“Fear-mongering comes from people who are trying to push a product or packaged solution,” contends Richard L. Akins, a financial planner with LPL Financial Services in Portland, Ore.

He was responding to questions about how advisors can discuss retirement income needs with clients–without being accused of fear-mongering. In the past few months, critics of retirement income planning have been hurling such accusations against the retirement industry.

The critics charge that today’s “don’t outlive your income” promotions, now favored by many retirement income professionals and providers, are stoking up groundless fear in consumers.

Even some financial advisors have called the products desk at National Underwriter to complain of this fear-mongering, as they put it. They say many clients actually die with more assets in their accounts than they held when they first retired.

Akins thinks a lot of the charges have to do with the practices, of some advisors, of just selling one-size-fits-all products and solutions rather than counseling clients about their specific needs.

“To do income planning right, you have to do a comprehensive financial plan on each individual,” he says. “And, even if a solution makes economic sense, the person’s risk tolerance may not allow for that, so you need to allow for that too.”

When plans are done correctly, Akins says, “the clients can see where their money is, where it will come from in retirement, the volatility that may be ahead and related factors.” When they see this, they have less fear, and less feeling that the advisor may be leading them astray.

OppenheimerFunds, Inc. has heard rumblings about fear-mongering, too, even from some of its own advisors.

In meetings, some advisors complain there is a conspiracy behind the push for retirement income planning, notes Kathleen Beichert, senior vice president and director of strategic retirement programs at the New York company.

They believe this conspiracy is being led by the financial services industry and the media, she continues, and they’re feeling pushed to change direction.

A survey Oppenheimer conducted supports that perception. When asked who is driving the demand for retirement income solutions, 45% of the financial planners surveyed answered “consumers.” But the remaining 55% collectively said the financial planner community (17%), financial services companies (28%) and the media (10%).

“We didn’t expect that,” Beichert says.

Discussion with planners uncovered that some believe everything they’ve been doing up to now has become irrelevant, that they now have to reinvent themselves, Beichert continues.

Her firm has responded by rolling out an advisor education program addressing those concerns. The approach is that advisors do not need to stop what they are doing, but rather expand on it. The focus is on developing strategies for the current environment, she says, citing the decline in traditional pensions and possible reductions in Social Security benefits as examples.

“Clients today are facing different variables than did previous retirees,” she says. So, “we need to start helping advisors understand that the issues and processes are now different.”

The program has four parts: materials to help advisors help clients envision their own retirement; analytic tools to use with clients for what-if modeling and related processes; a portfolio of products and strategies to help with implementation; and a monitoring component.

Increased advisor understanding leads to increased client understanding–and less fear, Beichert reasons.

Actually, many consumers already understand the need to be and feel protected in retirement, says William Raczko, vice president-global brand at MetLife in the Long Island City, N.Y., office.

MetLife research shows that today more than ever, people know they will be responsible for their own retirement. The finding resonates across the generations, from retirees to younger people, the company indicates. So, “the fear is already there,” Raczko says.

This fear is part of what he calls the “purchase barrier”–i.e., the issues sitting between intent to buy and making the actual purchase. These barriers include lack of understanding, fear of making a bad buy, and difficulty in getting started, he says, adding that the advisor’s role is to reduce this fear.

MetLife’s new ad campaign concerning retirement (called “If”) aims to support that, he indicates. “It addresses the uncertainties and possibilities in life, and also the certainties…It says, you’re not alone, and we’re here to help you.”

Bruce Long, president of Guardian Insurance and Annuity Company, New York, believes “there is no benefit to using scare tactics.”

The fear is in the individual when the person goes through the analysis the rep is doing, he points out.

It’s also there from the person’s own life experience. For instance, in 2002, half of some people’s account value was eliminated due to the stock market downturn, he says. “There is fear there.”

When the customer comes in already terrified of the future, “that’s the person’s own fear,” Long stresses. “The rep didn’t put it there.”

To illustrate, he notes that a lot of baby boomers are not even thinking about moving their money into bonds, even though retirement is approaching. “They’re still in emerging markets, because they need to make up what they’ve lost.”

That’s a fear the regulators don’t understand, Long says. “It’s driven by customers wanting more; reps can’t drive it.”

The rep’s job, he says, is to “try to balance it all out, put it in one box.” That box includes not only investment strategies for today but also lifetime withdrawal strategies, annuitization, and other ways of getting the money out in retirement.

“We want our agents and brokers to lead with the positive,” says Long. “They avoid the fear.” In support of that, the company provides reps with materials that suggest ways to phrase pertinent questions in a non-threatening way.

The industry in general doesn’t need to get the fear facts out, Long concludes. “We need to get out the fact that we have products to accommodate longevity and lifespan.”

One example of how this works comes from Peggy Coppola, vice president-marketing at Guardian. A 67-year-old man had been planning to hedge his securities in order to protect the income stream for his wife after his death, she recalls. Then, the man learned about a way to protect an income stream for her through a spousal rider that Guardian now offers in its variable annuities. The man ended up taking the option, because “the cost of the rider (65 basis points) was cheaper than the hedge, and it’s guaranteed,” Coppola says.

