Day 2 Keynote: Ask the Experts

Transcription:

Daniel Hood (00:08):

Welcome all. Good morning. Thank you. Thank you for coming back again. Some people didn't realize there were two days. Yesterday was great. I love the energy you talking to a lot of people. I hope you're all enjoying it. I hope you're all getting a lot out of it. We've got a lot more today, a lot of exciting stuff going on. I'm going to tell you a little bit about some of that in a second, but just a reminder for CPE, get yourself scanned in at the beginning of the session. In these rooms there will be a couple of people wandering around with tablets to help you make sure you get scanned and then there's QR code in the app and also on some of the placards out in the hallway that after you're finished, after the show's over or close to when the show is over, you want to scan that. It'll take you to an evaluation form that you fill out to make sure you get credit for all the things you've been scanned in for. So it's only one time to fill out the evaluation form. You want to make sure you do it before the 23rd. And if you have any questions, you can ask any of our staff or stop by the registration desk and they can help you out as well.



(01:05):

I want to again thank all of our sponsors, a specific call out to our platinum sponsors, Zoho and Mild Talent Hub. I also want to particularly highlight our research sponsor into it. This is just available now on accounting today.com. Recommend you go there or look at the QR code for this. This is a survey about how firms are using technology, their plans for technology, how they're implementing it, how they're hoping to make it better. It's a great benchmarking sort of set of information for how a lot of firms are using it and it's all kinds of firms. It's not particularly tech forward or tech savvy firms, it's everybody in the profession. So you give a sense of where things are. I did say I wanted to highlight a couple of things. I want to make sure I get these mentioned because we're pretty excited about some sessions in addition to this one, some sessions later in the day at 11:15, there's a young accountant presentation.



(01:54):

We got a bunch of young accountants from different parts of their careers, but all generally towards the beginning of it with the talent shortage and the inability to find and retain particularly young staff, we thought it was go to the horse's mouth and talk to them. We think it's going to be really interesting. We think they're going to share a lot of insights on how to attract and retain that level of talent, which is a big problem for the profession. We've also got an AI town hall towards the end of the afternoon that's going to be on this stage as well. It's going to be very practical, hopefully very practical and very directed at what accountants can and should be doing with AI and what you can't be doing with ai. I think it's going to be super practical and hopefully bring the AI discussion down to a level that really makes sense for accounting firms as opposed to a lot of the sort of broad discussion that we've had.



(02:35):

We also got a couple of other great individual presentations on ai. There's a whole track on it, but we're particularly excited about the town hall. Then we're going to be giving some awards after that for the fastest growing firms. We're excited about that and then immediately after that is karaoke, so we're also particularly excited about that. So you don't have to sing, you can watch other people sing and it's more entertaining just telling you it's good stuff. Alright, that I think is all the introductory stuff I have. So I'm going to go straight to this morning panel. I mentioned yesterday that we're hoping that most of what you're getting here is very practical, sort of tactical stuff you can take home and do immediately. But there are going to be a couple of sessions that are a little 10,000 foot viewy. Take a little bit back, set some of the context for where the profession is, where it's going, what the firm of the future is going to look like and all that stuff.



(03:23):

And for that we thought the best thing to do would be to get a range of experts with a range of expertise from different areas of the profession and also a great view of the profession as a whole. Get them all on one stage. I'm going to ask them some questions about, I would encourage you to ask as many questions as you can. We'll open that up earlier than we might for some of the other sessions. We won't wait until the end. So if you have a question at any point, raise your hand, get someone with a mic to pay attention to you and we'll answer those as we go. But let me bring up the panel. They're going to introduce themselves in a second, so I'm just going to bring up by name. You've probably heard of many of them, but let's start with Seth Fineberg, right? Then we got Michael Horwitz, Bonnie Buol Ruszczyk and last but not least, only in the order of the seats Randy Johnston. Alright, and like I said, I'm going to have them introduce themselves just to give you a little sense of where they come from for those. I imagine most of you are familiar with them hopefully, but if not, you'll know a little bit more about them in a second. Seth, give us a quick background. I



Seth Fineberg (04:30):

On. I am. Hey, I'm Seth Fineberg. For those who don't know me, I really had the joy in my career of working with accounting today for 13 years. I've covered accounting as a journalist and editor for 22 odd years. I was the lead editor for Accounting Web in the US before they closed in 2022. I've been a business journalist for over 30 years. Accounting. I often get asked sometimes, are you a practitioner? Have you studied accounting? No, I studied journalism, English communications and I found the great industry of accounting through working with accounting today and the other titles these days I run a consulting business called Accountants Forward because it is what I truly believe. I want to see this profession progress. You all are the backbone of the backbone of our economy and I want to see relationships between vendors and you all get better and I want to see this profession move forward. So I'm happy to be here, answer any questions you have.



Daniel Hood (05:41):

Excellent, Michael. Thanks



Michael Horwitz (05:42):

Dan. Michael Horwitz. I head up the BDO Alliance USAA very large association of independent accounting firms. We have 260 firms based in the United States and another 150, we call them business resource network members. They're just companies that like to hang around accounting firms. I'm a principal at BDO, so my perspective will come from observations drawn from our membership as well. I came from the big four, so I'll be able to share some insights based upon my background as well. Glad to be here. Awesome,



Daniel Hood (06:14):

Thank you Bonnie.



