AS HE APPROACHED

retirement after 31 years at Verizon, Bob Clay found himself sitting pretty, with a hefty 401(k) balance and big plans to build a retirement home with his wife, Barb, on a picturesque slice of property he owns on the Maine shoreline. He also found himself with some unexpected new friends a swarm of financial firms eager to win his rollover money.

After Clay took part in a couple of retirement seminars at the Harrisburg, Pa., office where he worked as an engineer, the offers started pouring in emails, brochures and phone calls from big firms like Merrill Lynch, Morgan Stanley and Legg Mason. Cold calls and letters from brokers and advisers soon followed. And after word got around that senior Verizon employees were getting buyouts, financial advisers from smaller local firms even started staking out his workplace, ambushing staffers on their lunch break to offer free meals in exchange for a sit-down sales pitch. The overtures all differed, but their aim was the same: Each firm hoped Clay would go to it for an IRA after he left Verizon. Clay couldn't help being unnerved. "These guys were like vultures circling my money," he says.

Who says older Americans don't get enough attention? Over the next two decades, the 76 million members of the baby boom generation will step out of the workforce and into a crowd of advisers clamoring to be their next financial guru. There's a reason for the hubbub: Unlike previous generations, these workers will have built up substantial savings in a retirement system based on 401(k)s and other defined-contribution plans. Every year they'll roll about $300 billion out of that system. And much of that money will go into some form of IRA (which, for the record, stands for Individual Retirement Arrangement, not "account"). Research firm FRC estimates that the assets in IRAs will double, to $8 trillion, by 2012.

Clearly, the stakes are enormous. The management-consulting firm McKinsey estimates that every percentage point of rollover-IRA market share a financial-services company captures will mean an extra $10 billion in assets under management which by extension would mean hundreds of millions a year in additional fees. "We call it money on the move, and that's the whole enchilada," says David Mullen Jr., a recently retired Merrill Lynch managing director who now trains financial advisers. "People that specialize in getting them are going to thrive."

To be sure, the 401(k) rollover isn't where all the action is in the retiree land grab. The wealthiest investors are more likely to have fortunes scattered across a range of assets, such as real estate and hedge funds. But they're also likely to have firm relationships already in place with advisers, while "mass affluent" upper-middle-class investors, with more of their assets tied up in 401(k)s, are probably going to face big changes in their financial lives. And while some investors will be much better off, others will be moving their money from a relatively inexpensive investment vehicle a 401(k) plan to an arrangement where they'll pay higher fees and commissions.

In their bid to capture new customers, the industry's motto appears to be "Keep it simple" and for investors, that's a mixed blessing. When offered too many choices, many people freeze up and do nothing but sit on piles of cash, a strategy that could leave them without enough money to live on. Chris Mayer, an executive who bears the informal title of "baby boomer guru" at The Principal Financial Group, notes that in the transition to retirement, many do-it-yourself investors "are more likely to become 'do it for me' investors." With this in mind, many firms are tapping into the success of target-date mutual funds, which automatically change an investor's asset allocation as he nears his retirement date. They're racing to market similar simplified solutions such as "target distribution" funds and annuities that will let investors park their money in a single asset pile and receive income in return. These products look suspiciously like, well, a good old-fashioned pension, except that the investors' own savings are at risk.

Simplicity will be a blessing for many retirees, but others will find that it costs a lot more than sophistication. The irony, of course, is that the more people pay for peace of mind, the more they risk running out of money (and peace of mind) as they age. That's why it's worth taking a closer look at the new IRA marketing wave.

For now that wave is small, but it's likely to swell. Case in point: retirement-income or "target distribution" funds. Six months ago Fidelity was the only player around, but it's since been joined by Charles Schwab, Vanguard, Russell Investment Group and the DWS Scudder unit of Deutsche Bank while many other providers are waiting in the wings. Some observers say that the sudden rush reflects a behind-the-times feel in the industry. "Money is up for grabs because financial-services companies haven't done their jobs," says Ryan Alderman, vice president of the Internet advertising company Avenue A/Razorfish, which has counted Fidelity and Prudential among its clients. "They've focused so much on asset accumulation over the last 20 years, they haven't built the products to handle the transition."

Still, the marketing apparatus is clicking into place. Fidelity launched its Income Replacement funds in the fall, just in time to cater to the American male's love affair with football and the sofa. "You almost can't watch a sporting event without seeing a Fidelity ad," says Tom Modestino, who analyzes the fund industry for the firm Cerulli Associates. Marketing experts have seen a lot of new spending on print, TV and online ads, with an emphasis on how to avoid outliving your savings. One interesting wrinkle: Many ads direct consumers to online calculators and worksheets that can show them how close they are to their retirement goals. Those calculators are free, but they aren't altruistic: They let companies collect contact data for potential customers. When someone visits a firm's web site, Alderman notes, they may download a "cookie" that will send that company data about their surfing habits. And later after they've searched the web for retirement-planning tips for the second time in a month, for example the firm can send them an ad inviting them for a chat.

Financial firms are also getting a more direct path to customers, thanks to the 2006 Pension Protection Act. This law allows employers that sponsor 401(k) plans to make investment guidance available to employees. In practice this usually means that plan providers the financial firms running the 401(k)s on the employer's behalf wind up offering investor education in the workplace. This synergy takes on more significance when you consider how much information the provider has about the employees' savings and income levels. At T. Rowe Price analysts use a tool called the PlanMeter to parse statistical data to a very fine level of detail: They can tell, for example, how well the 55- to 60-year-olds on staff are doing in terms of saving enough to replace their income in retirement. That allows the firm to contact the employer and target an education program for these workers tailoring their pitch directly to their needs and vulnerabilities.

