Are you ready?
For those of us in the accounting profession, life is fairly good right now. Growth trends are on an upswing with accounting market employment up more than 4% in 2015 versus 2014 and steady firm revenue growth since 2011, with top 100 firms up 9.3% in 2015! The recession has long faded from the rearview mirror, replaced with confidence again on the road ahead. While some may take these indicators as reason to sit back and relax, I would caution against those sentiments.
Disruptive trends are everywhere. Consider Uber, who has been frantically adding drivers to keep up with intense demand since its official launch not even five years ago. Uber’s ascent is being challenged by Lyft who announced it is partnering with General Motors to create a network of self-driving cars that will pick up and drop off passengers at the touch of a button. And they’re not the only ones eyeing the self-driving opportunity. Google® and Tesla have been working on driverless cars for some time. For Uber, it isn’t if driverless cars will be developed, it’s when. And the ramifications for Uber are enormous.
And in early March, the unthinkable happened; Google’s DeepMind AlphaGo computer defeated South Korean Go master Lee Se-dol, one of the world’s top players in a round of Go, which is believed to be the most complex board game ever created. Computer scientists felt that we were years away from mastering Go with artificial intelligence. I guess they were wrong.
So, how does this relate to the accounting profession? First off, we must understand we are not immune from disruption. No industry or profession is. As proof, consider these statistics from the 2015 International Business Council (IBC) Future of Jobs Executive Summary:
- 47% of all existing occupations are at risk of becoming redundant.
- Over the next decade, millions of new jobs will be created that don’t yet exist.
- By 2020, it is estimated there will be a global surplus of 90 million low-skilled workers, and a shortfall of 85 million high-skilled workers.
- More than 500 million new jobs will need to be created by 2020 to absorb those currently unemployed and provide opportunities for the youth entering the workforce.
If that’s not enough to capture your attention, consider this statement: Only half the skills employees use today will be needed in 2020. 2020? That’s four years from now.
So, just because things are good, it’s important we do not let complacency set in. As accountants, we must make sure that a rebound from the recession and growth driven by mergers and acquisitions within the profession doesn’t fool us into thinking the accounting services vertical is in better shape than it is – or let it mask some dramatic changes in customer behavior.
How accounting firms can stay ahead of the curve
Today, clients are looking for value beyond compliance services. They need tax preparation, accounting and payroll services, but they want a trusted advisor who is going to help them run a better business, improve their personal financial situation or assess the risks involved with making a change. Firms today must cater to both client needs and wants, or risk seeing their services become commoditized.
From a demographic perspective, we know that millennials are outpacing baby boomers as the largest percentage of the population and are now the largest generation in the workforce. And the new clients for whom your firm will compete are far more digitally sophisticated. They grew up with technology, so they expect to be served differently. They don’t have the patience to work with professionals who – in their minds – operate with outdated processes and a traditional accountant mind-set.
“A younger person is going to want to interact with the firm over the Web,” says Dale Jacobson, CPA, PLLC, whose firm is based in Austin, Texas. “They need to be able to communicate with you by text or email, or send it through the portal. And they’re coming and asking for technology-based solutions faster than the generations before, especially the younger entrepreneurs and small business owners.”
Jacobson is spot-on and has identified some of the more fundamental expectations of this new generation of client. They are used to banking, managing their investments and working with their service providers online. Anytime. Anywhere. Any device. Even doctors and dentists are deploying portals. A service business without options for customers to connect with them online is one that has long let the world pass it by.
Firms also need to serve their clients with a mind- set toward optimizing client experience. That’s part technology, part relationship, and part offering true solutions – not just after-the-fact reporting and compliance work.
In my years of experience, I’ve learned that clients initially come to their accountant with a simple request, like “file my tax return” or “handle my payroll.” However, they really want much more. “File my tax return” often means “help me with tax strategy” and “handle my payroll” often equates to “I’m interested in outsourcing my payroll and HR functions.” The question is, does your firm have the ability to capitalize on these opportunities?
It can, if you move to an advisory-based model that focuses on providing a consultative approach to serving clients. It’s a choice that will pave the way for your firm to offer new services that are highly valued by clients leading to higher revenues, improved profitability and higher client satisfaction. The reality is that many accountants are overloaded with tedious work and have lost the spark that once drew them into accounting. After all, most of us did not enter the profession for our love of cranking out tax returns and building financial statements. The true value of moving to an advisory-based model is that it will not only allow you to better serve your clients, but it will reignite your passion and enable you to do what you started out in this profession to do – help others.
In the end, the firms that will withstand disruptive trends must be in synch with changes in technology and elevate themselves to be connected advisors rather than after-the-fact reporters of financial or tax information. They also need to realize that accounting and reporting are only part of a good client relationship. Today’s clients expect them to bring new ideas, proactive thinking and a higher level of customer service. This means redefining what they do, how they do it and whom they serve.
“I see the accounting profession quickly moving to advisory-based services. Clients are looking for one- stop shopping, for holistic financial and business consulting and compliance work,” says Jacobson. “Essentially, we’re moving to making the tax return a by-product of everything else we’re doing rather than the tax return being all we do. That’s a big difference.”