Bonnie Buol Ruszczyk (06:16):

Yes, I had someone recently describe my career as the ADD career because most of the time I wear a marketing hat and am a marketing consultant to the accounting profession and an outsourced marketing director to small firms that don't necessarily need that resource full time. However, this year I took over the accounting Move project as well. I've been doing the shadowing and the slower transition over the last two years, but this year it is all mine for better or worse probably. And for those that aren't familiar Accounting Move Project puts out the best CPA firms for women and best CPA firms for equity leadership lists every year. And all participating firms get their own confidential, really insightful report of these are things you're doing really well and these are areas where you may be able to improve and here's how other firms have done that successfully. And then finally, I co-own another company called Rally Rounds, which is mastermind groups for accounting growth professionals and I co that with Katie Tolin. So I am happy to be here and learn from all these wonderful people I'm on the stage with.



Daniel Hood (07:33):

Awesome. We're happy to have you here, Randy.



Randy Johnston (07:36):

So Dan, thanks for the invitation and it is a pleasure to be with all of you in the room today. I am Randy Johnston out of Hutchinson, Kansas. Have worked in the accounting profession for about 50 years at this point. Founded network management group 40 years ago this year. So we support CPA firms 24 by seven for technology. I also am one of the founding partners in K two and K two produces about 1600 events for CPE in the US and Canada to a hundred thousand plus CPAs. I routinely consult inside CPA firms, but just as important, I help a lot of the technology vendors that create their products. So almost without exception, I've done paid consulting work for most of the vendors that you deal with. I have a lot of knowledge under nondisclosure, so I won't violate that, but I have friends in high places as the old song goes, right? So I typically know the CEO, the VP of development, VP of marketing at most companies. So when Barry Milan announced his retirement this morning, he sent me a personal message, which was nice and that's just kind of the way it works. So typically if you've got a problem, I usually know the person in the country that can solve it. So there we go.



Daniel Hood (08:54):

I think that makes it clear why we have you all on the panel. I hope it's clear. I want to kick off with sort of a super broad question. It's just I'm going to start with you already since you're right here. What do you think of the state of the accounting profession? How would you describe it?



Randy Johnston (09:08):

Well, I'll say it's a little bit bipolar might be a good way to think about it. There's lots of confidence issues and so almost all that I talk to say things are going marvelously, but the confidence level is so shaken that's really the problem. So if you kind of look beyond what would be the newscasts on this and the fear mongering things are actually pretty bloody good with almost every firm I talk to and almost every business I talk to.



Daniel Hood (09:41):

Excellent. So what think, where do you think, I'm just going to draw on this for a second. Where do you think the confidence issues are coming from?



Randy Johnston (09:46):

Well, the inflationary pressures are clearly one of the things. The talent shortage is clearly one of those things. I think understanding how to manage this new environment is a problem. I was in the A TP session this morning and they were talking about the way different talent levels work. There's a great book by Gene Twenge out of San Diego here called Generations, which I'd recommend that you give a read to because it helps you understand the attitudes of so many people and it's changed my way of thinking about things. I was IBM management trained originally and was taught that you think about people the way the world was when they were 10 and Gene says, no, no, it's the technology that was around when they were age 10 that affects it. And it's like, huh, never thought of it, but I'm pretty sure she's right. So clearly that's a second issue and frankly we're just in the midst of a lot of disruption. There's so much change. I've heard people repeatedly say that change is the slowest pace it's ever going to be right now, it's just going to get faster and that is very disoriented. So we don't have enough grounding among us in our values, our people and so forth. I think that's part of it.



Daniel Hood (11:01):

I definitely stopped being able to adopt technology right around the road, rotary phone and pong. That makes a lot of sense. I did it. Excellent. Bonnie, when you look at the state of their profession, what do you think of? What do you see?



Bonnie Buol Ruszczyk (11:12):

Yeah, I completely agree. I feel like we're kind of at, not to steal from Malcolm Gladwell, but we're at a tipping point of sorts with, we have obviously the talent shortage. We have all this technology coming in that we know we can harness, but we're not quite sure how to do it. We have clients, more client work in a lot of cases than firms have the capability to do before mentioned talent shortage, of course, impact side a little bit. So I think it's kind of that state of change where it's exciting but also scary. And I see the firms that I talk to a lot are excited about it, but just a little bit, I don't know, accountants tend to be conservative, so it's kind of that. Okay, am I ready to jump off this cliff yet or not?



Daniel Hood (12:05):

Michael, how about you?



Michael Horwitz (12:07):

I would say optimistic. The firms that we deal with and including BDO are having their best years ever. And this has been going on for quite some time. I guess we need to go back to the great recession to find a time when we really didn't have this kind of optimism. And what's fascinating is the degree to which firms are adopting this next generation of technology and adjusting to the millennial and Gen X, Y, and Z generations and realizing that they can evolve to better serve their clients in this transformative environment. So for most of our members, I would say in members not including CPA firms, but vendors to the profession, the future is super bright. I am not sure that they can define exactly what that future is going to look like, but a lot of the technology that's sitting outside the door here and that has yet to be created is going to make our lives better and it's going to be a lot more fun to be in this profession. I'm extremely optimistic.



Daniel Hood (13:18):

Excellent. Alright, Seth?



