sure, the current generation of accounting firm owners faces a crisis in finding the people for succession.
but that issue pales in comparison to the problem we have today, right now, with the gap between the generations seen in clients and the cpa firm workforce.
according to data from thomson reuters, the aging client base is much more pronounced than the aging workforce.
| generation |
% of workforce
|
% of client base
|
| traditionalists (62+) |
4%
|
7%
|
| baby boomers (44-61) |
38%
|
87%
|
| generation x (28-43) |
48%
|
6%
|
| millennials (under 28) |
10%
|
0%
|
“if we think the pipeline for future professionals is small, the pool of future clients is miniscule,” says jim boomer of boomer consulting. “just as the next generation of workers will require new strategies, so too will the next generation of clients.”
he makes four important points:
- the millennials and gen xers are more comfortable with online tools that enable them to do things themselves. they have access to information at their fingertips like no generation before them – and they know where to find that information with relative ease.
- while potential increased regulations and tax law complexities could change things, the fact is younger generations are less likely to utilize a professional accountant.
- firms will need to develop innovative strategies that identify and take advantage of new opportunities with a drastically different client base.
- this reality only makes younger generations of workers more integral to the long-term success of a firm. they understand the technologies and values that shape the mind set of the demographic. in short, they hold the answers to what it will take to transform and sustain a firm. learn from them and, at the same time, teach them to build lasting relationships that will be the foundation of the firm’s future client base.
19 responses to “are you already missing the next generation of clients?”
client testimonials don’t work anymore | adrian pearson
… this posting on accountingweb got me thinking about this unrelated piece at 卡塔尔世界杯常规比赛时间 and what the future holds for the “client testimonial” as used in the marketing …
michael
absolutely things are changing. but read what everyone has posted above. in effect they will do it themselves. yet i know not of a single person, client, friend who does not complain about having too little of one the most precious assets available to all: time.
if someone wants to be their own md, go ahead at your own peril. but yet the entire country wants medical services provided. i see no research that shows a slow down in the demand for medical services.
quickbooks, yes lots of my clients use it. it has replaced the need for routine bookkeeping. but lets be honest, the quickbooks results we all see are poor at best.
yeah just type something in google and be instantly educated. yet the average person on the street cannot identify where iran is on a map. all research says that more than 70% of americans are not prepared for retirement, yet there are millions of on line tools.
people confuse information for knowledge.
there will be a demand to truly educate and advise people but it is how that will be delivered is what will change.
if some, as noted above, wants to cut her own hair so be it. but not i and not most people. just as more and more flock to have their nails done than anytime in history (the explosion in nail salons). some people pride themselves in saving pennies as the sacrifice of time and freedom. truth is you will never make a “great” living serving people who are happy just living a “good” life.
we need to be creative about delivery of value and knowledge. many of the commentators on here frankly are not core client to build a business around as they would rather mow their own lawn than build a business. hence the responses we are filtering through are not coming from the entrepreneur. i can unequivocally state that the young entrepreneurs i work with have not time or desire to google anything related to the tax code or debits and credits but they are always calling for insightful and thorough answers to which they are seeking a response and from which they want action. google may provide information but what cpa on here can state that there is one answer for all clients. and when after clicking offline did has google then implemented a solution. sure for those climbing up on their rook when it is leaking, they surely are not out there adding revenues to their top line while replacing roofing shingles.
one other comment, the iphone app for a w-2: who on here makes a living preparing tax returns for those who just have a w-2? what market segment are we talking about in our analysis?
gary e. jones, cpa
here is a new iphone app that lends credence to boomer’s point. if you have an iphone download the app siri, then verbally (no typing) ask siri (a spinoff from stanford research institute, better known as sri) a question and it will respond with an answer in seconds. once this application is populated with a more substantial knowledge base, and learns through ai, many tax, accounting, legal, and other questions can be answered in seconds for free. that’s right, i said free.
right now the technology is mostly fun to use and entertaining; but, isn’t that true of a lot of technology that has eventually found its way into the mainstream of business and replaced the human being at the other end. robots come to mind immediately for me having replaced thousands of manufacturing workers in about a decade; example; the new ford plant in brazil.
q: the question is begged then; why can’t knowledge based workers (professionals) be replaced by technology?
a: you can argue that tax, accounting, business valuation, and other services require judgment; but, i say to you that turbo tax figured that one out and successfully poached hundreds of thousands of tax returns right under our noses.
watch for avatar professionals on demand through video with a learning knowledge base to eventually replace, or at minimum augment professionals. the future is at your door step and knocking so loud it is deafening. many call centers are implementing this technology as i am writing this comment – i have seen it work and it is amazing. movie star looking, video based avatars are on the way and they don’t require benefits, a human resource department, employee taxes like fica, and they will not sue an employer for wrongful termination.
rick
thanks, gary, we’ll try the app. here’s the url, if anyone else wants to try it…. http://itunes.apple.com/us/app/siri-assistant/id351778157?mt=8
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b
the world is changing quickly. there is already an i-phone application in california where you can take a picture of your w-2 and your tax return gets done. with thrid party reporting, the irs can do about 95% of the returns without any involvement by the taxpayer. quick books hasn’t taken away the bookkeeping work, but it has destroyed it’s perceived value. strategy still has value, if you can save or earn your client more than your fee. i think more cpas will be competing for less work going forward.
rich gall
as a professional service firm, we have begun successfully finding clients on linkedin and twitter. if our clients are using these kinds of ways to verify that we have a service they want then we must recognize that we are also in danger moving into a commodity. personal insurance has moved to geico and progressive and business insurance is beginning to do the same.
