The future of retirement-income solutions just got significantly more cloudy and more challenging.

For the past few years, we've been hearing a great deal about the topic of retirement-income solutions. There has been much publicity in the way of research, discussion and debate on this topic. But those arguments were based on a different world view than the one that we suddenly have today.

Just as the markets recently began a dramatically heightened period of volatility and a nerve-racking downward slide that dominated the financial news for several weeks, nearly 100 executives from across the money management and insurance industries convened in New York in late September for the Managed Money Institute's Retirement Solutions Executive Forum. [The writer chairs the institute's Retirement Solutions Committee.]

Research and insights from McKinsey & Co., Deloitte, TowerGroup, Dover Financial Research and many others were shared. We took an in-depth look at the current retirement-income landscape and tried to look ahead to where the industry is going.

The meeting concluded with a panel of executives—representing money managers, turnkey asset management providers, overlay managers and insurance companies—discussing what they are doing to provide solutions now and in the near future.

There was a number of valuable takeaways from that forum. For starters, there is a clear need and a definite demand on the part of investors and their advisors for help in sorting out how to manage the accumulation and decumulation of assets.

Since that conference, the fear and the need on the part of investors has grown exponentially.

Also, investors are shifting their focus in several, intertwined ways. They are more concerned with preservation and income. For advisors it is important to bear in mind that the income distribution phase is far more complex and challenging to manage and execute than the accumulation phase.

Other changes among investors include a heightened focus on managing risk. This was observed before the markets saw the recent record drops and will become an even more important focus as we go forward.

An additional lesson from this meeting? Fee-based advisory solutions will continue to grow as the platforms on which they are built lend themselves to efficiently and effectively managing accumulation and decumulation of the different products that investors own.

In order to address the marketplace need and the complexity around managing income in retirement; better and easier-to-use products, programs, platforms and software solutions will have to be developed. As a result, the financial services industry is in the process of developing the kinds of retirement-income solutions that the market is now demanding.

A partial list of those innovations would include:

• inventory and assessment tools and processes designed to provide a picture of the client's financial situation, risk tolerance, lifestyle expectations and income needs;
• retirement-income investment products with guarantees or other built-in assurances as well as managed-payout strategies;
• money management platforms that allow for the advisor and client to address risk and tax implications inherent in any individualized retirement-income distribution strategy covering many years; and
• software solutions that will drive complex decision-making to optimally manage income throughout retirement. This will be especially important given the dynamic changes in inflation, the markets, tax laws, regulatory environment, healthcare costs and family circumstances.

While significant progress has already occurred, there is much more on the way—and much of it sooner rather than later.

As an industry, we are in the midst of a seismic shift of being better able to help investors and advisors successfully manage their income in retirement. And while we have seen a few drips coming out of the innovation pipeline of products, programs, processes and software tools, there is a high degree of new thinking, innovating and building going on that will result in not-yet-available solutions to address the complex issues facing investors and advisors. There are several issues that sponsors and broker-dealer firms need to work through, whether they are wirehouses, regionals, independent broker-dealers, turnkey asset management providers, overlay managers or direct firms.

Those issues include a lack of a clear, enterprise-wide, retirement-income solutions strategy; antiquated organizational structures that are based on developing and selling products rather than creating and providing comprehensive retirement solutions; and tight budgets and reduced resources, particularly given recent economic and market events.

I am confident these issues will be worked out. Make no mistake about it, we are moving into a new era in providing solutions to investors. As always, when new eras start, it is the leaders who figure it out. Others will have to scramble to catch up.