The March of the boomers: capturing the business of retiring baby boomers will require the right blend of advice, planning and products.

By the end of 2013, it's estimated that more than half of the 76 million people born in the United States between 1946 and 1963 will be 55 years old or older and will either be considering retirement or already will have retired. These dramatic statistics underscore a long-awaited event: the retirement of the baby boomer generation.

The retiring baby boomers will need to deal with new realities, including longer life spans that create the potential for outliving their sources of income, and increased healthcare and long-term-care expenses. To address their needs and capitalize on the opportunities in this market segment, the life insurance industry must rethink its traditional approaches to the retirement market, and reinvent its tools and products.

Rethinking traditional approaches starts with the realization that the path to profits does not lie solely in focusing on high-net-worth customers. Between the wealthiest boomers and those with modest assets there is a large and complex middle market that offers enormous potential for the industry. These middle-market boomers have accumulated an investable asset base of $200,000 to $1 million that will be combined with Social Security and other sources of income to fund their retirement.

Yet despite this nest egg, these middle-market boomers still have concerns about their financial security in retirement. They need objective analysis and advice that today simply isn't available for those in the middle market. And they need a strategy for establishing a stream of reliable income that will last throughout retirement.

Life insurers have relied on the pure, product-focused sales approach for so long that customers starting to plan their retirement encounter the same product pitches over and over, regardless of their individual circumstances. When the dialogue with the customer is limited to a superficial assessment of only some of the customer's needs and of narrow product solutions, the prospects of developing a long-term personal relationship based on trust are slim.

Some insurers are working to strengthen customer relationships by training and supporting their representatives so they can enhance their dialogue with customers. The transition from salespeople who typically sell only the few products they understand, to advisers who focus on a good-faith assessment of each customer's needs and suitable product choices, will be critical in positioning insurers as trusted advisers to middle-market customers.

Success in the middle market also will require a new generation of non-accumulation, guaranteed-income products. Retirees' need for predictable, reliable, and low-cost products will increase as their basic need for substantial guaranteed income increases in the face of reduced external income sources, inflation and higher health-care costs.

These products also will have to meet higher standards of transparency in terms of how price, cost, performance/ yield, and risk affect ultimate product value. Customers must receive clear explanations of initial and future costs, performance risks, and withdrawal penalties.

To their credit, life insurers have been investing for some time in developing far more sophisticated and multi-featured annuity products, although many of these products (including two-tiered annuities, equity-indexed annuities, and variable annuities) were responses to losing the accumulation game to the mutual fund sector, and were sold and used primarily as accumulation vehicles.

Insurers must leverage their knowledge of the actuarial risks faced in retirement, and find cost-effective ways to mitigate those risks by using existing product designs in different combinations, or creating entirely new ones. Those product designs may or may not look like annuities, but their central purpose should be to effectively mitigate the financial risks faced in retirement. They should also include minimum performance guarantees--provided at a reasonable cost--to provide downside protection.

Along with new insurance guarantees, insurers should provide distribution channels (insurance agents, wholesalers, broker-dealers, banks) with objective value demonstration tools or case studies that can show when and how these new designs improve outcomes, and what the tradeoff is for the improved outcome. Insurers must position themselves as both a source of objective advice and a gateway to multiple retirement income solutions.

With so many financial products available from so many providers, boomers will gravitate toward one or perhaps just a few providers they trust. If insurers take the steps necessary for success in this market, they will be the providers of choice.

Robert W. Stein, a Best's Review columnist, is global vice chairman of Global Financial Services for Ernst & Young. He may be reached at [e-mail].