insight magazine

CPAs: Why They Leave, Where They Go

What’s pushing CPAs out of the field they worked so hard to get into? By CAROLYN TANG KMET | Fall 2018

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Public accounting is not for the faint of heart. Accountants shoulder long hours, demanding seasonality, constantly changing standards, and more. And yet, year after year, new applicants are drawn into the field — and seasoned pros press on — competing for the demanding and rewarding opportunity to serve in the industry. But at what cost?

CPA Practice Advisor reports many CPA firms experience average annual turnover rates upward of 25 percent. That’s more than double the national average turnover rate of 11.6 percent, as reported by CompData’s BenchmarkPro survey.

So, what’s pushing CPAs out of the field they worked so hard to get into?

For many, the decision to leave public accounting comes down to culture. The Illinois CPA Society took a deep dive into this in the INSIGHT special feature, “The Culture Conflicts,” in which a primary theme for departing the profession comes down to work-life balance — or the lack thereof.

“Accounting firms have been espousing work-life balance for decades, but many fail to live up to expectations,” says Scott MacEachern, a CPA who spent five years with a Big Four accounting firm before moving on to a variety of controller and CFO positions with multiple companies. These days, he’s the founding partner of LedgerLiberty Solutions, a Vancouver-based accounting practice.

The challenge with achieving work-life balance is that everyone has a different definition of what work-life balance should be, MacEachern says. Eight hours a day? Flexible work hours? The ability to work from home? These might all sound like reasonable requests — many of which are standard across other industries — but accountants in a large public practice environment rarely have access to a combination of such benefits.

“As a result, work-life balance is used more as a recruiting buzzword as opposed to a retention tool,” MacEachern says.

For many, it’s accepted that that’s simply the nature of the business. “Public accounting is tough!” says Sholly Nicholson, director of human resources at Sensiba San Filippo, a San Francisco Bay Area-based accounting and business advisory firm. “It’s a demanding, deadline-driven, service-centric business.”

Nicholson believes that part of the turnover trouble is accredited to the fact that many young accountants simply begin their careers not fully understanding what it takes to be successful in the profession. They then bail out when they find themselves in over their heads. Indeed, according to the AICPA National MAP Survey from 2016, among the least-experienced staff, for every person fired or let go (involuntary turnover), another two people leave on their own accord (voluntary turnover).

“Typically, the hours that public accounting professionals work is significant. Some people reach a point where they are looking for a better balance, so they move out of public accounting,” says Marc Basil, senior director of financial search with Chicago-based recruiting firm Brilliant.

Take Paul Russo, CPA, CFE, for instance. He is now the director of tax services at The 1911 Trust Company, a wealth management firm in Greater Boston, after transitioning to the company following 13 years in public accounting and law firms. His recent decision to depart public accounting was primarily driven by one factor — work-life balance. The culprit? The relentless pursuit of billable hours — still a staple of public accounting firm profits.

“You have to make sure you’re tracking all of your time immediately, so the firm can bill for it as quickly as possible and get the cash in the door,” Russo says. “As a result, you’re constantly striving to hit X number of billable hours for the week, for the quarter, or for the year.”

Russo’s current company uses a holistic management fee, which covers tax and investment services and other client needs.

“It lends to a much better work-life balance. You’re not stressed about generating and bringing in more business, or having X number of billable hours every year,” Russo explains. “You’re just making sure that your job is done and done well. It’s a completely different atmosphere.”

CORPORATE CALLING

Demanding hours and high expectations aside, turnover in public accounting is also being driven up by today’s robust job market. Simply put, young accountants with easily transferable skills, and experienced accountants with diverse business knowledge, have career opportunities galore.

“There are endless industries that accountants can transition to: movies, sports, mining, biotech, construction, the list goes on,” MacEachern says. “With the experience and connections obtained in public practice, accomplished accountants can transition to virtually any role in business.”

Indeed, we see evidence for that trend in the AICPA National MAP Survey. For early career professionals (2-5 years’ experience), a fraction over five people leave voluntarily for each one let go. Among more seasoned professionals (6-10 years’ experience), that number climbs to nearly six professionals voluntarily leaving for each one terminated.

Nicholson notes that CPAs commonly leave public accounting to go into back-office corporate accounting and finance positions where they “believe they’ll make more money while working fewer hours.”

