THERE is a generation gap opening up within smaller accountancy practices, which threatens to stifle creativity, innovation as well as discouraging some of the best and brightest from pursuing a career in the profession.
That’s the theory, at least, but it seems to be held by a growing number of accountancy leaders in small and medium sized practices. The theory has it that established, older partners are ill-equipped to handle the pace of modern professional services; they are too married to outdated business models and have failed to understand that clients have changed.
And they are faced with a new cohort of millennials and aspirant partners whose only frame of reference is the tech-driven, interconnected, fast paced world dominated by social media and customer-led service models.
Take Bobby Lane, partner at Shelly Stock Hunter, a practice that makes no secret of its interest in new forms not only of servicing clients but also of engaging and communicating with them.
A visit to SSH’s website reveals a firm quite outside the norm: no blue and silver corporate branding and spiel about going the extra mile. No, it’s simply video testimonials from satisfied customers, followed by a blog and Twitter feed. Lane has a background in PR, and it’s his view that a combination of demographic trends, regulatory changes and client demands have contributed to this growing generation gap.
“If you look at a lot of firms, you’ve got a number of partners who might be approaching retirement who are saying ‘Right, we don’t want to rock the boat. We want to get as much income out of the practice as possible and earn as much as we can for the next few years and not invest and not develop and not rock the boat and not do anything that’s going to change things’,” he says.
A new generation
In Lane’s analysis, they are sitting across a table from the younger partners who take a different view: “They are thinking, ‘Well you’re going to be gone in 5-6 years’ time, I’m going to be here for the next 20-25 years, I want to start doing some interesting things and bringing in some new revenue streams or offering new services or changing the way we operate with our clients but I can’t do that because you don’t want to reinvest in the practice and develop it and take any risks whereas we do’.”
The growth of social media has accelerated this, to a point where some practices are becoming split down the middle between Gen Y and the millennials on the one side, and the grey hairs on the other.
And it’s something, Lane says, that partners in established firms must be wary of. “I do think that accountants are still stuck in the dark ages and are still very, very nervous about talking about who their clients are, about what they’re doing; they’re worried about their competition; they’re worried about people stealing their staff and their clients.”
Carl Reader is co-MD at Dennis & Turnbull (and a winner of Independent Firm of the Year – Wales and South West England at the 2013 British Accountancy Awards). He has some sympathy for Lane’s lament. “I would agree that there is a gap emerging, and I think that is due to a couple of things: there’s a new generation that are more entrepreneurial coming in; they haven’t had the restrictions on how they can do business that perhaps the older generation grew up with.
“There have also been changes in how the profession regulates marketing – up until a few years ago we weren’t allowed to actively market, but the landscape has changed. It’s also about the new business models – the youngsters are seeing that the partnership model is broken.”
Reader says he is see aware of a growing number of firms starting up with a blank sheet of paper, often with a strong technology base. The stereotypical set-up of 12 patners who generate fee income and collectively decide firm policy is becoming outmoded. “I think youngsters don’t really want to be part of that. And certainly younger firms are pursuing more corporate models that do away with the traditional partner structure.”
Joe Reevy agrees with much of Lane’s analysis. Having swapped practice for tech consultancy, he has foot in both camps, and says accountancy partners in smaller firms have a long way to go to remain up to date with the younger generation.
“The way a lot of practices are run is very protective of reputation and often this means that being responsive to fast-changing events is prevented or the responses are conservative/anodyne in tone,” he says. “Young people seeking to shake-up firms have almost never been popular (at least in medium-sized firms), and this area is no exception.”
And therein lies the rub. This generation gap is a concern because it affects not only individual firms in that they become dislocated and divided, but it also has implications for the profession generally.
If accountancy fails to adapt to the new realities – that clients want to engage with their accountants in different ways, through different channels – then it faces the very real threat of the best and brightest looking elsewhere for a career.
“I’d be surprised if many firms realised that potential recruits often do look at what they are doing in social media, where an absence can mean, ‘staid’, ‘dull’ and probably not a fun place to work,” Reevy says.
Richard Oddy, Casper Kaars Sijpesteijn and Rory Goldthorpe have been appointed to senior roles in key sectors of high growth, with a further 17 junior and experienced hires
Adrian Hyde, a partner at CVR Global, has been appointed as the new president for a year-long term, effective 21 April this year
Chris Harrington of Reed Finance shares insight on the rise of the M&A and IPO specialist under the current political and economic climate
Richard White, Nicola Westbrooke and Richard Ross all join from KPMG, where they oversaw the real estate tax practice