Seth Fineberg (13:20):

I'm kind of more of the school. The frame of mind that Randy had mentioned. I think it is somewhat bipolar. I think it really depends on the lens that you look through. While you have some firms who are having some other best years ever financially underneath all of that too are firms that are also still struggling to retain talent, struggling to figure out what their next chapter is. And I think it needs to be stated again that the accounting profession is made up of three core groups, enrolled agents, professional accountants, people who don't have any initials after their names and they do a lot of the bookkeeping, core accounting work and then of course CPAs, by and large, these individuals are working at or running pretty small practices so we can kind of look at what the top 2, 3, 400 are doing. And then everybody else, I talked to a lot of everybody else's out there.



(14:22):

And yeah, I think there's hope for the future because we are definitely at a point of inflection. I can recall another time maybe 20 odd years ago where it was at somewhat of an inflection point and then maybe a dozen years ago when cloud was starting to rear its head and working in that way and now we have a lot of other technology. Technology wasn't always a major part of what you all do. It now has to be a major consideration in what you do, but also the culture that you have in your businesses and actually maybe even starting to think about your practice as a business. And I'll think accountants are really great at looking at it that way. So yeah, positive from the point of view of there's lots of opportunity and chance for change for evolution on what accounting can be. So I'm excited for that.



Daniel Hood (15:23):

I think what's interesting to me is that there is tremendous opportunity and there is tremendous growth. People are having their greatest years ever and so on, but it can't stay the same. It's given the pace of change, given the technology change, demographic changes to stay continuing to have your best years going forward, you're going to have to do a lot of work basically to keep up, just to keep up with the pace of change that's happening. And I think that's causing some of the confidence, the issues that are there. They're legitimate issues when you listed three or four things that are real. They're not hallucinations though they may be someday, but that it requires that level of work to overcome them, to prepare them to keep up with the technology, to keep up with the demographic changes or define the solutions to the demographic changes to stay in.



(16:03):

The positive state that firms are in now is going to require a great deal of work and to make the most of the opportunities that are coming up. They're not just going to flow to accountants just naturally. Accountants are going to have to grasp at them and I want to talk about that. I think there's a genuine optimism for the professional among you all. So I want to focus on that. We'd originally said, well, we'll ask about issues and about opportunities, but I think we've talked a lot about the issues. We've certainly mentioned them and people are familiar with all of them. Let's talk about the opportunities and Michael, I'm going to put you on the spot. You mentioned obviously there's tremendous opportunities in technology. What other kinds of opportunities are you seeing for the profession?



Michael Horwitz (16:38):

I was thinking what are we doing really as a business? We're in the business of having relationships with our clients. That's not going to change because of technology. At the heart of what we do, we provide mostly attestation, assurance, tax and advisory services to businesses and high net worth individuals. Many of those services are required of our clients. So it's just a question of who's going to serve them, not whether they need to be served. And so it comes back to having a relationship that's a meaningful relationship with your clients. That transcends the evolution, if you will, of what we're doing on a day-to-day basis. And by leveraging technology, we're just going to be more efficient at providing those services. That's why AI isn't going to take us out. It's simply going to be leverageable by those firms that really do understand the business that we're in and communicating the value that we're providing to our clients by leveraging this technology and taking advantage of the position that we're in right now, which is a pretty enviable one because as we all know, supply is low and demand is high, so pricing is adjusted accordingly and that's driving heavy profitability within the profession.



(18:02):

The firms that will be left behind will likely be firms that will not adopt that technology, won't be open to maybe looking at talent that's not necessarily around their four walls that will be exclusively oriented to select services that accounting firms may have provided 15 years ago, but today can be providing much more diverse service offerings with a much more diverse talent group. So this is going to be a fun next few years.



Daniel Hood (18:36):

But busy. Very busy.



Michael Horwitz (18:37):

Very busy. Yeah.



Daniel Hood (18:38):

Bonnie, what about you? What sort of opportunities do you see for the profession?



Bonnie Buol Ruszczyk (18:41):

Well, I spend a lot of time in the diversity, equity, and inclusion space. So I see a lot of opportunity for firms to expand their perspectives. So one of their myriad reasons why we should diversify our staff, we should look at who it is that we're hiring and how are we promoting people and all of that. But the real reason or one of the big reasons behind that is to expand our perspectives. If everybody in the room is one race, one gender in a certain age range, upper middle class socioeconomically and was raised that way, you have very similar ways of approaching problems or dealing with issues. But if you bring in people that maybe had a harder time, grew up poor or are from a different race, different genders, and really expand that conversation, you are adding a lot of different perspectives to the table and are able to look at problems in different ways and solve them in different ways, which just makes you that much more powerful and frankly that much more appealing to a broader group of clients.



Seth Fineberg (19:57):

Absolutely.



Daniel Hood (19:59):

Seth, I want to give you an opportunity to talk about opportunities, but particularly because you mentioned it, it's important to always remember that accounting gets very small very fast, right? There's three or 400 firms at the top, but then there's 43,500 that get very small. Again, very quickly, if you can think of specific opportunities for those 43,000, that'd be awesome. If not, whatever opportunities you got.



Seth Fineberg (20:21):

Look, I think they have the same opportunities as even larger firms. It's still the work has to get done and you're still in, like Mike said, you're still in the relationship business. You have an opportunity to continue to really be a part of your client's growth. If you have individual clients, you can think of other ways that you can really support them, maybe through other services like wealth management per se, instead of funneling that business away or maybe you're actually doing a little bit more deeper advisory work or you have a certain niche, maybe you have certain restaurant clients or certain businesses that you feel like need you the most. You can really kind of dig in there. We've talked for years about the riches are in the niches, but for smaller firms too, a lot of you work maybe in your communities or in your states. You're supporting local business that way. And yeah, I definitely think technology is there to kind of help with the tasks, the work so that you can shine in those relationships. So that's what I'm really looking forward to. I hope that answers your question. It didn't.



