As more Americans near retirement age, there has been a fundamental change in the way they approach their financial future. Factors such as the insecurity of Social Security and a shift from defined benefit to defined contribution plans have driven people to take a more active role in planning for their future. To serve that market, insurers need to incorporate predictive analytics–what analyst Cynthia Saccocia calls “active intelligence”–and communicate with their customers through Web sites. Saccocia, research area director for TowerGroup, is author of the report “The Future Retired: Facts, Figures, and Issues for Insurers, Retail Brokers, and Financial Advisors.”

As retirees' disparate buckets of money eventually are combined, insurers need to be positioned with services that allow a do-it-yourself approach to the portfolio that will give companies the ability to capture more financial share than they have today, indicates Saccocia. “It's really preparing these customers for the future and being that trusted advisor where [insurers] can retain that client when [the client] moves from accumulation protection toward that payout phase,” she says.

The industry has done a good job of educating customers on how to save for retirement, Saccocia believes, but insurers now need to help investors understand how to spend what they've saved. “The key thing for institutions is somebody is going to capture the accumulated assets and spend them down with the client effectively,” she says. “If not, [insurance companies] subject themselves to a risk of attrition in assets because [the assets] are rolling out of your institution to somewhere else.”