Predictions for 2014 and Beyond

By Joseph A. Tarasco, Accountants Advisory Group

As we approach the end of 2013, the accounting profession and marketplace is changing quickly. Here are some predictions and trends that you may wish to consider and take into account in your strategic planning for 2014 and beyond.

  • Competitive fee pressures, rising labor costs  and lack of quality staff will force firms to carefully examine their mix of services, industry concentrations and their positioning in their marketplace relative to their resources and competition. Industry, niche, and service segments will eventually be viewed as profit centers and partners will have to make the tough decisions to increase profitability in their respective areas. Partner accountability to increase bottom line profitability will put more responsibility on leaders to better manage the recruiting process, staff development and retention, marketing, work flow optimization and efficiency. More firms will move toward an up or out policy vs. the permanent manager type of structure.
  • Career development and leadership training will continue to grow as the need for quality professional staff at the manager and partner levels turns into a crisis mode. Firms will have no choice but to invest heavily in their best and brightest in all stages of their careers in order to remain competitive and develop a succession plan.
  • As the oldest Baby Boomers turn 68 in 2014, the firm’s who have grown thru consolidation of aging practices will begin to deal with intensified succession issues. Consolidation of the top 100 firms in the country will continue at a faster pace, especially on the east  and west coasts as new and larger national firms will be created eventually growing into 2nd tier firms.
  • Managing Partners and Executive Committee members will come under more scrutiny by their partners in their ability to lead and manage successfully while large numbers of partners retire and younger partners must step up their game. Aggressive firms will look at this as an opportunity to market to clients in larger firms who are experiencing service deficiencies while transitioning is in process.
  • Firms will take a hard look at their partner retirement compensation structure and policies and adjust them to the new economy to avoid younger partners from leaving and to attract quality partners and merger candidates.
  • The partnership structure will fade away and be replaced by a corporate type structure at the top 200 firms in the country. Firms will hire professional COO’s from outside of the CPA profession to assist them in managing their organizations.
  • Mergers of similar size firms with less than 20 partners will increase as a succession and growth strategy, in order for partners to maintain control and avoid culture shock of merging into much larger firms.
  • Partner compensation will be more geared to higher levels of performance and contribution to the future success of the firm. Aligning the firm’s goals and vision with partner performance criteria will be a key objective for progressive firms.
  • There will be at least 5 mergers of international associations of accounting firms in the next five years as associations lose members to mergers.
  • More small firms will split up due to a lack of partner consensus on succession planning and investing in the future direction of the firm.

The Accountants Advisory Group wishes you a happy and healthy holiday season and a prosperous 2014.