Retirement coaches: as Americans fret about their post-career lives, insurers see big opportunities to help.

Key Points

* Insurers are recruiting and educating financial professionals to meet the expected rise in demand for retirement planning.

* The big challenge for all financial-services businesses is to switch from planning for accumulation to retirement income and withdrawals.

* Middle-income Americans must be taught to get serious about building investable assets.

For 13 years, Bill Coutts was a professional baseball player, coach and scout. Today he is a player representative and a financial professional, one of a growing number the insurance industry is cultivating to prepare Americans for life after full-time work.

The South Dakota resident began his financial-services career by helping young ballplayers make good money decisions. Now in his early 30s, he has become a contracted partner with Allstate Financial to help not only ballplayers, but also the clients of Allstate exclusive agents to prepare for retirement.

"I got into the financial-services side of things after doing the others because I saw a need for sound advice and saw an opportunity to help," said Coutts, who has a bachelor's degree in finance and will this year become a certified financial planner and chartered life underwriter. "I like that Allstate is striving to be a total risk-management company, not only protecting their clients' homes and autos, but also now focusing on life insurance, investments and retirement planning. It also doesn't hurt that Allstate is a major sports sponsor."

Coutts is one of a growing army of foot soldiers that Allstate and many other insurers are recruiting for their retirement businesses. They expect that these will become important businesses for them whether they serve middle-income Americans or those with high net worths. And they are pouring resources into product development, specialists such as Coutts, and education and training.

"We go back a long way selling life insurance, but in terms of meeting the needs of retirement or the broader array of financial products--investments and life insurance, protection and preparation--we've really just started that six years ago in selling through our agencies," said Edward Biemer, president of Allstate Financial's retail/broker dealer operation and head of financial distribution. "We're selling over $2 billion in premium deposits now, and we're strongly committed to keep growing this thing because we find that the need is out there, and we're in kind of a nice position to meet that need."

The Lincoln Financial Group, meanwhile, is mass-educating thousands of independent agents through nationwide seminars and is planning to make retirement income its core business.

Allstate already has a relationship with 17 million households, mostly middle-income, through its home and auto business lines. In the six years since Allstate required its 12,000 exclusive property/casualty agents to become independent contractors, more than 7,500 have become licensed to sell financial services, and it has contracted with more than 1,200 experienced financial specialists such as Coutts to help exclusive agents. Each specialist builds relationships with several agents, and Allstate recommends that these specialists spend time in the agents' offices every week, Biemer said. "We do 90% of the choosing and screening of the specialists," he said. "We're looking for someone who has sold these products before and has taken time to listen to customers and develop customized plans, rather than just push products," he said.

Retirement planning is good for Allstate because, as Biemer said, there is little competition. "If we were talking about a market like auto insurance, in which almost everybody who needs it has it, and we only take customers away from other folks, then I'm in an absolute, one-on-one competition," he said. "But retirement is not a zero-sum game. There are a lot of Americans that have not met their retirement needs yet, that aren't working with a financial specialist to help them get there."

High-net-worth households already have full access to financial services. "There you are in one-to-one competition," Biemer said. "We certainly get our share of those, but they are not our target. We work with everybody."

In working with a variety of clients, Coutts has found that many have problems in common; some did not manage their money well, and some squandered it. He said people today worry more about their financial futures, and they've dug themselves into deep debt that they need to eliminate before actually funding their retirements.

The big problem is credit-card debt because it charges high compound interest rates. "Clients may say they want to invest and plan for retirement," Coutts said. "I applaud that, but if I put them into mutual funds, they'll pay a sales load, and they'll consistently have to have one heck of a return to beat what they're paying in credit-card interest. So my first advice is to get rid of the debt and build an emergency fund, and then we'll look et investing."

Another key to sound planning is to start young, a philosophy Coutts stresses particularly with minor league baseball players. "If you don't get the right advice when you're young and in the minor leagues, when you get to the majors, it's too late," he said. "So I train them young, and when they get there, they know what to do?

Lincoln Financial's Seminars

Lincoln Financial, en insurance group that operates in the high-net-worth market, is trying to distinguish itself as the top-of-mind provider of retirement-income services and products. As of December 2005, the company had held seven seminars throughout the country--each attended by hundreds of independent advisers--to help them understand that the retirement needs of baby boomers will be different due to their expected longevity and the decline of defined-benefit pension plans.

"Unique to Lincoln's approach to the retirement-income business is the recognition that we believe it will be our business in the not-too-distant future," said Heather Dzielak, director of the Lincoln Retirement Institute and annuity business-line leader. "The group of executives that has formed to further this strategy is a cross section of our entire company.... The senior leadership team we've brought together is charged with ensuring that retirement income becomes imbedded in every aspect of our business. It's really developing a culture and an appreciation for the recognition that retirement income is going to drive our growth."