Daniel Hood (21:41):

Randy, how about you? What opportunities do you see in head?



Randy Johnston (21:43):

Well, I hope I've got them all recalled for the comments. Friends, you're going to have a lot of change going on, so we're going to have to really work on change management through this whole time period. So I just want to preface it with that a number two, I don't think the compliance businesses of tax and audit are going away, but opportunities are raising themselves in many other areas. Client accounting services has been a big move. We've been promoting that firm for 25 years. It's finally catching on, but I am going to give you a little bit of warning there because while CS is enjoying high profitability right now is going to become commoditized very quickly because of technologies. And if we start talking about the technologies for AI and tax, there's some beautiful stuff going on there and AI and audit and so on.



(22:34):

Just want to warn you about all those makers Hub who's out in the hall has AI for transactions, great stuff. Those types of things are going to happen pretty quickly. It is a relationship deal in the profession. So Michael, when you said this, absolutely, yeah, it is. And so much of the culture right now is transactional and frankly, maybe I'm just getting old, I don't know, but I still think it's a relationship business regardless of the age. And you need to keep that very much in mind as you're thinking about your services. You do need to specialize and you have to think, am I going to be able to do this specialty in a regional or local basis or is it something I'm going to compete nationally with? And it's a whole different ball game when you're doing it like that. So that leads me over then to my favorite service, which is advisory.



(23:26):

And I like advisory because it is client-centric client first. And you really have to think about the individual and the business. Too many firms are trying to make this consulting. It is not consulting, that's a different business. Advisory is proactive consulting tends to be reactive. Advisory is forward looking. Consulting might be, but it also like compliance tends to be a little backwards looking and you have to think about the primary services that you're going to offer for advisory, the secondary and tertiary. I'm happy to send you a list. I got 125 advisory services that I have firms consider. And I know that is not all of the possibilities, but you can probably only do a few. And so I believe that advisory will be profitable for a long time and many of these other things will become transactional and will have competition in them. And if you look at the private equity impact and the split of audit services out trying to transactional analyze the tax and other businesses, that's another one of the maneuvers. So I think I got most of the key.



Daniel Hood (24:35):

That's a lot of them if it's not all of them, most of them. But I want to just briefly come back to it a second. You talked about the commoditization potentially of CAS is the answer to that. And this goes back to the general theme of right, nothing's going to stay the same, so you're going to have to keep changing to keep up with it. Is does that change if you make IT client advisory services as opposed to CAS or is that really we're just, it's going to get commoditized and you really need to shift that's a full scale advisory?



Randy Johnston (24:59):

A wonderful question Dan and I visualize those as being different. When you're doing CAS, you see the opportunity first when you've got the payroll involved and when you've got the book, you can see all the things that are happening in the business, but you have to look at it from an advisory perspective. So I actually consider a lot of the transactional stuff that happens in CAS to be separated. So you got to think it's more like management view against the transaction. So CFO versus controller type of view, but it's even a small businesses happening, see a whole bunch of small businesses out there. They don't want to do this bloody accounting stuff. They just want to run their businesses and they have so little knowledge of how to run businesses effectively. And you need to be able to explain to them all sorts of attributes. And I'll just pick simple ones that cashflow and inventory turns and hiring ratios and all that stuff. And many of you don't talk that language naturally. You're used to talking about, well if we do this, you can save these tax dollars or if you do this you'll be, it's a different world. And the business owner has to do some of that stuff. They're more interested in the other stuff. Advisory.



Daniel Hood (26:12):

One of the interesting things that, because you talk about all the difference between advisory and consulting, one of the things that people say is often consulting is a one-off, right? It's a onetime thing. Whereas advisory hopefully at its best is a constant relationship. A long-term relationship, which has the platform of the continuing compliance work sort of gives you a platform for being like, plus I'm going to add a bunch of advisory's on top that you're really going to like. So I think people are hoping that that's a springboard to advisory regular ongoing advisory work. But it's a complicated calculation in many cases. I think probably firms are going to, each firm will have a slightly different mix of those things, slightly different solutions to them. We'll see which ones work.



Randy Johnston (26:49):

And with advisory you might recommend in CAS or you might recommend tax planning or you might recommend other things, but you're sitting in a much higher management advisory role.



Daniel Hood (27:00):

Excellent. I dunno if a guy can barely see anybody I don't find and wants to bring in questions. Like I said, I don't want to wait until the end, but if you have any questions now, raise your hand or get someone's attention with a mic. Do we have, yeah, while we're getting the mic to them, I want you guys to think about, my next question is going to be about things you see firms doing that you think they should stop doing. Accounting firms are making that they should stop making, but we'll get to that once we get to.



Audience Member 1 (27:27):

A quick question for Randy. Do you see from a business development standpoint, advisory being a way to get in the door to these other services which are becoming more commoditized or how do you think about that as firm owners are making decisions for where to invest time and resources?



