As a tax and accounting professional, no matter your level of involvement with industry conferences, state societies, or trade articles, you can’t help but be inundated with the same messages over and over. Industry thought leaders continue to pontificate on the future of the profession and the need for firms to adapt. It’s likely you’ve heard one or all of the following statements more than once:
- Tax preparation is on its way out, so get ready.
- To remain relevant, firms must adopt advisory services.
- Transactional and compliance services are going the way of automation and artificial intelligence, so shift your revenue sources now.
- The traditional firm is dead.
Will these predictions and warnings come to fruition? And if so, when? The fact is that nobody really knows … even those of us who have long been writing about the slow demise of transactional work, the need to adopt an advisory services model, and the inevitable end of the traditional firm. Grandiose statements like those above have been used so often that they likely have lost some of their shock factor. It’s quite possible that a lot of accounting professionals may no longer even be listening or are simply ready for thought leadership that is more inclusive of those who choose to maintain a little tradition.
Balancing traditional with transformational
The time has come to take a step back from the grandiose and offer a realistic look at what’s happening in the profession now and the changes to come:
- Is tax preparation really going away in the foreseeable future? I don’t think so. Clients will always need someone to process their returns. However, tax preparation will change for many firms at some level. This could mean complete elimination or more of a balance between tax prep and advisory services.
- Are advisory services going to rule the accounting world at some point? Probably not, but they are still important and will require firms to have a strategy to deliver.
- Are transaction/compliance-based services on the chopping block? Again, probably not, but automation will play a big part in streamlining these services.
- Is the traditional firm dead? Certainly not! The traditional firm is busier than ever, and there is no shortage of work in sight. There’s also no reason why firms can’t balance traditional work with high-value advisory services at a level that’s comfortable.
The idea that you will wake up tomorrow and everything that you know to be true about your practice is suddenly gone is a gross overstatement. The traditional accounting firm is alive and thriving based on my conversations with firms from across the country. That said, however, there is still a balance that needs to be recognized. While the traditional firm still has its place, it cannot continue to fully operate as it has for the past 25 years. Technology advancements and client expectations have had a major impact on both the types of services offered and how they are delivered.
Setting incremental goals
Because technology and client demands will continue to push firms to adapt, we know that transformation, at some level, is inevitable. But transformation doesn’t mean changing everything about your firm overnight. Transformation is the result of setting incremental goals over time — goals based on the level of change you choose to take on. When you think of it this way, it’s far less overwhelming.
While the influencers will continue to predict trends and push firms to think differently, most firm leaders simply want straightforward advice on what they should do. At the highest level, the best advice is to set incremental goals as you work to transform your firm (whatever “transform” means to you). It’s a matter of setting your sights on getting just a little bit better every day … not reinventing the wheel.
To give you a little insight, in my own firm, RootAdvisors, we’ve worked to transform our business over the past decade. Today, we still offer tax prep and planning, but have scaled back and automated our tax workflow. This has allowed us to grow our client accounting and payroll business — both strong revenue streams. We’ve also implemented business advisory services, which continue to be the fastest growing segment of the firm. Incremental change -- that’s been the key.
An important thing to note here is that, by definition, the majority of services my firm offers are classified as “traditional.” True transformation was the result of how we executed services at every level of firm operations. To clarify, consider the following examples:
- Work schedule expectations. Traditionally, expectations during tax seasons are that staff work 60-80 hours per week. By balancing our service offerings and automating our tax workflow, staff now work a “normal” 45-50 hours per week.
- Work location expectations. Traditionally, staff was required to be in the office five days a week, and hours clocked was a key indicator of productivity. Today, we support flexible work schedules and focus on output (billings and client satisfaction) over inputs (hours worked).
- Tax planning and preparation. Traditionally, we sent tax organizers to clients, which were 35-pages in length and required ink signatures. We were also too busy to provide proactive advisory services. Today, we consider the client experience first — that is, how can we offer services with little to no friction? We now only send client organizers on request, capture signatures digitally, readily offer high-value tax planning, and value-price tax return prep work.
- Advisory services. Traditionally, client advisory work was offered on request only, was unique to each individual client and billed hourly. Today, we have defined advisory products that allow us to be proactive and repeat advisory services across clients with a set of “off-the-shelf” products. We are also able to value-price these services.
- Client accounting and payroll. Traditionally, we did not have a defined business model around these services. There was no clarity around the products we were selling, the clients we wanted to sell to (select niches), and the way we would deliver services (technologies used). This created inefficiencies and ineffectiveness in delivering services. Today, we have a clear model in place and use the latest cloud-based technologies to collaborate with our ideal clients and deliver services in real time.
Getting to transformation at your own pace
Balancing the traditions of the past with modern technologies and strategies is how firms should continue to evolve. And make no mistake, evolution is inevitable. It’s how you get there that’s unique to your firm. Taking change in small, digestible chunks allows firms to properly plan and roll out new services and practices that are effective and successful.
Too often, as influencers, we can get ahead of ourselves — preaching that the time is now and that failure to adapt leads to demise. While change is indeed rapid in our profession, it’s important to set individual goals in order to achieve (down the road) true transformation. If you are working every day to get a little better … to improve technologies, to refine your business model, to evolve your client base … then you are on the right track. The goal should always be incremental improvement. The end result is transformation.
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