As retirement looms for baby boomers across Canada, their focus needs to shift away from asset allocation and toward product allocation to ensure their portfolios will generate reliable and sustainable income from their savings, says Roy Firth, executive vice president of Manulife Financial Corp.

This is the idea behind an online initiative that Manulife is launching Monday: a “Retirement Solutions Centre” that will let advisors help their clients develop comprehensive investment strategies as they prepare for retirement.

“We’re trying to put together a whole new approach to retirement planning,” said Firth in an interview on Monday.

The Web site provides an overview of the product allocation concept, which was developed by Dr. Moshe Milevsky, a finance professor at the Schulich School of Business at York University and an advisor to Manulife. On Oct. 27, Manulife will launch a retirement income analysis tool in connection with the Web site, which will allow advisors to begin applying the concept to clients.

The tool assesses an individual client’s needs and risk tolerance and breaks down his or her portfolio into three retirement product categories: immediate annuities, guaranteed minimum withdrawal benefits and non-guaranteed income sources, such as mutual funds. The tool helps advisors evaluate a portfolio and project the likelihood that an income stream will be sustainable.

Although asset allocation has traditionally been the focus of investors as they accumulate wealth, their priorities need to change once they begin spending their savings in retirement, Milevsky says.

“How do you make someone more secure with their pot of money as they transition into retirement?” Milevsky asks. “That’s really what this is about.”

He says that rather than simply assessing a portfolio in terms of cash, stocks and bonds, investors should consider factors such as downside protection and income.

In retirement, this steady and sustainable income is more valuable than simply a large nest egg, Milevsky says. This is particularly important as defined-benefit pension plans become increasingly scarce.

Extreme market volatility in recent months has also made clear the need to plan for retirement and incorporate downside protection into a portfolio, which is something the new tool seeks to do. “It highlights the importance of this type of planning,” says Firth.

The Web site provides a comprehensive overview of the product allocation concept, but Milevsky stressed that the methodology is more complex than asset allocation. It is designed to be used by advisors, not by individual investors.

“If there’s anything we want to encourage people to do in an environment like this, it’s not to do it yourself, because of the complexity of it, and to get professional advice for product allocation,” he says.

The tool will help advisors take a more comprehensive view of their clients’ investment needs — a service that is becoming more important for investors approaching retirement and seeking long-term security. It will let advisors manage portfolios with all kinds of products — not just those issued by Manulife.

The new tool is just the beginning of this new product allocation concept, Milevsky says. Manulife is already working to incorporate such portfolio elements as life insurance and debt into the initiative.

“Down the line, it will provide a very comprehensive view of how people should allocate their wealth across products,” Milevsky says.