It’s one thing to say that insurers and advisors should give more focus to income planning, but the question is how to do it?

A panel discussion, held here during the annual marketing conference of National Association for Variable Annuities, Reston, Va., looked at three strategies for growing retirement income business.

Income annuities. At Fidelity, “we got a commitment from the top…to own this market,” said Farrell Dolan, executive vice president, Fidelity Investments Life Insurance Company, Boston.

Fidelity Investments Life decided to focus on baby boomers who are transitioning into retirement–people age 50 to 60, said Dolan. It does this with an income planning process that incorporates income annuities in the solution.

Originally, there was no “grand plan that brought us into income planning,” Dolan said. The company first tried selling income products the same way it sold accumulation products, he said. Later, it zeroed in on assumed interest rates in income annuities and still later, on “speaking slowly” or in whatever way that people would hear, he quipped.

But in 2001, Dolan said, Fidelity formalized an income planning process that clicked. It centered on a worksheet that had clients break out essential and discretionary expenses and the sources of income that would cover those expenses in retirement. People liked the process, he says, noting that 38% found they had a gap between essential expenses and sources of income. Of that 38%, there were “40% who bought an income annuity,” he said.

What helped move this forward is the company’s top-down commitment to owning the income planning market, Dolan added.

“We’re focusing on thought leadership, not P&Ls,” he said. Also, the company formed an Income Services Group, which makes monthly reports on what is going on. And, it took a “planning and consultation” approach, with modeling and sophistication built in and with services of both generalists and specialists. More recently, the company expanded its income approaches into the 401(k) market.

Annuitization. Genworth Financial has made annuitization the focal point of its retirement income initiatives, said Pamela Schutz, president and CEO of Retirement Income & Investments, Richmond, Va.

What people want in their retirement finances are guarantees, the ability to outperform inflation and a paycheck for life, she explained. So, Genworth developed products to meet those goals. The first was Retirement Answer, an individual income solution that can pay a person money now, money in 10 years and money in 20 years, Schutz said. Recently, Genworth also debuted Clear Course, a similar product for the 401(k) market.

Both products take an innovative approach to annuitization, Schutz noted. But it’s not enough to have an innovative product, she said. “You’ve got to sell it, too.”

Therefore, Genworth also has committed to an education program–to work with consumers, regulators, producers and media “to show the value of annuitization with sound math and compelling stories,” Schutz said. In addition, it has developed targeted distribution for these products, and it is cultivating thought leadership on retirement income, she said.

GMWB for life. Prudential Financial, Newark, N.J., went the other direction. It chose a product-driven path that promotes VAs having the guaranteed minimum withdrawal benefit for life feature, said David Odenath, president-annuities for the company. The approach downplays annuitization.

Here is why: After deciding it wants to “dominate the industry,” Pru studied the income market and found it is bifurcated.

o People who already are retired want flexibility and capital preservation, Odenath said. They want to spend down as little of their assets as they can and not to become a burden to their children. The company decided annuitization would be a “tough sell” in this market, he said.

o Meanwhile, people age 65 and under want to retire on their own terms, don’t plan to rely on Social Security, are motivated to live for today and many will continue to work in retirement, Odenath continued. “They want products with market upside, no downside, guarantees on their savings and growth for life.”

This led Pru to decide to offer an income solution for boomers using VAs with the GMWB for life feature. “Annuitization doesn’t resonate with boomers,” Odenath explained.

With GMWB for life, boomers can start and stop income, surrender the contract, understand their options, and maintain control (“though they do take a haircut” for the feature), he said.

The insurer also decided to offer education and outreach as well as product, via programs for financial professionals, investors, policymakers and the media. In addition, it continues to do research on retirement issues and it conducts retirement symposiums, Odenath said.

Genworth’s Schutz said the starting point for many people entering income planning can be the VA with the GMWB for life feature. Then, the advisor can help clients understand the trade-off they are making between the VA with GMWB for life and a full annuitization. The point is, with the GMWB, the client has greater control, options and liquidity whereas with annuitization, the client has higher annual income, guarantees and peace of mind.

Despite taking different approaches, all three insurers seem to agree that product providers need to listen to the customer and educate the market on income planning.