CPA 2027: Firms Retool
Competitive CPA firms are rapidly moving away from traditional compliance services to strategic advisory services.
By Derrick Lilly |
Digital Exclusive - 2021
Shifting company and client demands are driving a major change in the CPA profession—the rise of the professional services firm. Apart from the highly specialized niche firms chugging along for a few more laps, the CPA firm as we’ve known it will soon run out of gas and be forced from the race. It’s a bold prediction, but with CPAs’ traditional audit and tax functions heading for automation, the Society says CPAs will increasingly need to focus on services built around strategic planning and insight to remain competitive.
Take tax for instance. Ninety-two percent of respondents to the Society’s 2019 Strategic Planning Survey agreed that by 2027 tax returns will be automated with all inputs digitally integrated, leaving humans doing review only; work performed for individuals will be dominated by strategic tax planning and wealth management; and tax work performed for businesses will focus on providing specific industry insight and advice. In fact, 96 percent of respondents agreed that the CPA’s work will predominantly focus on advisory services: providing clients with strategic insight, advice, and assessment; implementing new technologies and business processes; and developing intellectual property aimed at solving business problems.
This is where competition will heat up. Based on the findings in “Where Opportunity Meets Value,” many forward-thinking firms are beginning to move in this direction. “Our report shows that more than 60 percent of accountants surveyed offer strategic advisory services, 26 percent offer outsourced/virtual CFO services, and nearly 25 percent offer cash flow analysis,” said Kevin Au, senior director of product marketing for Bill.com. “While this survey took place prior to the pandemic, we’ve also seen that the need for strategic advice in recent months has only grown.”
The roughly 100-person strong Chicagoland firm of Mowery & Schoenfeld can attest to that. The firm recently completed its first non-CPA firm acquisition, merging in the 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 the firm had been seeking to diversify as its clients are increasingly asking for guidance on managing their IT, cybersecurity, accounting systems, software, and remote workforces.
Accounting Today revealed similar performance boosters when it looked under the hoods of the top 100 firms in the country: Just behind attest and tax, IT and data security, M&A, tech consulting, and business valuations rounded out their top six growth areas, making strategic advisory services a clear competitive advantage among leading firms. We can even see this in how firms are increasingly referring to themselves.
Among the 20 fastest-growing U.S. firms in 2019 as identified by Accounting Today, many use “CPAs and Advisors,” “CPAs and Consultants,” or similar constructs in their business names. Consider the Midwest and Great Lakes’ largest regional firm by revenue, which goes by BKD CPAs & Advisors. Last year, BKD even rebranded its 25-year-old corporate finance arm to BKD Capital Advisors. Why? The firm’s leadership decided it was crucial to include “Advisors” in the new name to better communicate the arm’s broad range of services, calling advisory “the most important aspect” of the services it provides to clients.
Moving forward, firms are likely to continue racing down the merger, acquisition, and rebranding path as they jostle to position themselves for new growth opportunities in advisory, consulting, and other professional services. But while firms’ shift away from labeling themselves solely as “CPA” firms feels notable, it’s also worth noting that a name change is nothing more than that unless you shift your skill sets and services to back it up.
This is part four of a seven-part series taken from “CPA Profession 2027: Racing for Relevance,” a 2020 Insight Special Feature from the Illinois CPA Society. Read parts one, two, and three.