Randy Johnston (27:41):

Yeah, advisory can be a beautiful business development approach and it's a good way to get in the door because perhaps the accountant that's doing the work today or maybe no one's doing the work isn't talking the way you talk. And one of the things that I think I've learned over the pandemic period over the last 10 years for sure, I used to think to do advisory service, you had to have some gray hair to be authoritative to walk in the room. But frankly, a lot of our young accountants are very gung-ho to help these businesses. They just don't have a framework to do it. And I have discovered advisory tools that give them the framework to ask the questions so they don't have to provide the answer on the fly, they're just are doing discovery and then they go outside the room to bring experts back to answer those. So to me that's the ideal formula because in a one hour client meeting, you can discover enough advisory services that you can then propose has and other issues. I mean it's a beautiful thing when it's working and I can talk to you about it and I've written about it too. Does that help make sense?



Daniel Hood (28:47):

I think Michael wants to.



Michael Horwitz (28:48):

Yeah, I was just going to add, and Dan accounting today profiles the top a hundred firms. And so if you look at the larger firms, especially the big four assurance tax and advisory, they're way north of 40%. Advisory BDO is aspiring to be a third, a third, a third. And we're not there yet. And if you look at the top a hundred, it's really interesting if you go down that list, as you get down into the mid range, the percentages actually drop hugely. So there's a direct correlation between the size of your firm and the percentage of your revenues that are advisor. And if you believe that what's happening in the big firms is going to trickle down into the midsize and smaller firms, you're seeing your future basically in the evolution of the larger firms to providing more advisory based services. And those are the high value, non commoditized treasured services that our clients absolutely need to survive, if you will, and to thrive. And we want to be in the position of providing those types of services in addition to the regulated services that our clients come to us. So just think about as you're contemplating your own futures, how you can grow this non-traditional portion of your revenue stream because those are the highly valued services that you're clients are hoping and expecting that you'll be delivering to them. Right?



Daniel Hood (30:20):

It's interesting as you move down to smaller firms where the bulk tends to go to as opposed to advisory, it goes to tax. So you're stuck, not stuck with, but you're doing the tax work. It has to be done and it's easy to get stuck with it and not be able to raise your head above it and say, all right, what else should we be doing? What else should we be bringing to these clients? We're making sure they get their taxes taken care of, but we don't have the time or the energy or necessarily the expertise to do the other services that are.



Bonnie Buol Ruszczyk (30:48):

I'd like to add onto what Mike said is, and I think one of the challenges there is a lot of times the smaller firms and sometimes even the larger firms, I'm wearing marketing hat now don't know how to communicate what advisory is. We can say all day long that businesses need our advice, they need the advisory services, but if they don't understand the value of what that is and why they need those services. So I think that's kind of in some ways the challenge particularly for smaller firms because like you, I've worked with a lot of smaller firms is really saying, here's why you need this. We're not just trying to upcharge you and do more than your tax work. We're really trying to improve your business and this is how we're going to do that.



Randy Johnston (31:32):

And so Bonnie, to your point on that, if you are a small firm, you can make advisory a significant part of your revenue stream, able to act locally, work with businesses locally, but you got to drive that marketing message and remember you're going to have primary advisory, secondary and tertiary or concierge referral services and you're going to build networks, which you probably already have some of today, but when you focus on it, we're seeing firms shift where advisory is the majority rather than tax in small firms. And that's a beautiful thing where it used to be 80% tax and 20% of other services in small firms versus 40, 40 and 20 in mid-sized firms. We've seen the shift, Michael, you're correct on that. Interesting mix on the larger firms, but in the small firms, we're seeing radical shifts into advisory work when they're smart about it, they don't have to work as hard in the clients' value it a lot.



Seth Fineberg (32:27):

I don't have to have the volume business anymore. You don't have to work with as many clients and there's so many outsourcing services available too where it's like how is this going to get done?



Bonnie Buol Ruszczyk (32:39):

It's more fun.



Randy Johnston (32:40):

Anyway, sorry, somebody had a question.



Daniel Hood (32:41):

Yeah, just quickly, just real quick, your point about education. We've done some service of small businesses and there's no question they absolutely understand the value of accountants for taxes and that's it. They don't think of, they don't know of the other services and they don't know everything you can do. Even if you don't have it as a service, they don't think of you in that way. They think of you specifically, they saved me money on my taxes and that message has been hammered home for them and all the other ones they're still working on. We got one over here and then we'll get to.



Audience Member 2 (33:07):

Randy. You said you had 125 list, where can we get that list?



Randy Johnston (33:13):

I, I'll make sure Accounting today has that list. I'll get it, but if you email me directly, I'm happy to send it to you as well. It's randy@k2e.com. So I give that to people regularly and I don't mind talking to you about it. Right.



Audience Member 3 (33:27):

I know I ask a lot of questions, but this particular question is, Rachel and I have been discussing it, I think I have this conversation every single day. We are at the Accounting Today conference, and Michael, you might have the most insight on this working for an alliance, why are we still calling them accounting firms if we're talking about all these other services? And the bigger question is the reason why people trust accountants is because of the licensure and there's some sort of government oversight and requirements, but if we're offering all of these other advisory services, why are we still calling it accounting and how do we ensure the same level of responsibility and ethics and everything that goes with being a CPA? And we have this conversation every day and I'm really curious to hear everybody's perspective, but Michael and Dan maybe specifically.



Michael Horwitz (34:28):

Sure. I'll start and it's a great question. Obviously I wasn't around when the term accounting firm was created, but I would love to think of ourselves as technology firms that happen to provide assurance, tax and advisory services eventually. And we're probably not there yet, but think about that. I'm not sure that the term is going to change, but you're absolutely right. It's such a subset of what we all do that it's almost a shame to only frame ourselves in that perspective. And Randy, you said you've been at this for 50 years, so maybe you have some sage advice in terms of how we brand ourselves.



