As technology continues to disrupt traditional accounting models, forward-thinking firms are uncovering new opportunities and ways to future proof their business.
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Recently at Count Financial’s national conference, 700 Count delegates spoke about the most significant disruptions facing the accounting profession today. It’s a topic that resonates strongly with most accountants.
Disruptors and your client life cycle
It’s no surprise that advancing technology is having a major impact on many aspects of the accounting profession. But what may not be immediately apparent are the specific challenges that are emerging at each stage of the client life cycle. Here are a few examples.
1. Online tax returns– changing your traditional compliance work
Tax return services for individuals and small businesses have traditionally been the starting point for most accountant–client relationships. But since the introduction of online tax returns in 1999, the number of people doing their own tax has increased substantially. In 2015, there were close to five million users preparing their tax returns online.
As you might expect, tech-savvy under-30s have embraced this self-service option. Within that demographic alone, the number of online tax returns submitted in 2014 was around 400,000. The next year it more than doubled to almost a million.
This means less bread and butter work for accountants — and even more significantly, the loss of a direct path to the next generation of new clients.
2. Cloud accounting
Technological advances are not only making it tougher to attract new clients, but also to retain existing ones. With the proliferation of cloud accounting packages like Xero, MYOB and QuickBooks, many clients are now able to take care of their own bookkeeping needs themselves.
For instance, Xero’s subscription membership grew by an astonishing 80% in 2014 alone1. Today, Xero has over half a million subscribers globally — and looks likely to meet its next target of one million subscribers very soon.
3. Budget SMSF products
Changes in the SMSF space are also placing margin pressure on many accounting firms. As accountants deal with regulatory change and the end of the licensing exemption, there’s also new competition from low-cost SMSF administration packages entering the market.
Developed by the large players, these packages can range from $850 to around $2,500, which is markedly cheaper than the average accountant’s fee for SMSF administration. Although accountants tend to offer a greater level of personalised service for their fee, at some point the price differential will impact client choices.
4. Intergenerational change, retirement and succession
Finally, at the same time when it’s getting harder to engage new clients, current clients are retiring in record numbers. Historically, an average of 140,000 people in Australia have turned 65 every year, but going forward, this number will double to 280,0002. This means their need for tax and business accounting services will also cease.
Some of these clients will want your help with business succession planning, particularly if they hand over their business to their children or grandchildren. But there’s no guarantee that the next generation will continue to use your services.
In fact, if your business doesn’t have a strong digital presence you could miss out, 76% of today’s affluent consumers conduct online research prior to purchase3. They may also be more inclined to try robo-advice instead of automatically using the family accountant/financial adviser.
The solution: prepare for the future now
The future looks challenging — the statistics surrounding each disruptor above paint a picture of accelerating change — but it’s certainly not all doom and gloom. In fact, many accountants are finding ways to turn these potential disruptors into enablers, by focusing on the things they can offer that technology can’t.
For instance, some accounting firms are using cloud accounting software and white-labelled SMSF administration products to help them efficiently service the more routine needs of their clients. On one hand this enables them to offer their services at a more competitive price point, and on the other it frees up more time for them to provide additional value-added services that leverage their professional expertise.
Even if your clients have already adopted their own cloud accounting or SMSF administration service, there are still opportunities to deepen your relationships with them by helping clients harness the full power of these digital technologies.
The future is not robotic, it’s bionic. Winning firms will offer a hybrid of innovative technology and a personalised client proposition.
The key is to make the shift to become a trusted adviser that businesses and individuals can’t afford to do without. And for firms who are able to do this well, the future looks brighter than ever.
1 Year In Review, Xero
2 ABS, Australian Demographic Statistics, 2012 and Population Projections, 2010. Values after 2012 are projected
3 Today's Affluent Consumer, Oechsli Institute, https://www.oechsli.com/research