakeholders," says Murphy and -- speaking of in-house stakeholders -- helping ING's annuity wholesalers figure out approaches to independent broker-dealers, financial institutions and regional brokerages.

Meanwhile ING US Insurance will focus on risk protection, wealth preservation and risk management. This includes ING's life-insurance, employee-benefits, and group re-insurance businesses.

Smith says the insurance market faces the challenge of persuading generally under-insured Americans of the need to incorporate basic life insurance into their overall financial plan. Fortunately, she adds, insurance products, which have "evolved and expanded beyond just protecting people and their loved ones" from unforeseen events such as accident or untimely death, are more than adequate to this task. "With new designs and increased flexibility, insurance products comprise key elements of sophisticated financial plans."

Smith was president, ING US Retail Financial Services before becoming CEO of ING US Insurance.

ING Financial Services is a subsidiary of the Dutch insurance and banking giant ING Group.

MassMutual's new group

ING isn't the only annuity-product vendor to see opportunities in the retirement market, however. MassMutual Financial has created a retirement-income entity to serve the retail retirement-savings and retirement-income market.

"The tens of millions of consumers nearing retirement are seeking to convert accumulated retirement savings into retirement income, and most want the security that comes from a portion of their retirement income being guaranteed," says Drew Dickey, who will lead the new group, called MassMutual Retirement Income (MMRI). "As employers increasingly turn away from traditional pension plans, which promise guaranteed income benefits, consumers must replace that guaranteed lifetime income individually, either by themselves or by working with a financial advisor."

Prior to his latest appointment, Dickey was president of MassMutual's financial-products division.

MMRI merges MassMutual's annuity and income-management groups "to present a greater resource base for the retirement-income market," the Springfield, Mass.-based company says in a press release. The group will support MassMutual's affiliated advisors as well as investment and distribution companies that "channel longevity and guaranteed income" into retirement-planning models.

MMRI strategy and product coordination head Jerry Golden says that retirement-income solutions present challenges far removed from those surrounding the accumulation of retirement savings -- ones that are "neither intuitive nor like what has come before." He says that some industry experts recommend that consumers allocate between 10% and 30% of their investment portfolios to guaranteed lifetime income in the form of immediate annuities. "Doing this effectively is a new proposition."

Sun Life survey

Meanwhile Sun Life Financial is out with a report (sort of echoing a recent study by Northwestern Mutual) that says baby boomers, once retired, are likely to spend more money very early in their retirement on things like travel and hobbies, and that their retirement plans should provide for appropriately flexible income streams.

"This survey shatters the old rule that people should plan to live on a fixed 70-80% of their pre-retirement income," says Mary Fay, general manager of Sun Life's U.S. annuities division. "Boomers are eager to live life to the fullest, particularly in the early years of their retirement."

To do that though, they need "flexible retirement income plans that give them access to the money they need, when they need it," adds Fay.

With help from Cambridge, Mass.-based Cogent Research, Sun Life polled 1,000 retirees and 1000 non-retirees, all over the age of 50, with at least $250,000 in investable assets.

More than 70% of these respondents said that their retirement-income needs would probably fluctuate widely, and that they would need more money in the first five years of the post-career lives. Previous generations of retirees were more sedate.

About 80% of respondents expected that travel, hobbies and new careers would play a large part in the first five years of their retirement. To fund these activities, the baby boomers plan to tap Social Security, pensions, and employer-sponsored retirement plans.

Around half of those who responded to the survey said they would draw on rental and investment-property income, or look to assets from selling their businesses to fund their retirements. A surprisingly high 86% said they would find other forms of employment to support their lifestyle aspirations.

"Financial advisors are in a unique position to help their boomer clients manage retirement income in a way that is flexible enough to meet retirement lifestyles," says Kevin Hart, president of Sun Life Financial Distributors. "Boomers may need more income early on, but it will be just as important they don't outlive income as their retirement lifestyle evolves." -FWR

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