Randy Johnston (35:14):

Well, rebranding is hard having watched a lot of companies try to do it and a lot of companies really flounder at it, and your question is you're asking, I'm thinking what a brilliant piece because globally for those bookkeeping firms, there are bookkeeping certifications in the UK and Canada and so forth. There's not an association like that and they're taught to throw the higher value services to the accountants. It would be nifty to have an advisory certification and I'm not aware of one anywhere maybe in a few. Okay, so note, but I've seen a lot of, and I hate to use this word, you know what the basis of it is, fake advisory. So I wrote and spoke about fake advisory probably as much as six and seven years ago because a lot of people were doing that. But right now as a transition, Michael, I'm seeing a lot of firms brand as accountants and advisors in a pretty common model. They're trying to pull people along in that thinking and what advisory means is so different and is so broad. When you see my list you'll realize, oh man, Randy must be smoking dope. It's not legal in Kansas. Okay.



Daniel Hood (36:29):

Twice here.



Randy Johnston (36:32):

Oh yeah, good idea.



Daniel Hood (36:32):

Constantly accepted takes to conferences you're like is say where it's legal, I'm there.



Randy Johnston (36:37):

Oh, that's for karaoke tonight, I get it. Okay, but I don't have the magic bullet on that. That's an interesting one that I actually will mole here until I can come up with a solution. What I do is try to figure it out and then bounce it off other people and let smarter people come up with better ideas. But your question is it was worth the trip to San Diego for me for that.



Seth Fineberg (37:03):

I have some very pointed comments on it, but I want to hear from the marketing person on the stage first. You have the marketing perspective on that. I think it is very much a marketing related.



Bonnie Buol Ruszczyk (37:13):

Well, I think you're right and you're absolutely right that rebranding is hard. I've done that with a whole lot of firms, but I think you make a really good point, Jess. You do a lot more than accounting and part of the challenge there is, as you mentioned Dan, when people think of an accountant, they immediately go to tax and as hard as everybody in this room and everybody out there tries to say, oh, we're so much more than that. We do all these wonderful things, we make your business, it's still not completely breaking through. So I don't know if rebranding is the thing or if we just redefine what accounting means.



Seth Fineberg (37:59):

Thank you.



Bonnie Buol Ruszczyk (38:00):

And that's kind of probably the easier tactic, but it's still really, really damn hard to do.



Seth Fineberg (38:08):

Look, nobody comes to an accounting conference or any conference to stay the same. You're all here to hear perspectives on what could I, should I be doing and also validating the things that you are currently doing. You all right now in this room and even outside of this room as accounting professionals have the opportunity to redefine what being an accountant is, it doesn't need a rebrand, it doesn't need to be changed. I think you all can start saying this is what accounting is. Accounting needs to have a better story told and you all are in the seats to start telling it and I'm obviously going to do my level best from where I sit to help with that too. But this is the exciting time. This is where it's like, okay, we're actually at that point of inflection where accounting has an opportunity to completely redefine itself.



Daniel Hood (39:11):

This is not helpful, but I'm going to directly answer the historically, the answer to the question is modern accounting starts in the second half of the 19th century, late 18 hundreds, and it is specifically about the application of capital to huge scale projects like railroads, it's actual accounting, it's bookkeeping and it's allocation, all that stuff. Modern firms, Price Waterhouse, all the biggest firms that have been around for a long time started in that era and they really were accountants. Tax doesn't come along as a major thing. Income tax doesn't come along until it's 1913 or 1916 and even then it's a relatively small portion of the population doesn't expand until much longer and accountants take on tax work. So it exists. What are we going to call these people who do the tax work? We're going to call them account. It's because the accounting firms are like, well, we can do this too.



(39:58):

The short version is accountants took on those roles. The interesting thing, and I would throw this out is most people who call themselves CPAs never do a public audit. So why are they calling themselves CPAs and that it's sort of an interesting thing and I were also curious about do we think people trust accountants or trust CPA specifically because of the licensure and the oversight or is it because they use it as a proxy and then they work with them and then they save them a lot of money and that's really why they trust them is you saved me a lot of money on my taxes. I'm not sure that that's my question is sort of does the credential engender as much trust as we think or is it just the performance of people who have that credential? It proves it anyways, but that's the historical answer there.



Randy Johnston (40:39):

And it might be the independence and the fiduciary nature of what accountants do. I am very concerned at the conflict of independence that I see in so many CPA firms. That's a bother. But this client responsibility where it's client first and their business, that's really what the advisory gets you to. And I do not like situational ethics whatsoever, but again, my value system is not your value system or the client. So again, we start getting into gray areas pretty quickly, but you're correct when you think about the transactional versus this business forward nature, big difference. So again, I'm so anxious to see what smart people come up with as frameworks for this because I do believe a nice valuable certification in this area could have great weight and having, this is not self-promotional, so please don't take it that way, but having helped create a lot of the IT certifications that are out there, having helped create most of the accountant programs that are out there.



(41:52):

The designer of the Avalara program as an example or the Intuit program, and so I designed all those bloody things. Those had self-serving vendor interest in mind in many cases, but they also helped clients along the way and this one needs to be very thoughtful to get a lot of marketing. If I say FTD, most of you know what that is in the room, but that's not promoted very much anymore, but that whole floral transfer mechanism validated a lot of these local florist shops, so it's got to be something like that. I don't know.



