BOSTON (TheStreet) -- With baby boomers entering the ranks of the retired, there's been a lot of talk about how living longer makes ensuring lifetime income streams crucial.

The push to sell this demographic on one potential tactic -- annuities -- has meant governmental prodding and refocused sales efforts by insurance companies providing the products. It's gone beyond selling to consumers, though.

It's no longer consumers than need convincing of the value of annuities and the lifetime income stream they provide.

Tom Johnson, senior vice president at New York Life, considers himself something of an evangelist for income annuities. He describes them as "personal pension plans." An investor pays a premium to an insurance company and, in turn, gets scheduled payments for as long as they live, longer if they have a plan that includes spousal benefits or a guaranteed payout.

His sales pitch is that, aside from Social Security and pensions, income annuities, properly constructed by a financially secure life insurer, are the only product with a lifetime guarantee. Anything else, from bonds to dividend-paying stocks to CDs, can eventually run out of money.

His efforts these days aren't so much focused on consumers as trying to persuade large-scale financial advisers, brokerages and retirement plan providers to consider annuities along with the traditional mutual funds that have been their stock and trade.

Among his ammunition: a study by Boston-based Financial Research Corp. that compared a traditional retirement portfolio containing only mutual funds with a strategy that adds an income annuity to the mix.

"Across a wide variety of metrics, the portfolios containing a partial allocation to income annuities produced significantly better retirement outcomes for investors," it wrote.

Johnson says the vast majority of retirees tend to roll their savings into an IRA at retirement rather than leaving their savings in their employers' plan. Putting a portion of these assets in an income annuity is perhaps a better strategy, he says. As such, insurance companies are looking to partner with the large distribution and asset management companies they have often competed against, because both could benefit from having a partner in the space.

"I don't have to anymore point out the longevity risk. Usually they've done the math and understand that," Johnson says. "Two or three years ago, if I was sitting with a chief investment officer or vice chairman from a large investment company, they would kind of look at me and say, 'OK, I get this longevity risk, I can manage it through some sort of systematic withdrawal program and I can create some products that do that. I just don't buy this that I need to part with any of my money.' That's how they thought about it."

These days, Johnson says they are more willing to consider giving up an apportion of these assets. He tells them: "I can produce a form of alpha you can't."

"Of course, you say that to a billion-dollar investment firm and they are 'Go ahead, smart guy, show me,'" he says.

That's when Johnson shifts his pitch to risk pooling and mortality credits, the concept of applying principal from those who die early to those who die late. It is a key strategy that enables insurance companies to guarantee higher lifelong payments. There is no such thing as a "synthetic mortality credit," Johnson says, and they are unique to insurance companies.

Although the life insurance industry has a finite capacity, a limit on how many income annuities the entire industry can produce, it is still beneficial for them to expand their market through partnerships.

But what's in it for the other guys?

One consideration is the Dodd-Frank Financial Reform Bill, which adds additional fiduciary responsibilities for advisers and plan sponsors. The importance of lifetime income solutions could mean that a portfolio isn't deemed responsible if it fails to have all reasonable options.

The bigger challenge for insurance companies is making the case that advisers can still benefit even though they are giving up a portion of the assets they might otherwise manage for fee income.

Johnson's counterargument is that the guaranteed cash flow from the annuity stabilizes withdrawals from the remaining mutual fund portfolio. The portfolio grows and can be invested more aggressively, generating additional fee revenue.

There is also a potential benefit that, as investors struggle with the transition from accumulation to lifetime income planning, the advisers with greater portfolio flexibility have a marketable advantage and can attract more business.

"Then they have to put their own math to it, and prove it to themselves," Johnson says, adding that he stresses the "income annuity is going to do the heavy lifting in terms of proving the retirement income, which leaves assets under management basically intact."

Financial Research Corp. does see one particular interest that may have a more difficult time in this new landscape: Because income annuities can serve as a bond replacement in portfolios, bond managers will be left with potentially lower allocations.

"This is likely to lead some bond managers to aggressively partner with insurance companies to develop a new breed of product that combines features of both bond funds and income annuities," it wrote.

Johnson points to Fidelity Investments as a successful model of income annuity integration. It is the second-largest seller of income annuities in the nation, in part because it got into the game early, having owned an insurance company since the 1980s.

"They began to bake those products into their process," Johnson says.

Today, New York Life is one of five carriers working with Fidelity on income annuity products.

-- Written by Joe Mont in Boston.

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