According to Todd Mackay, president of Avantax Wealth Management, as much as $650 billion in “tax savings alpha” could be realized by advisors and their clients every year if they were to more effectively incorporate tax considerations into the investment process. “It is a staggering amount of money that could be put back into the pockets of households across the U.S.,” Mackay told ThinkAdvisor in a recent interview, but only if the right planning talent is available.
What Comes Next
In a new conversation with ThinkAdvisor about the CPA talent shortage, Ryan Losi, an executive vice president of the boutique certified public accounting firm PIASCIK, said the situation is likely to “get a lot worse before it gets a lot better.”
“I do think the CPA talent issue is a major emerging problem, both for CPA firms but also for financial planning professionals and closely regulated corporations,” Losi said. “All of the managing partners of the big CPA firms are out there talking about this. You hear about this concern at all the big meetings of accounting organizations. It’s a reality.”
Losi said he is particularly worried about the precipitous drop in the number of college graduates earning accounting degrees, and he wonders whether the traditional barriers to entry to the CPA profession have become too onerous in the eyes of young people and career changers.
“I can tell you from firsthand experience that this is just a tough, demanding field,” Losi said. “The educational commitment and the working hours are serious. A CPA can expect to work 70 hours or 80 hours per week during certain seasons. Frankly, many people under 30 just don’t want to commit that kind of time to work, and it doesn’t matter how much money you offer them.”
According to Losi, older professionals in the field today are willing to put in the long hours because of the substantial compensation they can earn. But, at least in his experience, offering higher pay just isn’t enough to attract many younger people to such a demanding field.
“What I’m seeing as a solution is that firms are being forced to outsource some of their work to places like India, and that is happening much more than ever before,” Losi said. “Based on the data that I have seen, prior to the pandemic, the number of CPA firms across the U.S. using outsourced services was about 6%. Today, it’s above 40% and growing rapidly.”
Losi said this challenge will take many years and a lot of collaboration to address, and it is unlikely that the CPA industry of 2040 will resemble the industry of 2020. In the future, CPA firms will be globalized and much more reliant on scalable technology.
If he could make one change today to slow the decline, Losi would reduce the number of credit hours that are required to sit for the CPA exam.
“Over the past 15 to 20 years, many of the state-based CPA boards have adopted more difficult criteria for even applying to sit for the exam,” he said. “One change that I have strongly disagreed with is that you now need 150 credit hours to even sit for the exam in most states, while most undergraduate accounting degrees require only 120 or 130 hours. We have, in effect, intentionally limited the flow of candidates for the CPA designation.”