Relevancy – A Top CPA Industry Issue? You Tell Me
Marc Rosenberg, CPA
Accounting Today, expertly edited by Dan Hood, has published its Top 100 List of Most Influential People in the profession for many years. This year, they made available Top 100 responses to the question: “What is the most important issue facing the public accounting industry?”
I was stunned that a major new issue has emerged that I’ve never heard seriously discussed before. At least 20 listed “relevancy” as the most important issue. In summarizing the ‘relevancy’ responders below, I’ve never seen the issue articulated this well, with a common theme.
Is relevancy truly a genuine threat to our profession, say, in the next 10 years or so? Am I a relic who fails to see the forest through the trees, unable to fully appreciate relevancy as an emerging, omnipresent threat to our profession? Or are these 20 people so desperate to find something new to talk about (maybe it’s boring to talk about staff shortage, Baby Boomers retiring, succession planning and merger mania every year) that they felt compelled to give AT some cool sound-bites?
What do you think? Please tell me by responding to this post.
The AT-100 Discuss Relevancy
Relevancy is inhibiting the best and the brightest from joining the profession. You can’t attract Millennials who use Uber and Airbnb to a profession stuck in an industrial-era business model that makes people account for every six minutes of their day. (Ron Baker)
CPAs need a broader role, with more specialization, consulting and continuous learning and competency development. (Gary Bolinger, President of Indiana CPA Society)
The profession is being disrupted on many fronts: talent, technology and increased regulation. CPAs must re-invent themselves and their services to meet the wants of the market. (Gary Boomer)
Our profession is threatened by an outdated business model. The Cloud, video conferencing, portals, mobility and social media enable CPAs to deliver work to far-flung clients efficiently and with the personal touch. The geographic borders in our minds need to come off. The business model is shifting from an individual book of business, tactical generalist, boots-on-the-ground approach to a leader-driven, strategic, specialist and digital future. (Gale Crosley)
Technology is moving so fast that all the bean-counting that has been the heart and soul of the industry is disappearing fast. Writing checks, invoicing, collecting money, depositing checks and even financial statements, can all be done digitally instead of the old school ways. (Chris Frederiksen)
It will not be long before automation will be able to handle most of the role of current CPAs. What computers can’t handle, offshoring will. It won’t be long before there are more people in India with more knowledge of the U.S. Tax Code than there are CPAs in the U.S. (Ed Kless, Sage)
We continue to struggle hiring and retaining the required numbers of staff, many of whom have a negative impression about a career in public accounting. (Rita Keller)
Many of the profession’s best and brightest see little or no future in the traditional public accounting industry, seen by young people as increasingly irrelevant. The number of newly-minted people entering public accounting is trending to an all-time low. (Rick Telberg)
In our increasingly digital, instant-information world, how can a profession comprised of predominantly compliance-oriented, historically minded traditionalists compete? Why would young, smart, tech-savvy professionals want to work in a profession still so married to “the way it was?” CPAs must embrace new-school practices to add real value beyond reporting and filing. (Jennifer Wilson)
Final thought: Can you say “cognitor?”
12 Comments
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Absolutely, relevance is major threat to the profession. The AICPA’s Horizons 2025 survey of CPAs details these concerns. Compliance is not enough, especially in an industry that largely doesn’t understand how to articulate value. I think firms need to do a much better job going deep with specialization. They must demonstrate and prove it,…and not just say that they specialize. Also, consulting in areas outside of accounting is critical to clients who expect that their primary advisor offer integrated service offerings beyond accounting/tax compliance. Lastly, business models of firms need to be transformed to a model that recognizes knowledge-workers, value, certainty in pricing, technology, mobility and value.
Nonsense. We are more relevant than ever. Our clients need us for planning and advice. Compliance is secondary!
For a different slant on Relevancy, look at it from the clients point of view (The Most important one).
As a CPA PD consultant I have been preaching and teaching relevance for 25 years. Granted, my clients work for the most part with owner operated business, not public companies so my approach isn’t right for every firm.
I’ve come to understand that the two “lowest common denominators” for every business owner are 1. The Quality of Life they aspire to and 2. The income to sustain it.
I demand my clients and staff become conversant in how their relationship and services are RELEVANT TO THE CLIENT’S QUALITY OF LIFE AND INCOME! If you think the clients are capable of making that connection you need a reality check.
Try asking a senior doing a bank rec how “their work” is RELEVANT to their client’s quality of life and income. Talk about a deer in the headlights stare! If you force them to figure out an answer you’re on your way to creating a client centric culture, differentiation in the marketplace and a Uniqe Value Proposition which actually has some meaning. I believe RELEVANCE is the key o controlled, profitable growth.
If we and our possible recruits believe all we do is record and process, we are already irrelevant. On the other hand, if we actually critique and evaluate business methods and records we will be right on target for the most valuable professionals.
This concept actually came up at an accounting and auditing conference yesterday. Continuous auditing, data analytics, technology, etc. is the way to create interest in today’s accounting students- the accounting world is changing and the new folks will lead the way. There is a sea change that will occur over the next 10 years or so.
