Breaking from Tradition

It probably comes as a surprise to exactly no one that accountants are not the first on line to adopt the C word – “change.”

Whether it’s new strategies or technologies, their idea of venturing out into unchartered waters is substituting a green tie in place of a brown one.

In many cases, “glacial” may be the word that best described the pace of change in the profession.

There are three ways to grow in this business. 1. One client at a time or what is known as “organic growth.” 2. Merge with another CPA firm. 3. Begin a new client service line.

But with the advent of profession-altering trends such as blockchain and robotics promising to revamp the accounting process as we have traditionally known it, there will be significant changes afoot – whether the profession is ready or not.

Like I warn attendees at many of the sessions I present – this is not your father’s accounting firm.

For one, within five years, the audit process will likely be automated, sending the folks who normally perform that Type A work, looking for something else to do.

As a result merger-minded practices are quickly wading into what I call “non-traditional” affiliations to expand their scope of client services.

So instead of merging with other CPA firms, we’re seeing practices scoop up such entities as HR consulting, IT/cyber security firms, financial planning, engineering and marketing concerns as well as payroll outlets.

Years ago, a statistic came out that compared the percentage of client loyalty versus the number of services a firm offered. Not surprisingly, the percentage of loyalty increased exponentially the more services a client had access to.

For example, one of our clients who performed a great deal of cost segregation work recently acquired an engineering firm. And another who had a large number of high net worth individuals, merged in a platinum-level financial planning concern.

Obviously much like a merger of CPA firms, the combination has to make sense. A firm that has a large quantity of $300 1040s would probably not make an ideal merger partner for a financial planning firm. Ditto for a firm that has not made the transition to paperless, acquiring an IT consulting practice.

If there’s one thing I’ve learned in the 17 years I have been involved with the profession is that the only constant is change. And the firms that are reluctant to embrace are likely create real estate and client opportunities for those who do.