Dzielak said Lincoln already has evidence that the approach is driving its growth. Two immediate successes have been:

* I4Life, an income feature that is offered as a rider on variable annuities that provides guaranteed income and flexibility without annuitization. It accounted in 2004 for $408 million in sales: in last year's second quarter, it topped $1 billion in assets. Dzielak added that the feature is driving 10% of all variable-annuity sales at Lincoln and is attracting independent advisers to bring clients with income needs to the company. "This is probably the most obvious example of success that we've seen," she said.

* Greater sales of accumulation and protection products, including variable annuities, variable universal life and the MoneyGuard product that provides long-term-care insurance on a universal life insurance chassis. The focus on retirement income helps Lincoln's independent advisers understand that the work really begins five to 10 years before the client plans to retire, said Dzielak.

The approach and seminars also have driven home the message to advisers that traditional spending rules in retirement need to be rethought if clients are to maintain their standard of living, said Dzielak. The old method of complementing defined-benefit pension plans and Social Security with withdrawal programs and bond portfolios mar no longer work because of the decline in the number of people covered by defined-benefit plans, longer life expectancies and the impact of market volatility. "The early 2000s was the wake-up call that systematic withdrawal programs need to be complemented with other strategies," said Dzielak.

The seminars are intended to be only a beginning. Once they are over, Lincoln quickly dispatches its wholesalers to each distribution channel, including wirehouses, independent planners and banks, to keep the message alive and begin a stream of follow-up educational material.

What's particularly encouraging to Dzielak is that the retirement-income approach is growing not just Lincoln's piece of the pie, but the pie itself. "When you get into the discussion about income, variable annuities emerge as an exclusive provider in managing longevity risk," she said. "That's where I believe the industry is going to regain its growth. We're seeing that with I4Life; a good proportion of advisers had never sold an annuity before."

According to Dzielak, Lincoln's success at the individual level is being recognized by some industry groups, including the American Council of Life Insurers. "They've actually reached out to us to help understand how maybe we can help solve some of these other emerging retirement needs in the mass market," said Dzielak. Already there is some activity to attach a retirement-income solution to defined-contribution plans sponsored by governments and corporations, she said, "and I think the opportunity is only going to get that much bigger."

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Allstate Insurance Group

A.M. Best Company # 00008

Distribution: Exclusive agents, independent financial professionals

Lincoln National Life Insurance Co.

A.M. Best Company # 06664

Distribution: Independent agents, brokers, banks and wirehouses

For ratings and other financial strength information about these companies, visit www.ambest.com.

RELATED ARTICLE: The game changes, an association forms.

Industrywide, the quality of retirement-income planning is not high, because the financial-services industry is still in the asset-accumulation mode of planning, according to Francois Gadenne, president and chief executive officer of Retirement Engineering Inc. and founding chairman of the Retirement Income Industry Association, which formed Nov. 30. "In the accumulation phase, we have great certifications and training programs, and even though it's a new science in terms of investment management, there's a lot there that is well codified and taught in schools and well understood," he said. "However, once you've made the transition to the distribution phase, the game changes. It is no longer so much about asset allocation as much as risk management."

That is because with money regularly being added during accumulation, advisers and clients can correct mistakes. But during retirement, with money being withdrawn, the client is like a hemophiliac. "If I nick you at the beginning, I'll bleed you to death at the end," said Gadenne. "It's very, very risky ... This is one of the reasons we started RIIA. It's to get out of the product silos, to squarely address the issues of income and of advice in a distribution phase by creating training, best practices and new certifications that are industrywide and can help advisers make this shift from being very good at what they do now, which is asset allocation, to becoming very good at what they need to do in the future, which is risk management."

Gadenne expects the changed game will generate new products for the trillions of dollars--and perhaps tens of trillions--likely to be in play. One reason may be that regulators and rating agencies may limit the amount of longevity risk they will allow on insurers' balance sheets. A second reason is that most of today's products are either investment products in which investors shoulder the risk or are insurance products in which buyers receive income guarantees, but insurers keep the assets.

New products are likely to be risk-sharing, said Gadenne, in which investments will provide a little more commitment to the customer, and insurance products will fall short of real guarantees. "You could argue a variable annuity is a little of that, that it starts to slide into risk sharing," he said. "With a VA, you're no longer buying something certain ... So you'll see this blend between best effort and guarantees on the extreme, and with all sorts of interesting recombinations of risk sharing. That's where you'll see an enormous amount of innovation."

Most of that innovation will be devoted to the affluent market, said Gadenne. High-net-worth households can use investment management the way they have for the past century, while the mass market will simply not have enough money to allow the industry to create products that will be profitable, he explained.

Are interesting problem to resolve will be how an industry that earns income based on assets under management will handle a declining AUM environment. "We have some ideas, but those we share with our clients, not the public," Gadenne said.