When I was getting towards the end of high school, I really didn’t know what I wanted to do. I was good at both mathematics and computers, and so I thought it would be something in IT or business/finance.
I went along to a careers fair at the start of my final year, and when I was there I spoke with someone about a career in accounting. I gave it a bit more thought and decided that accounting might be a good way to go, and I was then lucky enough to land a job straight out of high school working for a Big 4 accounting firm. As it turns out, the choice of accounting has been quite lucrative for me, going from a very ordinary starting wage for a cadetship/traineeship while studying, to progressing to Partner money 14 years later at age 32.
Up until the last couple of years, I would have thought that a career in accounting would definitely be the way to go if you’re wanting to make some decent money. Of course not everyone makes partner, but even if you can make manager level or equivalent (entirely possible by the age of 30 for many people), you can be making six figures which would put you right up there compared to a significant portion of Australians.
However, some changes in the industry that have happened, and that I can see happening, are starting to make me reassess whether accounting really is the way to go for the longer term for many people.
Technology is eliminating some jobs
Many of the tasks that administration and entry-level staff are involved in are disappearing, making me question the amount of time that such jobs can continue to exist. Some of these tasks that are being eliminated by technology include:
- Filing (no more paper files);
- Archiving (limitless digital storage means no more archives);
- Incoming and outgoing mail (everything is done via email, with even the tax office increasing electronic communications);
- Invoicing (this is now paperless in our office, and will be emailed out to clients soon);
- Answering telephones (many enquiries come via email now rather than via telephone); and
- Basic data entry (cloud accounting is killing off data entry).
In our business, I predict this will have consequences for roles in a number of occupations, including:
- Administration staff – to reduce by at least 1/3rd, if not more; and
- Trainee/cadet accountants – these entry level roles will need to reduce by at least 20%, but possibly more.
Technology is dumbing-down/simplifying other jobs
For those that will continue to have jobs in the industry, their roles will be greatly “dumbed-down” and simplified in a number of ways, including:
- Cloud accounting will eliminate data entry, with transactions automatically imported from online banking feeds;
- Cloud accounting packages will generate the financial statements, so you probably won’t even need to prepare financial statements in accountants’ software systems;
- The tax return will be prepared automatically from the cloud accounting software package, meaning tax returns will largely be prepared with a click of a button.
- For individual tax returns, much of the information is already available from the tax office’s “pre-filling” reports, and I would say that these returns will eventually be done automatically without an accountant. An accountant would then only be needed if you wanted to lodge a variation.
- Self managed superannuation is being largely automated by the same cloud accounting processes detailed above, and given that pricing has been disgracefully high in the past this segment is ripe to be stolen by the big banks who will drive prices through the floor.
Clients are becoming smarter and don’t need us for so many things
Many of the services that we provide to clients have historically been provided based on the clients being ignorant. While I believe that people will continue being ignorant about money, I believe that they will become more informed about the value of services that we provide and may choose to simply not obtain some of those services.
While the pace of financial education for the general population is frustratingly slow, I believe that people will eventually develop enough financial intelligence to reduce the need for some of the basic advisory services provided by some finance “professionals”.
Clients are becoming more cost-conscious and just won’t pay so much for many services
As technology reduces the amount of time it takes to attend to accounting tasks, clients are also starting to question how it can cost so much and take so long. It is no longer uncommon for clients to query fees regularly, especially for smaller clients in the <$4k per annum fee range.
The internet is also increasing competition for accounting services, with the geographical requirement that your accountant be close to home being steadily eroded. Innovative new ideas like suitbids.com, where accountants can pitch for client work online without ever meeting or speaking to the client, will have the effect of breaking geographical links, but also driving down costs.
Governments don’t seem to be favouring the status quo for accountants
A rumoured proposal from the Australian Taxation Office is to start automatically stripping data out of the cloud accounting software of taxpayers to automatically complete their various tax returns. While this is a fair way off as a reality, I can certainly see how it could be an effective way for clients to handle their tax obligations. It would also greatly reduce the scope of services that accountants could offer to taxpayers in this scenario.
Another example is individual tax returns, for which the writing is surely on the wall. Countries such as the UK have done away with individual tax returns, except for taxpayers that choose to self-assess, and this would put firms like H & R Block and ITP out of business overnight. The system actually works quite well in the UK, and given that the Australian Taxation Office already has access to the appropriate data for this task I can’t see any reason why they don’t just make it happen now. The only reason they don’t is probably because of the backlash from the accounting sector, but if it’s in the best interests of taxpayers I can’t see how long they can hold out…
So should you take up a career in accounting?
I believe that the accounting firms that are most-susceptible to these challenges are the big firms. They typically have highly-inflated fees where clients are being significantly over-charged, they have bloated cost structures with a high level of excess staff and bureaucracy, and they are least able to handle fee shrinkage due to their big payrolls and the significant lifestyles that they are supporting for their partners.
Given the above, I believe that a career in accounting can still be quite rewarding, but I would question whether a start with a big firm is as good as it once was. Smaller firms of course have their own issues, not to mention it can be very hard to squeeze your way through to the top of the tree, but I would stop and question the tried and tested career in accounting.
While I can’t really put myself in the shoes of those starting out in the industry, I would say that I believe an approach that has a good chance of success is one where you take a smaller firm with a strong client base, and roll out better use of technology. This should reduce time commitments, reduce the required headcount, and reduce costs overall. If you can educate your client base along the way then you should be able to make plenty of money without working as hard. Making the transition from traditional accounting model to the new world will be the key challenge though.
What is your prediction?
So what do you think? Is the accounting industry going to be very different in the future? And will it still provide rewarding careers like it has in the past?
And what about your industry? Are you working in a job that may not exist in the future or is at risk of being very different going forward? Or have you even thought that far ahead?