A Tale of Two Markets
Having built and sold an accounting practice for £45 million in the UK and witnessed the evolution of accounting in both British and American markets, Paul Latham has a unique perspective on the industry's transformation. As he describes it, he's something of a "time traveler," watching the same changes unfold across two continents, decades apart.
The changes that swept through the UK accounting industry in the 1990s are now reshaping the American market. This parallel evolution provides valuable insights into where the profession is heading and how firms can position themselves for success.
The Three Fundamental Shifts
The accounting profession is experiencing three major transitions that are reshaping how firms operate. First, there's a shift from backward-looking to forward-looking services. Instead of merely reporting what happened last year, successful firms are helping clients plan for the future. Second, practices are moving from reactive to proactive engagement with clients. Finally, there's a transformation from basic compliance services to high-value advisory work.
The Boiling CPA Syndrome
Latham presents accountants with a stark choice using the analogy of the boiling frog. Just as a frog in slowly heating water doesn't notice the danger until it's too late, accountants can either become "boiling CPAs" facing a slow and painful decline, or they can embrace change and thrive in the new environment.
Becoming the Most Relevant Advisor
The real opportunity for accounting firms lies in becoming what Latham calls "the most relevant advisor" to their clients. This means being the core, central figure in their clients' financial lives – the go-to person for business guidance and financial decisions. This position of relevance goes far beyond traditional compliance work, encompassing strategic planning and business advisory services.
The Servant Mentality Trap
One of the biggest mistakes Latham sees in the profession is what he calls the "servant mentality." While providing excellent service is crucial, thinking of oneself as merely a servant to clients is a destructive mindset. Instead, accountants should view themselves as collaborative partners working alongside their clients to build successful businesses.
Working On vs. In the Business
According to Latham, accountants often run "the second worst businesses in the world" (with the revelation of the worst being saved for his live presentations). This poor business performance stems from getting so caught up in serving clients that they forget to work on their own business. They become trapped working in their business rather than on it, leading to suboptimal results and missed opportunities for growth.
The Future of Accounting
The future of accounting belongs to firms that can successfully navigate these changes while building strong client partnerships. This requires a fundamental shift in mindset from being a service provider to being a strategic partner. It means looking forward rather than backward, being proactive rather than reactive, and focusing on adding value beyond compliance work.
Drawing from both his experience as an accountant and as a business owner who has built and sold multiple successful companies, Latham brings a unique perspective on what clients truly value from their accountants. This dual perspective helps illuminate the path forward for firms looking to thrive in an evolving marketplace.
The transformation of accounting services isn't just about adding new service lines or adopting new technologies – it's about fundamentally reimagining the role of the accountant in today's business environment. Those who can successfully make this transition will find themselves well-positioned to build highly valuable practices that truly serve their clients' needs while creating sustainable, profitable businesses for themselves.
