Nicol believes it would be a natural step for the veteran defender.
"Jamie is definitely the type of guy who looks as though he has coach written all over him," Nicol told talkSPORT.
"He's somebody who is no nonsense. When something has to be said he'll say it. He's obviously got good tactical knowledge because you can't play that many games, certainly at centre-back, unless you're very astute.
"He definitely has a future at Liverpool, albeit it probably not so much on the field.
"Liverpool would be insane to let him go. Not just because of his character, but also the knowledge that he has."