Audience Member 4 (42:30):

You'd be happy to talk to.



Randy Johnston (42:31):

Oh yeah.



Daniel Hood (42:32):

Well, I mean I think the important point is that it is Bonnie's point about the tipping point is the point where all this can be redefined. That said, this is the opportunity now and it's like the 1930s, it's like the 1880, 1890s profession is a point where it can redefine itself and change what it is and what people think about it, but it requires people actively doing that. There were a lot of people in the 1930s who fought hard to shape the modern profession and they worked with legislators and they worked with credential creators and so on. It was a lot of effort. We haven't had any change like that in any of our lifetimes because it settled in the thirties and kind of stayed the same for a long time. Do we have a question?



Audience Member 4 (43:10):

Good morning? My name's Shree Gupta, head operations and growth for Crete pa. This question's for Bonnie, but really would love to hear from anyone here. You spent the last several minutes joking about expanding the aperture of services that are offered and sold by a typical advisory accounting firm. I'd love to hear more about what you've seen firms do when it comes to who they are entrusting with that responsibility that go to market responsibility because so far historically it seems like leadership partners have solely been entrusted with selling. Are we starting to see more mid-level talent also take on that role and how are they incentivizing those team members to do that more effectively beyond just delivery on their engagements?



Bonnie Buol Ruszczyk (43:56):

I would say the smart firms are and yeah, I can't tell you how many people I've talked to that reached partnership level and went, I've received no business development training. I don't understand what is this job. All of a sudden I just thought I was going to sit around and meet with people and make a whole lot of money. But what I am seeing more in, like I say in firms that are smart is they are starting that business development training at the associate level. Let's take these really young people out on the lunches that you're going to or the cocktail hours or whatever it is you're doing and let them know the process. Let the fear go away. That is something that terrifies so many young accountants are like, wait a minute, I got to go up and talk to strangers. That is terrifying.



(44:51):

And so they're kind of incorporating it into the role. I also think that we have to just kind of building on what you're saying is partner groups need to diversify to reach a broader swath of clients. I mean right now everybody has plenty of work, but that is not going to be the case forever and look at census data and our country is changing and people like to work with people that understand their situation and are familiar with them. So not only making sure that we're training young business developers from the minute they walk in the door and giving them opportunity to shine and grow as they proceed to that partner level, but making sure that we have a diverse group of people that are moving into leadership roles. Have so many statistics that run around in my head, but when you think of gender firms are generally 50 50 as far as men to women until you reach that senior director level and then about 50% of women opt out. So why is that happening and what can we do to make sure that that doesn't continue happening?



Michael Horwitz (46:07):

I think a related question is how do you get your audit or your tax professionals to talk about advisory and it's sort of the holy grail I think of our profession. If we look at the plethora of services, I'm not familiar with Randy's 125 services, but if you imagine a very broad service matrix potentially, and you look at your clients and you recognize that for most of your clients you're just providing one or two services that can get you really excited with all that white space and the opportunity, but you have to teach your people to be comfortable talking about things that they're really not comfortable talking about. And so we realized that NBOA number of years ago that we just weren't seeing the cross-selling if you will, or cross serving, that we had hoped and you need to start to educate people to make them comfortable, put them a little bit out of their comfort level to introduce the services that their brothers and sisters within the firm are going to be delivering. They're not going to be delivering those services, but that mindset of being protective of your client relationship that you've spent so much time developing in that trusting relationship and broadening it is something that most people in this room are just not inherently comfortable with. And you got to get out of your comfort zone to be able to do that.



Seth Fineberg (47:24):

Absolutely. Time to do some uncomfortable things. People, if you want to grow, you want to progress, it's time to just kind of live in that uncomfortable for a bit. You've all jumped into a pool that might've been a little too cold at first, but eventually it's not right. You get comfortable, you get used to it, but initially you're like, oh my god, why did I do this? It's okay. It's going to be okay.



Daniel Hood (47:49):

Excellent. Randy, I wanted to see if you want to bring in, because you had mentioned earlier about young people being everyone is afraid of talking to strangers and it's appropriate because they're terrifying people. You don't know. They could be anyone you don't know. But you've mentioned that younger people were interested in this, that it doesn't need to be the gray-haired, emon grease who can provide advice that young people can do this. What do they need to do to do it or are they excited about it or is it's just that they can.



Randy Johnston (48:16):

First they are excited about it, at least the young people, young professionals that I talk to absolutely are to your point, the clients want to work with people that are like them. So again, young business owners coming up, we're going to see a lot of transition in this area. I'm super excited about the transitions. The opportunities are just astoundingly mind blowing. But Dan, to your point, I actually am fussy about a learning matrix that has skills in all sorts of areas and I usually like to have a conversation with people saying, look, here are the opportunities in our firm. Here's the types of things we can do and here's the education and experiences we're going to do to help you get to that point. And you have to be involved very early. It is not the old model where you don't get to talk to the seniors and the partners like it was in the past.



(49:12):

And from a management perspective, we have to embrace those younger people and bring them along. So some words in the profession like sale or sell or four letter words, we try to avoid those. But the business development stuff, the cross-selling of services, when you determine this is what we need for our client base, this is the skill sets we have with our team members, here's how we're going to go to market with that. It becomes so bloody exciting because you realize you get the opportunity to help so many people. It's the impact of the businesses and their employees, their team members as well. Young people get excited about that. They're very interested in in all sorts of change, and they see it happening at that level.



