Accounting Industry Predictions for 2022
During these unprecedented times, it is difficult to predict the future. Thus, the leaders of today’s CPA firms should focus on planning for various options based upon as many possible scenarios as possible. This type of planning explores plausible potential business models and implementation processes for impending unknowns.
As you develop your strategic plans for 2022 and beyond, consider the following predictions and trends.
Aligning the firm’s goals and vision with partner performance criteria and accountability continue to be a key objective for progressive firms.
Unrelenting increased competition for professional staff, rising staff labor costs, increased regulations, and client demands will force firms to carefully examine their mix of services, industry concentrations, and niches. Client engagement profitability will be more scrutinized and evaluated, and partners will be held more accountable for increased realizations.
The future will bring tremendous opportunities for accounting firms that are highly leveraged, with well-trained professional staff, using state-of-the-art technology, and use outsourcing methods and processes, and increased efficiency methods. Firms will continue to offer remote work options way beyond 2022 to compete for talented professionals.
To take full advantage of the favorable marketplace for accounting firm services, partners need to be highly effective client relationship managers, trusted advisors, and rainmakers — not grinders. Firms of all sizes will increase their menu of consulting and advising services to remain competitive. Firms will continue to acquire consulting and advisory companies that complement their traditional services.
As succession planning continues to be challenging, career development and leadership training will be further expanded into firm CPE curriculums. Progressive firms will significantly increase their training budgets. To remain competitive and avoid merging into a larger firm, partners will have no choice but to invest heavily in their “best and brightest” staff in all stages of their careers.
Across the country, consolidation of firms will continue at a faster pace, especially with two to 15 partner firms. 2022 will most likely break records for CPA firm M&A transactions.
There will be more mergers of public accounting associations and networks.
More small firms will split up due to a lack of partner consensus on succession planning, whether to merge into a larger firm, and the strategic direction of the firm.
Firms will increase their efforts to recruit talented partners from other firms. Ideal targets will have leadership and practice development skills and partners who are specialists/experts in industries and niches.
As the war for talent is in a “crisis mode,” firms will invest more resources into outsourcing work offshore and acquiring firms or growing their existing firms in India and the Philippines.
The firms that have grown through the consolidation of aging partners and practices will begin to address intensified succession planning issues. Firms with succession challenges that wait too long to merge up or be acquired will experience significant decreases in practice valuations.
More firms will merge as a competitive strategy to gain more resources, greater service capabilities, and industry expertise, and advisory services rather than for near term succession problems. There will be more mergers of mega-firms into larger regional and national firms.
Managing Partners and Executive Committee members will be held more accountable by their partners for strategic actions and profitability. Attention will focus on their ability to lead and manage successfully and achieve the goals and objectives, as documented in the firm’s strategic plans.
Technologies such as artificial intelligence (AI) and robotic processes automation (RPA) will continue to advance at an increasing pace.
Rapidly changing technology will play an even more significant role in marketing professionals’ programs and plans. As a result, marketers will be better equipped to generate ROI-driven reports, perform precise market research, collaborate with BD professionals on CRMs (Customer Relationship Management), target prospective clients, implement digital marketing and social media campaigns, and use videos and creative designs to illustrate client success stories/case studies and testimonials.
Diversity, equity, and inclusion (DEI) initiatives will continue to be a competitive differentiation, especially in attracting the best talented professionals.
There will be an increased number of firms hiring lead generator/business development professionals to compete with larger firms and supplement the practice development efforts of their partners.
The need for diversified multi-faceted marketing professionals will become even more necessary to maintain a competitive edge in the local marketplace. As a result, more firms below the Top 200 will outsource their marketing and practice development programs to consulting companies.
As the lack of qualified professionals continues to be an obstacle to growth, the role of internal marketing professionals will continue to expand and increase in the areas of recruiting and hiring practices to attract quality staff, partners, and M&A candidates.
The partnership structure will continue to fade away and will be replaced by a more corporate type of structure. More firms will hire professional COOs to assist the partners in managing their organizations.
The future is bright for accounting firms that can quickly implement initiatives and strategies to adapt to the changing marketplace and the needs of quality clients.
“It is not the strongest of the species that survive, not the most intelligent, but the ones most responsive to change.” — Darwin
Joe Tarasco, CEO and Senior Consultant, Accountants Advisory Group, LLC, assists the leaders of public accounting firms by consulting in all areas of firm practice management, including succession and strategic planning, firm governance, mergers and acquisitions, partner compensation structure, practice development, facilitating partner retreats, and leadership consulting. Click to request a consultation or call (845) 265-9046.