This issue of Generational Viewpoints features two individuals from
ESSENMACHER'S GENERATION X VIEWPOINT
Two major trends CPA firms should focus on throughout 2013 and beyond are consolidation of firms and the specialization of individuals working within those firms, which, in my opinion, are directly tied to one another. There are approximately 40,000 firms in the U.S., many of them small businesses and sole proprietorships led by Baby Boomers, many of whom are quickly nearing retirement age.
As this generation approaches retirement, there are fewer licensed practitioners following in their wake to assume the leadership roles within all these firms. Additionally, the complexity and ever-changing regulations of the Internal Revenue Code, continued proliferation of International Financial Reporting Standards, and demand for estate planning for an aging generation have led to specialization by many individuals within the profession. As these Baby Boomers retire, fewer CPAs are adopting the mantle of providing professional guidance across all accounting specialties. In lieu of the CPA advising clients on all aspects of the business environment, we now see teams within CPA firms representing individual departments, such as audit, employee benefits and tax.
Within these groups, additional specialization is likely to further define young professionals' careers into industries such as construction, manufacturing, nonprofit and service. These industry groups and specializations have given rise to niche firms and specialized groups within larger firms to target their specific markets with expertise. The ongoing consolidation of CPA firms will allow these niche groups to grow within CPA firms, thereby increasing the dependency of these niche groups on other niche groups to provide complete and well-rounded service to businesses.
As the younger generation of CPAs continues down the course of specialization, fewer individuals are willing or qualified to replace the retiring generation of sole practitioners and small firms that provide a broad range of accounting services to so many small businesses. The decrease in young CPAs to carry on the "do-it-all" service of the Baby Boomer sole practitioner, and the ongoing complexity of the accounting world, will continue to fuel the "roll up" consolidation we're seeing in the profession.
FRIEDMAN'S BABY BOOMER VIEWPOINT
The last few years have taught accountants and their firms to watch economic trends, which are often difficult to fully comprehend in a timely fashion. In addition to carefully observing the economy, we need to connect the trends to our own business models. I believe that two of the more important parts of the economy to analyze are the manufacturing industry and consumer confidence.
The U.S. economy relies heavily on the manufacturing sector. In very short order, we have seen the manufacturing industry become global in scope. Our clients have adapted to the dramatic changes in manufacturing trends in many ways, including sourcing their raw materials internationally, partnering with international companies and investing in manufacturing in non-U.S. plants. To properly advise our manufacturing clients, accountants have to understand manufacturing trends. Clients rely on us to help them structure their international transactions, learn what factors are important to their success, and guide them through often complex tax laws.
The other key trend to pay attention to is consumer confidence. Although manufacturing is vitally important to the U.S. economy - and the accounting business - in order for them to thrive, there have to be consumers to buy their products. Analyzing trends in consumer confidence assists accountants when they consult with their clients about subjects such as hiring, manufacturing quantities, inventory levels and capital expenditures. Our most perceptive clients keep track of their competitors, their customers and the overall economy.
Reviewing and acting on trends in consumer confidence goes a long way to helping clients make sound business decisions.
The interconnection between our clients' success and our own is clear. As their business results improve, our clients are more apt to take on new initiatives, take risks, and grow their organizations. We have to respond by making decisions in our own practices like hiring and investing in additional expertise to be available to serve clients to the best of our ability. And, to deliver sound advice and counsel, everyone with client responsibilities should pay attention to things that influence their success, including keeping an eye on the key indicators of the health of our economy.
This column is facilitated and edited by Krista Remer, the Generation X consultant, and Jennifer Wilson, the Baby Boomer co-founder and partner of
