By Reyes Florez.
Headlines highlighting rapid changes in the accounting industry are ubiquitous. The shifts are both obvious and subtle, and for those of us in the industry, it can seem daunting to predict what’s next as even the pace of acceleration is accelerating. Investing time to understand where things are headed is important to a firm’s and professionals’ ability to proactively evolve instead of merely reacting.
The Platform Accounting Group was created to address the changing landscape and now operates 28 (and growing) boutique firms across the United States. My grandfather and father operated small tax firms, and now, with nearly a decade of professional experience in acquiring and operating firms, I have the good fortune of gaining insights from both the ground floor and the macro view as I participate in industry panels, conferences, and meetings with other industry leaders. With my unique perspective, I believe there are four key areas for firms to consider as they keep an eye to the future.
Accounting careers are shifting away from a linear path
The industry is moving towards more merit-based promotions, more career pathways, and greater opportunities. The public accounting talent shortage has been a problem for more than a decade and is being acutely felt top to bottom now. Those who have stayed in the field have long desired greater balance, autonomy, and opportunity. Fortunately for them, the staffing problem is so pervasive that firms now have no choice but to adapt and provide people with what they have long asked for.
The most pressing need in the industry today is a next generation of leadership. With the anticipation that many AICPA members are preparing for retirement, high-performing talent has unprecedented opportunities to rise through the ranks quickly. In the face of the massive leadership turnover, firms need to shed traditional ways of progressing and promoting talent—such as mandatory years of experience requirements and piecemeal delegation of client management—and adopt methods that are more merit-based and opportunistic. To ensure this new leadership can be successful it is critical that firms provide greater systematic support in helping rising professionals develop client management, people management, and strategic thinking capabilities.
This shift also means firms need to “flatten the landscape” and move away from the traditional pyramid-shaped partner models, and instead operate with a broader distribution of information, relationships, expertise, and rewards. They must also broaden their view of where talent can come from. With advancements in technology, particularly AI, today’s professionals can and will come from more diverse backgrounds than ever before and firms will need to place more weight on an individual’s emotional intelligence, strategic thinking, creativeness, and communication capabilities than they do on pure technical capability.
At Platform, we believe in providing opportunity, growth, and flexibility for our people. Not only because industry trends demand it, but also because our model requires that we elevate rising professionals into client and people management positions earlier and more deliberately than the norm. This means investing in support infrastructure, technology, processes, and data to enhance our people’s productivity, capabilities, technical skills, and insights. With this in mind, I believe a career in accounting will be more dynamic and rewarding than ever before.
Adopting the latest technology is no longer optional
Enterprise-grade tools are now widely available to small and mid-sized firms, providing a significant competitive advantage. However, incorporating these new tools into business models requires a proactive approach and major investment. Discovery, vetting, and adoption of new tools demand a significant investment of time, energy, and capital, and full adoption often requires major operational changes and adaptation of human behavior. This all can be a herculean effort. To meet this need firms will have to invest heavily into teams of professionals whose sole focus is operations and strategy, or combine, merge, or sell to firms who have the necessary infrastructure to support the change management required.
At Platform, we have a dedicated and experienced operations team and have spent a decade creating a technological infrastructure that enables our firms to work more strategically, focused, and informed. We continually experiment and invest resources in optimizing the technologies we bring to our firms and have the personnel and financial resources to ensure our firms get and maintain the systems they need.
All client types are seeking a more holistic experience
Clients today seek trusted advisors who can help them navigate more than just tax compliance. According to 2022 research from Intuit Accountants, 83 percent of clients want year-round, holistic advice in addition to filing their annual returns. While large firms have long been able to provide holistic client service, a “full-service” model is very challenging to achieve at a boutique level. However, for boutique firms to stay relevant there is an immediate need to expand their capabilities beyond tax compliance to offering a wider range of services. Building out these additional services is yet another area that requires significant resources.
At Platform, we see the future of professional services even at a boutique level as less siloed and more collaborative. We are building an ecosystem of experts across various services to provide clients with holistic advice and support specifically tailored to Individuals and SMBs. Our professional services arm, Platform Advisors, offers centers of excellence in everything from ERP consulting to wealth advisement, available to all our local firms and clients.
Preserving what’s great about boutique firms amidst consolidation
While Platform has operated in this space since 2016, a significant number of new entrants, equipped with substantial capital, have recently flooded into the industry. While I view this trend as a net positive and a permanent fixture, many of these entrants lack the interest, expertise or understanding to operate a boutique firm. What has consistently made boutique accounting great is the people and the generational relationships local firms have with their clients and community. Thoughtful consolidation can help the industry thrive, but careless consolidation threatens the well-being of clients, firms, and the industry as a whole.
As private equity enters the industry, it’s vital to preserve the power of local firms. Boutique firms should carefully consider their partners, looking for those with experience and a commitment to preserving what makes each firm great. At Platform, we pride ourselves on putting people first, ensuring each of our local firms maintains its culture and autonomy, and taking a long-term view in building an enduring firm. We believe in the power of small firms with a big vision and invest our support and resources into preserving that. We’re also working hard to make sure every component of our business – from culture to the way we use technology to staffing structure and beyond – works together so the sum is greater than its parts. Helping small firms evolve into the future can be complex, but is undeniably powerful when done the right way.
Embracing the future of accounting
While it’s easy to fear the future, I’m excited about what’s to come. With an expanding definition of an accounting career, advancing technology, increased need for connected services, and a shifting landscape of industry participants, it’s an exciting time. We will continue to embrace trends and create the next generation of accounting, always centering on the needs of our people, firms, and clients.
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Reyes Florez is CEO of Platform Accounting Group.
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Tags: Accounting, Technology