In the next year the contents of that pitch are likely to change significantly, thanks to the runaway success of the target-date, or "life cycle," mutual fund. According to fund-tracking firm Lipper, such funds attracted net inflows of $112 billion in 2007 even as U.S. stock funds as a whole were losing assets. In October the Department of Labor allowed 401(k) plans to use life-cycle funds as their default investment option a move that will only make them more popular, as they absorb the assets of investors too lazy or apprehensive to choose otherwise. Small wonder that the industry's favorite new retirement product, the retirement-income fund, is essentially the mirror image of a target-date fund.These funds also change their allocation based on a final target date the year 2038, say or a minimum payment. Each year they automatically pay out a certain amount of money to the owner. Some, like Fidelity's new funds, liquidate the assets by the time they reach the end date; others, like the Managed Payout funds Vanguard is expected to roll out soon, are designed to have assets left over that can be invested elsewhere or passed on to heirs.

But of course, there are drawbacks. With a retirement income fund, also known as a target-distribution fund, the payout can be difficult to predict from year to year most are structured as a percentage of your assets rather than a fixed dollar amount. That means your yearly payout can rise and fall with the Dow or the Nikkei a scary prospect in the wake of the market's recent volatility. And some are quite expensive. Lipper analyst Tom Roseen notes that these funds will typically cost more than investors would pay if they simply bought the underlying funds. That may not sting too badly if the underlying funds are affordable: The retirement-income funds from Fidelity and Vanguard, for example, currently charge between $50 and $60 per $10,000 invested. But offerings from Schwab and Russell Group cost $84 to $135, respectively, and Scudder's Life Compass Income fund charges almost $190 and this after a hefty front-end sales charge.

If you don't like either a target-date or target-distribution fund, you can always sell it and opt for another investment in your 401(k) or IRA. That's not always true for the other emerging linchpin of the IRA: the annuity. With annuities, investors give a lump sum to a bank or insurance company in return for a lifelong income stream. Annuities have often fallen afoul of consumer groups, and for good reason. Many carry high surrender charges, which means investors pay a penalty if they pull out. And although sales commissions can be phenomenally high reaching 10% not all annuities have to be registered with the government, so it's often hard for a consumer to calculate what they cost. The problem, complains Baltimore financial planner Tim Maurer, is that "the house always wins."

Still, commission-hungry agents and retirees craving a steady income have kept the market booming. Revenue from annuity premiums almost doubled between 1997 and 2006, to nearly $200 billion a year. And the companies that sell annuities are counting on the rollover market to keep that growth going. The Principal Group, which handles 401(k) plans for about 3 million employees, saw its annuity sales rise sharply in 2007; Chief Executive Barry Griswell attributed the growth largely to "our success in converting the 401(k) market." Later this year Principal will introduce a package of retirement transition services called Principal Retirement Navigator; for many investors the firm will recommend a combination of a target-date fund and an annuity.

It's only fair to say, however, that annuities have improved. Many providers have lowered their fees and eliminated surrender charges. The average cost of a variable annuity has held steady at around 2.5% over the past five years, while the costs of extras like inflation-adjusted payments has dropped, according to Morningstar Annuity Research. And so-called immediate annuities, which are relatively simple and inexpensive, are starting to get some traction, says Judith Alexander, sales director at Beacon Research. The industry sold $1.9 billion worth of such annuities in the third quarter of 2007 "just a speck on the hide of an elephant," notes Alexander, but still a 15% jump from a year earlier.

Some employers, most notably IBM, have been offering these simpler annuities to their 401(k) plan members at rates that are discounted even further as low as 1% in some cases. Principal's Mayer says that the difference between such "institutional" pricing and buying an annuity directly can add 7% to the buyer's monthly income the difference between, say, a $3,500 check every month and a $3,250 check. That doesn't sound like much until you think of that $3,000 a year as golf fees or a vacation.

That institutional-pricing advantage which can also take the form of lower management fees on funds in big 401(k) plans looms larger when spread across 30 years of retirement. That's why, for many retirees, the best IRA rollover might be no rollover at all. According to David Wray, president of the Profit Sharing/401k Council of America, 52% of 401(k) plans allow members to convert their assets into distribution plans essentially, into an IRA without having to set up a whole new account. Many companies shy away from the administrative hassles of turning a savings plan into a payout system. But where it's allowed, it's becoming even more popular. Vanguard has been a champ at getting customers to stay: Researchers at Cerulli recently found that in 2005, about 47% of people leaving jobs that had Vanguard plans kept their funds in the 401(k); in 2000 just 29% took that option.

So is this a good idea? Well, it depends: 401(k) plans, especially those at smaller companies, often carry additional administrative fees that are difficult to trace, buried in the fine print of regulator filings. The Government Accountability Office reported in 2006 that these fees added an average of about 18% to the true expenses charged to account holders at smaller companies. The GAO, joined by several congressional leaders, is advocating clearer disclosures of fees, but investors shouldn't hold their collective breath. The industry has lobbied heavily against the disclosure on the grounds that too much information confuses investors.

Confronted with myriad options, Clay, the Verizon retiree, ultimately rolled about half his money into a largely broker-managed IRA, putting the rest in real estate. Clay was impressed with the broker's Web tools, which helped him calculate how different asset allocations might project to future gains. Clay likes the research involved in guiding his own retirement, but he observes, "there'll always be people out there who will tell you they'll get you rich in two weeks." He should know: Some of those cold-calling advisers are still contacting him, more than a year after his retirement.

Additional reporting by Angie C. Marek