Anna Rappaport, an actuary and principal of Anna Rappaport Consulting, Chicago, Ill., maintains that consumers should feel “somewhat frightened” when engaging in retirement planning.

“But this fear should not get out of balance. Consumers should also be told what they can do about it, to make things better for themselves.”

The Society of Actuaries has been trying to get people to be more focused on the risks related to retirement, she points out, but this has been a “real problem.” Many people don’t do the complex calculations and look at what could happen several years down the road,” she says, citing findings of a recent study, Spending and Investing in Retirement, published by the SOA and LIMRA International.

Some people do plan, Rappaport allows, but they tend to focus on the more immediate and dramatic risks. For instance, they recognize that a homeowner will be wiped out all at once if a fire burns down the house, so they buy fire insurance. But outliving one’s assets due to longevity “happens in pieces,” she says, so it gets less attention.

“The two should be equally frightening, but often they are not,” she says.

Also, people tend to base their ideas on what happens to their parents. “But retirement is going to be a lot different for the coming generations than for their parents,” she says, due to longevity and many other trends.

Discussing this gets tangled up in personal notions. For instance, Rappaport says that considering what may lie ahead for boomers in retirement, “it might be best for couples to plan as a couple and also as if each is going to be the survivor.” However, that’s hard for a lot of people, and many just don’t think about it, she says. “Or, one might think about it and the other might say, ‘let’s enjoy things now while we can.’”

After studying this for a long time, Rappaport has concluded that “people do need to be scared enough to do something about it (their retirement income). If they wait too long, it’s hopeless.”

But she is also against stoking up fear or inundating people with statistics.

Rather, she suggests, “try using case histories and stories as a way to raise the issues that people face. Or use scenarios.

“Then ask, ‘are there issues here that you want to talk about?’”

Though not a financial advisor herself, she says she does help people personally with their retirement questions and she does presentations. In those situations, she always tells stories, because “a story really helps people relate…They start talking about it and then about themselves, what will happen in their situation.”

Here are other suggestions for ways to raise awareness without pot-stirring:

Start the discussion with generalities. Long recommends this. Then move into fact-finding. In the course of conversion, say, “if you plan on retiring, think of (developing) an income stream to replace your earnings.” That can lead to discussion about how products, including annuities, can do this in several different ways, he says.

Present retirement income planning as a precaution. Point out that not everyone dies at the same time, suggests Akins. Then look at the income plan as a way to take precautions, “to be sure your money will last as long as you do.” Perhaps inquire if they have enough assets to pay for their long term care, he adds. “If not, suggest looking for other alternatives.”

Have a dialogue. Discuss longevity, Raczko says, but not in a way that scares people. “Have a dialogue around it, and how it is important to guarantee income for those years.” Don’t just warn the client that “you might outlive your income.” Respect the consumers appreciation of the situation, and build from there, he says.

Ask questions. Make a list of questions to ask that raise the issue and help the person think about it in a rational way, suggests Rappaport.

Make it easy. Present information in easily understandable terms; point out that it is easy to get started on a plan; and in many cases, note that the client has already started (say, by buying life insurance at work); suggests Raczko. Then, move into discussing ways to “fill in the gaps” to create a personal safety net. Also, ask a simple set of questions to help focus on the specific needs, he says.

Suggest resources. Offer names of books and websites that people can consult on their own. “Often, these resources will help take the mystery out of it and show possibilities,” says Rappaport.

Identify the person’s own problem. This is something the packaged solutions on the Internet can’t do, says Akins. The packaged solutions do present information, just as some websites tell how to perform open heart surgery, he notes. But that doesn’t mean consumers will be able to do it themselves. “They need an expert who will focus on their own situation,” he says.

Avoid the fear-and-greed approach. Don’t warn about the dangers in a threatening way, says Akins. For example, don’t say: “If you don’t do this, here is what will happen to you.” That directs fear to the consumer. It is something he has seen product pushers do. Instead, he says, “promote having a comprehensive financial plan throughout life, and note that these plans are not just for rich people.”

Clients need a way to figure out how to live in retirement, says Beichert, noting it can be a challenge for advisors as well as clients.

Developing this can be emotional, she says, especially when clients are hearing messages in the media and even from President Bush, about how benefits once counted on may no longer be there, how longevity is increasing, how health care expenses are rising, etc.

Fear about the changes now going on creates inertia, she says. People can be “paralyzed by fear” and so do nothing to plan for their retirement at all.

She thinks one solution is for advisors to start taking about retirement at earlier ages, while clients are still accumulating

New Oppenheimer research shows that people are already starting to approach advisors for help at earlier ages, Beichert points out. Specifically, it shows that 75% of investors will seek out a retirement advisor the first time, or change advisors, between ages 45 and 55. If advisors don’t reach people at those earlier ages, “they will lose this business,” she says.

As for avoiding fear-mongering, she says: “You reduce the fear by answering the client’s questions, and by replacing client uncertainty with a plan.”

It starts by visualizing the retirement ahead, and translating that into a plan. “If you get past the vocabulary that is frightening, it makes it less intimidating.”