“Often, the type of client bases the professional was exposed to in public accounting is the ideal corporate destination for them. For example, an individual that had primarily publicly traded clients would have a logical career path in working for a publicly traded company in its SEC reporting or corporate accounting function,” Basil explains. He points to numerous positions that would be a natural fit for CPAs leaving public accounting for the corporate world: CFO, controller, corporate accountant, financial planning and analysis, internal audit, and more.

A common reason for young professionals to consider transitioning away from public accounting is the perceived lack of advancement opportunities. “Many public accounting professionals feel that if they don’t have a clear path to partner, they need to leave,” Basil explains.

For others, the need to commit to a single field to truly succeed is a deterrent. MacEachern explains that there comes a point in every accountant’s career where it becomes clear that staying in public practice means a full commitment to a specific expertise. “There’s nothing wrong with staying in a specific field, and many accountants find it fulfilling. However, for others, the variety of work available in industry makes it inevitable that people leave the public practice field,” MacEachern says.

Right from the start, Kevin Strawbridge knew he wasn’t going to stay in public accounting. The now seasoned Csuite executive attributes part of his success at several companies to his time spent in the Big Four trenches. “I still find myself ‘tick and tying’ numbers,” he laughs. “I knew when I got both of my accounting degrees it was for a much broader ambition of running a company one day. Knowing how to define and defend numbers in financial statements has served me very well.”

Indeed, within a year of taking over the CEO helm of ClickBank, Strawbridge led the company to a 22 percent increase in top-line sales driven by improved margins and optimized spending.

Shifting from public practice to industry is less difficult than one might think, at least from a technical standpoint. “Usually the greatest obstacle in terms of responsibilities is learning how to use a new company’s ERP or accounting system, which is a minor challenge for a seasoned public practice accountant,” MacEachern says. “The hardest part is just finding a business willing to take a chance on a public accountant’s first foray into industry.”

PUBLIC PROMISES

Alternatively, maybe the answer isn’t about leaving public accounting. If an accountant is looking for change, perhaps they can find it at another firm with a different culture. “Before heading for the hills and leaving public accounting altogether, I’d suggest doing a little research,” Nicholson says. “Each firm is quite different and operates under a different set of values as well as culture.”

At Sensiba, the turnover rate is about 15 percent. Nicholson says they’re able to keep turnover down because they follow a motto: “Family. Community. Firm.” “In that order,” Nicholson emphasizes. “We care less about where, when, or how you do your work and more about the work getting done and making our clients happy.”

Despite the demands, there’s an upside associated with working a few years in public accounting — particularly with the Big Four. “As cliché as it sounds, pay your dues,” Russo advises. “People who put in those years, and who work on engagements and rack up billable hours, will be exposed to so many more things than someone at the junior associate level who comes in for a year or two and leaves for private.”

Russo speaks from personal experience. He says one of his best decisions was starting at a Big Four firm right after finishing his master’s program and earning his CPA. “In terms of the learning curve, I was able to learn my industry, my job, and public accounting exponentially quicker than if I had gone into private industry from the get-go,” Russo says. “For any type of situation or transaction, there’s always someone at the firm who is well-versed in that area. Leverage that knowledge and learn as much as you possibly can before you jump ship, because you’re not going to find that big of a network to bounce things off if you’re in private industry.”

“Think about it. Each partner has multiple clients, and each client has their own network,” MacEachern adds. “Don’t like traditional networking? That’s fine. Ask your best client out for lunch. Invite your favorite partner to grab a quick coffee. Start planting seeds for your future outside of public accounting; you’ll be surprised how many people are willing to help.”

Regardless of whether the goal is to make partner or to transition into private industry, Strawbridge says the most important thing to remember is to make a plan and stick to it.

“Fail to plan, plan to fail,” Strawbridge says. “I talk to many young professionals who have expectations that are not founded on building the proper experience and understanding of where to head. They are often disappointed that they cannot seem to get ahead and achieve more. That then leads to complacency and stagnation.”

While there are several reasons both young and seasoned CPAs leave the public accounting profession, spanning from a lack of work-life balance to a plethora of attractive opportunities in the private sector, it is indisputable that devoting a few years of your career to public accounting can help position you for whatever path you decide to pursue. And just as CPAs must decide the career paths best for them, public accounting firms must the decide on the best ways to retain the talent that is best for them.