An increasing number of journalists and podcasters want to interview me about my views of the future for accountants. On reflection though I suspect I am sometimes a disappointing interviewee.
This is not due to excess modesty as regards my conversational skills or my ability to explain and justify my predictions. On the contrary, feedback suggests that I regularly provide clear, hype-free and justifiable responses to the questions I am asked. And, as you might expect, I can be quite entertaining too even during podcast interviews.
What I think disappoints the interviewers is the strength of my view as regards how slowly the profession will evolve – as this runs contrary to the hype promoted by software suppliers, app designers and commentators who do not fully understand the accountancy profession. Their views may grab headlines but are rarely rooted in reality.
My views, on the other hand, resonate with the accountants I speak with, both one to one and at conferences and events. My predictions re the future, as evidenced by my blog posts, have also been proven right over the last ten-plus years.
In case you don’t get to read or hear me speak about the future for accountants let me summarise my thinking for you here.
Firstly, it’s important to note that I, of course, agree that the accounting profession is going through (another) period of unprecedented change and that compliance work is evolving.
At some point in the future accountants will focus less on compliance work than has been the case in the past, and there will be fewer jobs for accountants, as we currently think of their roles. I also believe that there will be fewer large firms of accountants in the future. But, and here’s the rub, there will continue to be plenty of work for most accountants I know for many years to come.
The remainder of this blog post explains my thinking. I’d love to know whether you agree.
Another period of ‘unprecedented’ change
Many commentators are (again) suggesting that the move to cloud accounting has reached a tipping point and is now creating a period of unprecedented change for accountants. I’ve tracked similar warnings about cloud accounting back to at least 2009 when I dismissed the warnings as being too loud and too soon. There has been an increasing move into the cloud over the years and accountants have adapted – as they will continue to do.
Another big change ‘now’ is the rise of alleged Artificial Intelligence (AI). Again, I suggest that the real impact of AI is somewhat down the line. And no, I do not see how it can replace the role of sole practitioner accountants – any more than the move to quarterly reporting to HMRC (part of the Making Tax Digital initiative) will decimate accountants’ client bases.
Evolution of compliance work
Back in June 2009 I wrote another post on this blog about the future for compliance services. I was arguing against those commentators who seemed almost contemptuous when talking about accountants who focused on the provision of compliance services. That was over ten years ago and I said they were wrong.
They are still at it. Has anything changed over the last ten years?
Yes. Lots has changed and we are likely to see many more changes over the next few years. Changes in compliance obligations, changes in the work required to help clients fulfil said obligations and changes in the way accountants promote and provide their compliance-led services.
But, none of these changes will come about overnight. No. There will be an extended period of evolution. I’m an advocate for taking the initiative and ensuring that you are able to compete successfully as the changes take hold. But I am also absolutely confident that the real impact of the changes will take closer to ten years rather than two to come into effect.
Fewer jobs for accountants in future
This prediction follows two key changes. The first is the (now) increasing move to cloud accounting, the influx of apps and automated facilities that reduce the need for so many accounting staff in finance departments and in firms of accountants. The second change is the rise of AI which, over time, will only add to this trend. But neither of these changes will reduce the need for savvy sole practitioner accountants. Their activities may need to evolve but, as always, nothing will change their client base overnight.
Fewer large firms of accountants in the future
This seems obvious to me as the costs of running large firms continue to increase without any commensurate rise in productivity or quality of service to their smaller clients. Every decade sees more mid-sized firms merging and claiming this will help clients. Typically though the mergers are driven more by a desire to reduce overhead costs and thus maintain profits per partner.
Clients, on the other hand, are increasingly looking for lower fees and want evidence that they are better served by a larger firm with higher staffing costs than smaller firms. Over time this means that more and more smaller clients are moving to smaller firms of accountants. The exceptions are those who perceive that they are better served by a larger firm with higher fees and staffing costs than smaller firms.
It is now becoming very common to allow staff to work remotely, from home and whilst mobile. This will only increase the desire for them to cut loose from the mother-ship and go it alone or to create a new smaller and local practice.
It is no longer cost prohibitive for smaller firms to start up and to promote themselves aggressively in competition with larger firms, thanks to the internet and low-cost online marketing opportunities.
I have long seen a future where accounting firms are increasingly polarised – a few very large ones and thousands of very small ones. This will better match the demographics of the business world. Although many people glibly talk about SMEs, the official stats reveal that over 99% of UK businesses are small (not medium-sized). And a very large proportion of them are, in fact, micro businesses. How many of these businesses or individual taxpayers need services that cannot be provided by smaller firms of accountants?
A while ago, I decided to focus my advisory and support services on sole practitioner accountants. Yes, I also have plenty to say that is of value to those in larger firms and this is why I am engaged to speak at away days and conferences for larger firms and for international associations. But I love working closely with savvy sole practitioner accountants who are keen to become more successful. And so yes, of course, I see there is a future for them. Their roles and activities will continue to evolve, as they always have done, and I will be there to help them.
I have worked with sole practitioners for many, many years. And I have constantly been debunking the ill-informed nonsense they are fed about the short-term impact of major changes.
When the first Accountex conference took place in November 2012 I was invited to write an editorial for the show guide. In it I set out dozens of ‘major’ changes to the accountancy profession that we had witnessed over the preceding twenty years. Most had been predicted (by others) as likely to have a major impact on accountants. However, in every case accountants adapted. Some retired early but they were replaced by more accountants choosing to start their own practice. Many of these new entrants had been made redundant by the larger firms who were slimming their workforce as a result of mergers (see above). This trend is continuing.
The rise in home working and mobile working is also contributing to a rise in the number of sole practitioners and smaller local firms.
For some years the professional training syllabus has been evolving to ensure that newly qualified accountants have better business skills than ever before. This, I suggest, is fuelling a desire to be one’s own boss, to run one’s own practice and to move away from the politics and cost pressures of working for mid-sized firms.
Those sole practitioners who are resistant to change will become increasingly frustrated. More will retire early (as did their predecessors) rather than adapt and develop their skills. In this connection I often stress the importance of developing your Key Business Skills.
The future for accountants is brighter than many external commentators would have us believe. The profession and work expected of accountants has been evolving for as long as I can remember. This is set to continue – possibly at a faster pace than ever before. BUT, despite all those predictions to the contrary, it will be closer to ten years before most of the changes have a major impact on individual accountancy practices.
Nothing much will happen in two years – unless you want it to and you choose to start doing things differently – to increase your short-term profits and long-term prospects.