During the Great Depression, two separate cereal companies, Post and Kellogg, were competing for the cold cereal market. Both companies had toasted flakes but most consumers were still eating oatmeal because it was hot and at least seemed healthier. As the Depression hit, Post-which eventually became General Foods in 1929-began to cut expenses, laying off workers and cutting advertising and marketing spending. The company focused inward, trying to protect its market share and hold on.

Kellogg, on the other hand, invested heavily in research and development and doubled its marketing resources, heavily promoting its new cereal, Rice Krispies, which debuted in 1929. Kellogg reduced the hours of the manufacturing plant's three shifts and created a fourth, just to keep as many people working as possible. "I'll invest my money in people," company founder Will Keith Kellogg said in 1930. By 1933, Kellogg's profits had risen 30%. Post's profits had risen 18%.

Okay, we know we are not reliving the Great Depression and we also are not cereal manufacturers, but there is certainly something to be learned here. As revenues plummet all around us, business people share a natural tendency to chop costs and hunker down until the storm passes. The danger is that while you and your staff try valiantly to hang on, you are losing out on the enormous marketing opportunities that exist in turbulent economic times. That opportunity is to capture money in motion.

Many clients will be leaving advisors right now who promoted performance, and not only failed to deliver but also hid from their clients as markets collapsed because they had had no idea what to say, or what to do. During bull markets, financial planning's process-based advice is often positioned as old-fashioned and conservative-but ultimately, it works. Today, many investors find that very attractive. As a result, you may benefit from the downturn.

DELEGATING GROWTH

But to capture money in motion, you need staff. That is, you need good staff-people who can not only retain clients, but who can also acquire them. This is a new twist from the past 10 years, a time during which many firms brought on great advisors who focused exclusively on retention. But don't ignore the ability of all advisors to ask for referrals, hold seminars and represent the firm with knowledge, expertise and leadership. That is the core of organic growth.

For years, you may have handed clients over to your employees. But you may never have required your staff to take responsibility for bringing in new business. They have the security of a paycheck each month and may have come to believe that they deserve a bonus every year. They are often rewarded for the firm's production, but that is not necessarily equivalent to their personal production.

With so many changes in the economy and your revenue, now is a great time to connect your marketing efforts with your compensation structure. Both are critical to the success of your firm. Invest in your people-but be sure to do so in a way that ensures that they are rewarded for the behavior you are looking to reinforce. Helping them expand their skills and leverage your marketing efforts should be your top priority.

I believe that the economic events of the past several months have redefined our compensation structure forever, particularly for RIAs. Base salaries are likely to shrink, and bonus structures will become much more complicated so that staff is motivated and rewarded for bringing in new relationships. Client retention, though important, cannot be the primary focus if a firm is looking to grow and stay profitable.

Think about this: The average age of an registered investment advisor today is in the 50s. Even if you decide to be the rainmaker until you drop dead, your firm should demonstrate depth in all areas, including marketing and leadership. Everyone should have to participate at some level.

Like many other firms, you have probably cut staff in order to meet both short-term cash flow and long-term profitability needs. But what you might want to consider is how to keep your remaining people working, while the firm takes less of the cash-flow risk.

CREATE A NEW COMPensation PLAN

You have probably already made some base salary adjustments. If so, freeze your current advisor base salary. Now, build on that base with bonus strategies that encourage the behavior you want.

For example, connecting with the right centers of influence can bring new business to the table, leverage time and maximize marketing results. Encourage your next generation of advisors to meet with these influencers regularly; in fact, reward them for it.