When I write and talk about the future for accountants I debunk the hype (and fake news) that suggests that compliance work is dying. It’s NOT.
However I do believe that within ten years or so, most of the compliance focused work currently done by general practitioners will no longer be required. Your systems and processes and software will almost certainly reduce the need for your involvement (or that of your junior staff); and there will be more direct filing of data with HMRC. Compliance work isn’t dying. It’s changing and the changes you will see over the next few years will dwarf those we have yet experienced.
Most of your current clients will not force you to reduce your fees but some will recognise that you’re doing less work than before. You may take the opportunity to provide more advice, help and assistance than before. And they may value this sufficiently to allow you to keep charging the same fees.
What’s more important than whether compliance work is dying is that there will be fewer new clients around willing to pay the sort of fees you currently charge for recurring compliance work. As your current client base retires, dies or moves on, so you will need to replace them. But your future clients will be looking for something different to your old clients.
Within a few years, possibly sooner, new clients seeking to appoint their first accountant or a new accountant will be looking for LESS help than your old clients. new clients will find it normal to rely on software to do much of what older clients have been paying accountants and bookkeepers to do for them. Thus the help and support new clients require with their compliance obligations will be different and simpler than the help and support you provide to your longer standing clients.
Within ten years or so, most new start-up businesses will be largely reliant on online bookkeeping systems that contain direct filing facilities. Most millennials, who will form a significant proportion of those starting new businesses, will start out as they mean to continue. They won’t have any resistance to using online systems – especially when they find out how much this can reduce the need to pay an accountant to do relatively straightforward (compliance focused) bookkeeping and tax filings.
Those accountants who doubt the validity of this view are often mistakenly assuming that the current generation of software solutions will not advance any further. Of course they will. What we have today is just the beginning.
I doubt there will be a BIG change in the next 12-18m. There will start to be a shift in the next 3 years though. And I think things will be VERY different in 10-12 years time. Precisely when accountants will feel the winds of change depends on where they are now. It will be probably be somewhere between two and ten years from now.
As compliance based work gets simpler and, almost certainly, cheaper, general practitioners will have a choice:
- Ensure you can compete for new clients who want (simpler) compliance focused services. And ensure that your systems and processes will enable you to manage the larger number of clients/relationships than you do currently – in order to generate a similar profit to now (due to the lower profits available per client for compliance work); or
- Develop the skills and competencies necessary to provide valuable advice to clients on financial, tax and/or business related matters; and if your current clients won’t want or pay for such advice, you’ll also need to develop the skills to attract, win and service new clients who will do so.
In my talks and programmes I recommend starting to build those skills now so that you are well prepared by the time you need to rely on them. When that time comes you won’t just be competing with better prepared and trained accountants; you’ll also be competing with business coaches and management consultants who already have the necessary skills.
I’m firmly of the view that you cannot force-fit the future to your current business model. The world is changing. And the pace of change has sped up. Weirdly, it will never be this SLOW again!
When I first write about this topic one reader asked how accurate were my predictions ten years ago. This prompted me to look back on my blog to see how accurate were my predictions back then. What I found was that I wasn’t making many predictions. And those I did make went against the prevailing view of the time.
For example, in 2009 I disagreed with those commentators and software suppliers who were telling accountants they must move into the cloud or they would lose their clients. I said that such views were, at best, premature. I was right 😉
Despite my membership of The Magic Circle I have no magical powers. I cannot see into the future and predict exactly what actions anyone will take. What I (and others) can do though is to spot trends and to extrapolate likely changes that will follow. That’s what I’m doing here.
What’s more important than whether compliance work is dying is how you will respond to the inevitable changes that are just around the corner. Do you want to be prepared for them or to risk leaving it too late to evolve your practice? Will you be satisfied if your practice survives or do you want to plan, prepare and be ready to thrive as things change – as they most certainly will do over the next few years?