Relevancy is a threat to every industry and the accounting profession is no different. We all know ‘if you aren’t growing you are dying’. Growth isn’t just about top line or bottom line revenue. Its about being able to embrace new ways of doing things and expanded mindsets. Yes, succession planning is an issue as are staff shortages and that is part of what is driving merger mania. However, the firms that are solving those problems are addressing relevancy. They are embracing new ways of doing things, new business models and attracting and retaining the right people and making partnership look attractive to the next generation. Kudos to those T100 that addressed it as a threat.
We as a profession have been desperately seeking relevancy for many years but so do all businesses and industries of maturity. CPAs continue to assume a position to their small and medium sized business clients as Trusted Advisor if not MOST Trusted Advisor. This is important to preserve this position and constantly work in the profession to be worthy of that trust. Technology as we know it can never take the place of Human Relationship. It is not about money, ultimately, it is about people.
Businesses and the people that own them have been shackled with increased compliance requirements and we have been in the forefront in understanding and helping them comply. There has been pretty rapid change in the breadth and complexity of what must be reported and to whom. There is no other group more equipped to assist clients in that endeavor.
Complicating the complexity are reporting requirements that compress the time when businesses must report. Our team members carry a huge burden that is often not understood by our clients. Our industry needs to perform while creating environments for the team to find and use their passions. Our business is not for everyone. Those that do join it must be led and not just used to produce billed hours. While specialization is a logical course for our businesses we cannot lose sight of the importance of defining and delivering the value that our clients seek from us. Those firms that think it is simply about delivering an opinion or tax return WILL be left behind.
What I found most interesting about the T100 survey is that there were 118 responses. But as to relevancy, as a CPA who is responsible for hiring the CPAs who provide services to my Family Office, I would argue that at least 90 % of the revenue the small to mid-size firms generate is from compliance services. And to the paying customer (like me), this type of work has essentially become a price-based commodity. I want proactive planning, and great ideas, and access to a network of well-vetted complimentary resource providers, and income tax planning on an on-going basis, not just in December when it is too late to do anything. In other words, I want a “relationship” with my CPAs. If the profession continues to generate most of its revenue from selling what consumers merely need (compliance services), instead of providing customers with what they really want (all kinds of future-looking services and planning applications), then by definition the answer is “no the profession is no longer relevant.”
Great Post Marc. Relevancy is a word that comes to me a lot now. It is being asked by the thoughtful “elders” of almost all the industries I serve. Is what we offer of use now? Are we important? Do we make a difference? It is because we are digital immigrants and our youngers are digital natives. The age changed. And how we learned to work is not and will not be how the world works. This is very humbling. It creates a vulnerability that people at the zenith of their working lives are not comfortable with. To be open to not only the skills of younger people but their wisdom as well takes real strength. No doubt the accounting industry will reinvent itself. Abilities like thinking clearly through issues, attaching numbers and values to problems and demonstrating the accuracy of things will not become less relevant. But some of us will.
Far from being a topic brought up just because we are desperate, relevancy is a major threat. Capitalism is based on “creative destructions,” and no business is exempt. If you want to see just how disruptive these threats are, in total, check out this book: “The Future of the Professions,” by Richard and Daniel Susskind. Be prepared to be blown away, along with, perhaps, the professions.
I believe that we are more relevant than ever. small business is more focused and niche oriented. our clients are very good at what they do, but not good at what we do and must provide for them. our roles continue to grow and our relevancy continues to grow. Business advice, tax advice, planning, cash flow needs, investment advice, etc., etc., etc. where are we irrelevant???????
Scott – you ask “where are we irrelevant?” I was stunned when I saw 20 of the Top 100 Influential people cite this as a major CPA industry issue. So, I am discussing this issue with nearly everyone I talk to these days. The history of the business world, if not all of life, has shown us that slow, life-altering, cataclysmic changes are almost never seen before it’s too late. Railroads failing to get into the airline and automobile industries because they saw themselves being in the railroad business instead of the transportation business. Ice trucks not getting into refrigeration. Or the famous line from the CEO of DEC saying he couldn’t imagine why people would want a personal computer in their own homes.
It’s hard for me to see how the CPA industry can ever become irrelevant, but perhaps it will become less relevant and we’ll miss out on some big opportunities. One issue that needs to be carefully examined by the CPA profession is the historical model of how CPA firms operate and how flawed it might be. Examples:
• Though some firms truly get into consulting, most under $15M do very little consulting, but that’s what clients want most from their CPAs.
• Partners averaging 1200-1500 charge hours a year. How can they do this and still have time for firm management, mentoring staff and practice development?
• Firms failing to adopt leading edge technology and operate in the dark ages.
• The profession has a horrible time attracting and retaining staff, yet continues to shun outsourcing.
• Tim Christen, MP of Baker Tilly and new Chair of the AICPA asks: “Do we really think public companies will continue to accept audit reports that are 120 days after the period being reported on?”
• For 99% of all staff, it takes 12-20 years to be promoted to partner. Do we really think this helps retain the best and the brightest?
• The typical 8 partner firm operating with little accountability and every partner having staff do bank reconciliations a different way – how can we expect staff to accept this nonsense?
The business graveyard is littered with major companies that went out of business because failed to adapt to change and whose philosophy was “if it ain’t broke, don’t fix it.” CPA firms have had a good, long run. But like all industries, to keep this going, we need to constantly re-invent and re-engineer ourselves. Staying the same is a recipe for disaster.