i’m of the opinion that the first thing a person does when they know they need a service is go to google. if you can’t be found there in the moment of need, you don’t exist. linkedin and twitter work well for the marketing departments but they have to center around new ideas about how you work and exist to create an awareness of your market. and to be frank, this is going to be very hard for cpas.
we think our clients can measure us in a clear multiples of roi and make sure they understand what that is both in terms of revenue generation and cost savings. if they can’t, we will easily be geico’d – or turbotaxed.
steve bunch
i too am gen y but i think this article is only relevant if your primary interest lies in attracting individual clients.
to speak to technology enabling the younger generations, in the past two months alone, i have picked up a dozen new individual clients who previously used turbo tax et al., and made significant mistakes that will ultimately cost them interest and penalties. incidentally i did not resort to twitter or facebook for these new clients but good old networking (which is actually more fun, but i digress).
i personally am not looking for individual clients only, i see them as a matter of convenience for my corporate clients which are much more profitable and rewarding engagements.
to that end, i don’t think quickbooks is the answer for the younger generation. young business owners may think that qb allows them to properly record financial transactions but i find that 90% of the time they aren’t even close. the bottom line is i think the younger generation would rather spend their free time engaging socially in twitter and facebook and leave the dull accounting work to a professional. if anything i think viral and social media marketing are a better use of a young executive’s time rather than trying to prepare his/her own tax returns and financial statements.
while twitter and facebook are being endlessly pushed by state cpa societies and trade groups, i think linkedin is the only viable social media influence in our profession. it is a “business social” platform that gives you the ability to set yourself apart professionally and use your contacts to make introductions to new ones. i still think face to face networking will be key to the future success of any cpa firm.
april
mallory on july 24th response hit the nail on the head!
i am a gen y, and she is perfectly right that our generation tries to do much more by ourselves. google truly is my best friend, everything you ever needed to know about your favorite online game, what a rash on your skin might be, and we can find the cheapest hotel room. we do all our banking online, and that online statement dumps directly into our quickbooks or microsoft money program so we can completely automate our bank reconciliations and keep track of expenses.
why come to a cpa when quickbooks and turbotax walk even a dummy step by step through their bookkeeping? so, when i look at who my future clients will be, i think it will be clients who think that paying us is well worth the time they would be saving. this means we have to become an effecient well oiled machine.
client testimonials are not enough | technology for accountants in practice | top accountants
[…] this posting on accountingweb got me thinking about this unrelated piece at 卡塔尔世界杯常规比赛时间 and what the future holds for the “client testimonial” – as used in the marketing […]
wayne schulz
nice post – and agree that the next generation will want to buy services very differently from how the current generation does.
my service offerings are primarily erp (a fancy name for accounting software) and already i can sense the winds of change.
legacy offering such as spending a day or two “upgrading” computers will soon be extinct. can you imagine what the next generation of owners would say if they learned that their facebook or gmail would be down two days while technicians upgraded their account?
so far all the explanations that i’ve heard in it-land about how this won’t happen are from those justifying why they won’t change – and not watching where the client of tomorrow will arrive from and how they will want to buy.
where will those next gen clients come from?
[…] me yesterday asking if i have any data points into uk attitudes towards the profession following this piece from rick telberg where he quotes: “if we think the pipeline for future professionals is small, the pool of future […]
jerry justice
good insight jim. the changes to technology and, more specifically, the cultural changes to the way people use that technology are already impacting the way we do business. the need for accountants will be there, the question is what the services provided look like in a mnore collaborative world.
jason m blumer, cpa
jim boomer hits the nail on the head.
our industry needs to wake up – we have to start doing things differently. we will be serving new generation clients with new generation staff. demographics tells us so.
the demographical data at the beginning of the post is great. within the next 5 to 10 years the “% of client base” category is going to swing heavily toward the generation x and millennials. and it won’t be gradual.
baby boomers will retire in huge numbers over night, and gen x and millennials will begin to own businesses (it’s already happening with the gen x). it just makes sense.
if we aren’t preparing now, then we will be shocked as to what our millennial clients require of us!
tweets that mention are you already missing the next generation of clients? : 卡塔尔世界杯常规比赛时间 -- topsy.com
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rick
mallory, andrew… thanks for your comments!
mallory
as a millennial, i think the logic that we are less likely to utilize an accountant for traditional reasons is valid. my husband and i do service our own car, repair our own roof, and style our own hair. if we don’t know how to do something, we just “google it” often with fantastic results. we get frustrated with the older generation that ponders how to do something for hours when in 10 minutes you could just look it up and have it done.
that said, as our time gets more valuable we will outsource services. i am a cpa so obviously i am not in the market for tax and accounting, but i can say that important factors when outsourcing other services is 1)they must save us alot of time (otherwise we will do it ourselves) 2) there is usually a secondary reason for supporting the service (the company is local, we know the business owner personally, or are somehow otherwise connected).
great article, i’ll be thinking of some ways other ways for accounting firms to connect to the younger generation.
andrew pfau
i don’t fully agree with the logic that younger business owners will not need an accountant or an accounting firm. unless you believe that all areas of accounting and taxation are suddenly going to get very simplified, i do not see how a busy successful business owner will have the time or the inclination to learn the skills and knowledge necessary to eliminate the need of a professional. i don’t care how smart you are you don’t practice root canal on yourself, nor do you service your car, repair your roof, or cut your own hair. we provide a service and most people, especially the affluent, will continue too seek professional experience and care. i agree they may have different needs and they may communicate in different ways but they will still seek out professionals from their own generation to service their needs. in fact, the downturn of today will lead to tens of thousands if not hundreds of thousands of new seedling businesses that will grow up from the forest replacing the dead and damaged tress of the current economy.
they will represent the next generation of businesses that will carry the economy into the future.
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