Prudential Retirement is developing a guaranteed income investment that is designed to assuage investors' fears about turning over large sums of money to insurance companies. Investors have so far been wary of buying into the concept of "annuitization," or guaranteed lifetime income payments, because it requires them to turn over large sums of cash in return for a monthly check.

The issue is an important one as mutual fund companies face the pending retirement of baby boomers, who have fueled decades of growth for retail funds. Now, these same boomers will want to pull out assets and will look for fund companies and others to provide innovative investments. Scott Sleyster, executive v.p. of Prudential Retirement, said his development team is trying to work through behavioral issues such as investors liking lump sums rather than a guaranteed income stream, even if that income will last a lifetime.

Sleyster said Prudential is betting that it can attract investors with guaranteed incomes that are far more than what an investor could draw off of accumulated assets on their own. For instance, with most professionals suggesting a 4% draw down rate, investors would need $1.25 million to generate $50,000 in income. Using an annuity, the investor would only have to save $750,000. Sleyster said he wouldn't reveal details of Pru's strategy. But he did say the new investment ­ which may be introduced later this year ­ would incorporate a balance between giving investors the maximum income with an innovative amount of control of their assets, the issue that appears to turn annuity investors off the most.