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I’m an accountant, get me out of here: Why it’s time for change

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New business models could offer greater choice for professionals and customers alike.

 

18th Jan 2022
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The pandemic has given us the chance to rethink the way we work and placed greater focus on our lifestyle and values. We’ve been relieved of the daily commute, learned to work remotely and had greater say in how we manage our routine.

Some professionals - especially those from the big firms who are used to long days in the office - may now be rethinking their priorities and looking for an escape route. Unfortunately, for those who want to remain in private practice, accountancy offers limited options. 

The problem is that while technology has disrupted many other industries, accountancy has remained a bastion of tradition in terms of its business models and its culture. 

The Big Four continue to dominate the sector and attract the cream of the talent. Candidates are drawn by the brands’ prestige and the long-term career prospects - but success comes at a price. Given firms’ focus on profits per partner, professionals often find themselves trapped on a treadmill with little control over the type of work they do or the clients they serve.

While there are plenty of hard-working graduates out to make their mark, the novelty can wear thin. It’s not surprising that bigger firms have struggled to retain more women partners and achieve greater diversity.

At the other end of the scale, smaller firms can provide a better work-life balance but also lower pay and less opportunity for those with specialist skills.

In contrast to accountancy, other areas of professional services have been transformed in recent years by the introduction of new technology and new business models, so skilled workers have a much wider choice. In property for example, a whole range of breakaway teams and start-ups have challenged the dominance of the big firms and introduced different approaches.

Even in the legal sector – hardly known for being trendsetters  – a host of new ‘digital’ firms are offering an alternative to the traditional partnership model. These ‘fee-sharing’ or ‘consultancy’ models are an attractive proposition for professionals looking for greater flexibility and autonomy.

Challenger firms such as Keystone Law, Gunnercooke and Taylor Rose have gone from strength to strength during the pandemic. According to one report, they will become the dominant model in the high street and mid-market in five years’ time, with a third of UK lawyers working under their brands.

It may be that the debate about alternative business models has unleashed creativity in the legal sector; or the unique demands of audit work have stifled innovation in accountancy. However things may be about to change.

Firstly, technology has undermined the advantages that big firms once had – the global networks that helped them to win business and the vast army of employees to carry out the work. Smaller firms can now more easily compete by building networks online and assembling virtual teams.

Aspirations have changed too - recruiters tell us that candidates are seeking greater autonomy and flexibility, and becoming more entrepreneurial. And regulatory pressures are also building. Any new legislation on audits would have a major impact on the entire sector.

The landscape may soon look very different, with the creation of larger, specialist firms at one end and smaller start-ups at the other. There would be greater competition but also more diversity in terms of business models. The result will be a more vibrant marketplace and one which offers greater choice for clients and professionals alike.

James Dow is a founding partner of Dow Schofield Watts, an accountancy brand that follows a licensing model and listed on the Alternative Investment Market in December 2021.

Replies (6)

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By Hugo Fair
18th Jan 2022 12:06

"The landscape may soon look very different, with the creation of larger, specialist firms at one end and smaller start-ups at the other."
How is that a different landscape?
Sounds like the status quo to me (without the fun of the 12-bar boogie variety).
The names on the door may change, but everything behind them stays (mostly) the same.

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By DJKL
18th Jan 2022 12:56

Effectively, as we have now, the inbetweeners find it tricky to work out where they ought to sit to eat lunch and as soon as they get to a critical mass someone will no doubt wander along and make them an offer they just cannot refuse.

And if you are a discerning consumer being not enormous but needing in depth sound technical advice, where do you now go, well we have been clients of KPMG, Grant Thornton and flirted with what was Baker Tilly, and frankly I have found myself far more comfortable with the likes of Johnston Carmichael (effectively what Scott Oswald were in the Scottish marketplace before they were acquired in one of the consolidation phases that sweep the marketplace) than these larger beasts.

Of course I ought to have a loyalty to Baker Tilly/RSM as that is where I effectively started in the mid 80s , but it is a never changing cycle, the year I joined Hodgson Impey was by chance the year Hodgson Harris incorporated Chalmers Impey and no doubt some of the new emergent firms will get folded into the arms of others before too many years pass.

(Effectively big dogs eat little dogs)

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By Hugo Fair
18th Jan 2022 13:13

A much better exposition than mine, which suffered from my unaccustomed attempt at brevity!
But your final line says it all ... especially if you add "and thereby leave room for new little dogs".

It's the clients for whom I feel sorry - as soon as they need anything more than the bare minimum of 'standard' services, but aren't equipped with pockets deep enough to talk to the big boys'n'girls.
Of course this applies not just to accountancy services, but to legal and medical and ...

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By DJKL
18th Jan 2022 13:36

Talking to the big dogs is a waste of time unless you are big enough to get their undivided attention, you just get shunted to some tax manager/audit manager and if you remain long enough then in fairly short order they look different because they are different.

This is the same even with smaller firms, in my second employment I prepare to ETB our books and pass these to external accountants, a local CA firm, at best these days the same person does final accounts etc for at most two years, then they are either elevated within the firm or have departed for elsewhere. Where is the continuity of contact?

I have no experienced medical but legal can be a nightmare, you can end up with 3-4 different teams within the firm each dealing with their own niche part of a single transaction (and the fees to go with it).

In my father's day they were a five partner/20 staff law firm, my father did conveyancing, trusts, CTT planning, leases, some commercial law etc, a broad spread with the firm having a court partner and other broad niches that the five partners covered, they were not the biggest in Edinburgh but were a decent size second tier New Town firm that had existed from the 1830s. Then ,as he decided to retire in the 1980s, the consolidation of law firms really took off, firms swallowed firms, Pairman Miller merged with Drummond & Co, before you knew it Alex Morrison (where my mum had apprenticed) was part of Maclay Murray (think late 1990s/early 00s) more recently Maclay Murray, the largest Scottish firm became part of Dentons , the world's largest firm (we used them a few years back, not cheap but at least only two teams needed for a £250k transaction)

As you say, the death/takeover of some leaves space at the bottom, new firms emerge, if you wait long enough some of them will get consumed and the cycle will continue but the middle keeps becoming hollowed out.

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By Hugo Fair
18th Jan 2022 13:55

"I have no experienced medical but legal can be a nightmare, you can end up with 3-4 different teams within the firm each dealing with their own niche part .."
Lucky you to have not experienced it, but I can assure you the medics are no better than the lawyers (even where the individual is supremely competent).

I was recently attended upon by a leading Osteoporosis consultant and, whilst looking at various scans, I asked about some white 'splodges' in areas he wasn't discussing. "Oh", he casually responded, "that's osteoarthritis ... I only deal with osteoporosis"!
[When I replied with ever so slight sarcasm that it was nice to be talking to 'God', he positively preened under the presumed accolade!]

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By DJKL
18th Jan 2022 14:10

Specialism- my father used to tease my godfather (they were at university together) that whilst my "Uncle Don" apparently had read history all he could ever discuss was The Thirty Years War, and then only five years of it.

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