The changing demands of businesses and clients are driving a major change in the CPA profession – the rise of the professional services business. Aside from the highly specialized niche firms advancing a few more laps, the CPA firm, as we know it, will soon run out of gas and be forced to drop out of the race. It’s a bold prediction, but with the traditional tax and auditing functions of public accountants geared towards automation, the Illinois Society of Certified Public Accountants says that public accountants will need to increasingly focus on services built around strategic planning. and information to remain competitive.
Take taxes, for example. Ninety-two percent of those who responded to the Society’s 2019 Strategic Planning Survey agreed that by 2027, tax returns will be automated with all entries digitally integrated, leaving humans only doing review; the work carried out for individuals will be dominated by strategic tax planning and wealth management; and tax work done for businesses will focus on providing industry-specific insight and advice. In fact, 96 percent of respondents agreed that the CPA’s work will focus primarily on advisory services: providing clients with strategic information, advice, and evaluation; implement new technologies and business processes; and the development of intellectual property with the aim of solving commercial problems.
This is where the competition will heat up. According to the findings of “Where Opportunity Meets Value,” many forward-thinking companies are beginning to move in this direction. “Our report shows that more than 60 percent of surveyed accountants offer strategic advisory services, 26 percent offer virtual / outsourced CFO services, and nearly 25 percent offer cash flow analysis,” said Kevin Au, principal. Senior Product Marketing Officer at Bill.com. “While this survey was conducted before the pandemic, we have also seen that the need for strategic advice in recent months has only increased.”
The strong Chicago firm of Mowery & Schoenfeld of roughly 100 people can attest to this. The firm recently completed its first acquisition of a non-CPA firm, merging into Chicago-based information technology services firm Xamin. “In an ever-changing world, we will be able to help our clients find technology solutions and provide a high level of security for their operations,” says Jeff Mowery, co-founder and managing partner of Mowery & Schoenfeld, noting that the firm had been looking diversify as their clients increasingly request guidance on IT management, cybersecurity, accounting systems, software, and remote workforce.
Accounting Today revealed similar performance drivers when it examined under the hood of the nation’s top 100 companies: Right behind attesting and taxes, IT and data security, mergers and acquisitions, technology consulting and business valuations rounded out its six growth areas. major, which makes strategic advisory services a clear competitive advantage among leading companies. We can even see this in how companies increasingly refer to themselves.
Among the 20 fastest-growing US companies in 2019 identified by Accounting Today, many use “CPAs and advisers,” “CPAs and consultants,” or similar constructs in their business names. Consider the largest regional firm in the Midwest and Great Lakes by revenue, which is called BKD CPA & Advisors. Last year, BKD even changed the name of its 25-year-old corporate finance division to BKD Capital Advisors. Why? The firm’s leadership decided that it was crucial to include “Asesores” in the new name to better communicate the division’s broad range of services, calling advisory “the most important aspect” of the services it provides to clients.
Moving forward, companies are likely to continue down the merger, acquisition, and rebranding path as they strive to position themselves for new growth opportunities in advisory, consulting, and other professional services. But while companies’ shift from labeling themselves solely as “CPA” firms feels remarkable, it’s also worth noting that a name change is nothing more than that unless you change your skills and services to support it.
This article was originally published on Illinois CPA Society website and is the fourth in a seven-shot series of “CPA Profession 2027: Racing for Relevance,” a special feature in Insight 2020 from the Illinois CPA Society.