Daniel Hood (49:57):

And it may be easier for them to make those changes. People have gone into an accountant and been in accounting for 20, 30 years. You're used to a certain model. It may be harder to change. Seth, you got super excited at some point in there if you wanted.



Seth Fineberg (50:08):

No, he just touched on something that's like, yeah, the opportunities. That's what I get excited about is that the opportunities to do things do even some uncomfortable things. Things you're not used to doing are many, and I think maybe some of the younger set in general are definitely motivated to do that, be that voice for the firm.



Daniel Hood (50:36):

It's interesting, you see at a lot of firms, this tends to be tour at larger firms just because they have more people, but some of the most interesting and forward looking services that large firms doing are often being led by younger people. You see cannabis, you see ESG services, both a test and consulting services or advisory services going on. You see a lot of them being led by younger people because they have the enthusiasm, because they have the freshness and because for newer things to come along, crypto, no one can be a 50 year expert in crypto. It didn't exist for 50 years. So if I study it for two years, I'm as expert as anybody else who studied it for two years. So it's an opportunity to bring people on as we're recruiting a retention possibility. It's also a service expansion opportunity. On the other hand, you have to get all the other partners to trust this 30-year-old to lead a group, but it's an interesting opportunity, certainly. Do we have any more, we've only got three minutes left, but I know we've got a question there, Mike.



Seth Fineberg (51:28):

Where did the time go?



Audience Member 5 (51:29):

How do we incent firms to make the monumental changes that we've talked about on the panel when as you said, Michael, they're making money hand over fist, doing everything the old way?



Seth Fineberg (51:44):

I don't know that. So Monumentals great. I think these are incremental changes that ultimately will lead to, I think, but even better things because as Bonnie had said, it's not going to last forever. You have to be thinking about what's next.



Daniel Hood (52:05):

I would just to give you guys a little chance to think about this because it's a great question and it's really complicated, but I'm going to throw out the option of yes, firms are making money who hand over fist, but it's hard work. It's not like you're sitting back at the pool and money's just flowing to you, right? You're working crazy hours, you're working ridiculous.



Seth Fineberg (52:19):

How many hours did it take to get there?



Daniel Hood (52:21):

In your off hours? You're reviewing software to figure out what softwares can make up for all the staff you can't find you're working. Bob and Doug Lewis, were talking about people charging 2,500, 3000, 4,000, 5,000 billable hours in a year. That's crazy, right? That's an enormous amount of work. There is a lot of pain out there. The money's coming in and it's great, but there's a lot of difficulties to overcome to keep that money flowing in at that level. So the incentive, I mean it is very difficult to incentivize people to change when revenues are high. The thing is to find ways to get them to focus on those pain points. Those pain points are there and if you think of it a longer term, those pain points are driving people away from the profession. So you won't be able to realize the value that you built up during the good years.



Audience Member 6 (53:07):

There's a difference in how you feel about the work that's being done though. That's the incentive for me. You feel better about work when your client is appreciative and it's a different end of day feeling of accomplishment. That's the incentive. I dunno how many of you high off getting a tax return out, but if you have a client that is super grateful that you've given them insight and advisory services help grow the company, that's a different feeling.



Seth Fineberg (53:33):

It goes both ways.



Daniel Hood (53:35):

The value that clients, for those who can see the value that clients see from the advisory work from the higher level value added work is incentive and incentive. I would also suggest that a lot of clients, like I said, we do the service and they love getting a big refund and you can get that feeling from that too. So how do you get both really? That's what you should be pursuing. Get them the big refund and then get the high off that we're all chasing a high here.



Randy Johnston (54:00):

So, the answer that I've given to partners on this is, look, I think we can reduce the overall workload of the partners and the people within the firm and that the revenue stream is going to be higher. We're going to do a lot more value billing and therefore we're going to be less tied to the hour. We still can cost by the hour, but the amount of profitability here becomes sinful. And as long as you want your clients to be sinfully profitable and you get a piece of that good. If you don't want to, that's okay too. And that usually will stop partners in the track for just a minute saying, oh, you mean we can help clients be successful and we benefit too. That's the formula and it takes a little while to get there, but not long.



Daniel Hood (54:43):

Michael, I want to give you last word on this because we're just running out of time, but go ahead.



Michael Horwitz (54:45):

Quick answer to the question. I think that all boats have risen with this high tide. I think there're going to be some folks that are going to be exposed when the low tide comes and there'll be some haves and have nots. The folks that come to these kinds of conferences are typically the halves. They're the one percenters. They will evolve, but there will be firms that will think, just keep the status quo and milk this thing for as long as possible, and those firms won't be around five or 10 years from now. Probably not.



Seth Fineberg (55:18):

No way, unless they act. I'd say three things need to happen in this profession. I know we're out of time. You need to place value on life work balance. You need to not check the box when it comes to a diversity and inclusion and hiring the way Bonnie was talking about. And three, pay your people better figure it out. Starting salaries and even up to associate, mid-level associate is, it's pretty sad overall.



Daniel Hood (55:51):

That is true. Sorry, Heather, I can't tell if you're telling me to wrap it up or to take one more question. Wrap it up. All right. It was awesome. I think we created more questions than we answered, but that's awesome. Spend the rest of the day talking about them and report back to us at the end of the day for answers to all the questions we raised here. But I want to thank you all for your questions. I want to thank you all pal. Awesome stuff. Thank you so much for sharing your insights with us. We appreciate it.