BeansTalk
BeansTalk: Where Expertise Meets Opportunity, Mauldin & Jenkins' podcast, where we are sharing and showcasing our areas of expertise through conversations with practice leaders on their knowledge and experience.
BeansTalk
Future Forward: Technology, Insight, and Impact
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The accounting profession is evolving rapidly, driven by advances in technology, artificial intelligence, and changing client expectations. In this episode, Brandon Smith and Brent Ullrich discuss the future of CPA firms, the growing role of advisory services, and how firms can leverage innovation to deliver greater value in an increasingly dynamic business environment.
Welcome to Bean's Talk, MJ's podcast where we are sharing and showcasing our areas of expertise through conversations with practice leaders on their knowledge and experience.
Speaker 2Well, welcome back to uh Bean's Talk. Um today I'm very excited to talk to Brandon Smith, who is probably you probably recognize a host with the uh with the podcast, and we're talking about a topic which I think is both is near and dear to both our hearts, which is kind of the future of the CPA, the advisory firm, uh what that means. And and I feel like we're kind of in a a state of flux right now with you know with technology and everything. And so just kind of a conversation about, hey, what does that mean? What does that mean for the future? And , you know, it hey, Brandon, great to have you on your own show.
Speaker 1Yeah, thank you so much, Brent. It's gonna be interesting to kind of be on this side of the microphone for these sessions. But no, just as you said, it's just such an interesting time right now in the profession and just the business environment generally. Um, so I'm I'm excited about the the talk we're gonna be having today. And and and too, you know, I kind of realize as well when it comes to the episodes that I'm always hosting and the conversations I'm having with my guests, never really going through a little background on myself.
Speaker 2Yeah, so please do kind of, you know, for for those for those new listeners, let's give us the give us the skinny. What's your background? What do you do?
Speaker 1Yeah, I'll do the quick elevator pitch. How about that? But yeah, so I lead our advisory practice. And what that means is just, you know, I work with a range of all of our different skilled professionals across the firm who are working with clients on a range of different kind of subject matters and domains of expertise. So things like our outsourced accounting practice, CFO navigator, our transaction advisory practice, which includes MA advisory, due diligence, QV, all that fun stuff. Um, our our risk practice, where we have things like our information technology services. We do a lot of cybersecurity support and different compliance testing around security protocols. We also have really in-depth teams who are compliance specialists, working with things like financial institutions and governance around the realms of compliance, and also a lot of our specialty tax practices, just helping our clients navigate unique uh specialty tax challenges, things like state and local taxes, incentive credits, a wide range. So I just work with all the leaders across all those different domains around the advisory practice of our firm. Um, in addition to that, I also serve on our firm's technology committee and I chair innovation committee. So I have a lot of fun. I work with a lot of uh neat people around the firm and touch a lot of really fun clients too.
Speaker 2And for all our dedicated listeners, there's probably a podcast with each of those people that he listed that is uh head of one of those kind of advisory arms, too. So, Phil, please, please go back and and and listen and subscribe and and and catch up. But uh but today I know you know we're talking about maybe the future of the accounting industry, the accounting firm, what that means. I feel like it's always a good idea to just kind of go backwards a little bit, right? Of just like, well, hey, what's it been like to kind of give you context of what it might be like, right? So, you know, I would say what's kind of in in your experience, because you've you've been a CPA for a long time, not too long, but uh, you know, uh, you know, what was the role of the CPA and the CPA firm historically, you know, the last 10 years? Because I feel like we've experienced a lot of change in those last 10 years. So I think giving the listeners just kind of context of, hey, what did we do 10 years ago versus what we're gonna do going forward? Just kind of talk a little bit about that.
Speaker 1Well, well, and on that, I'd say too, something that's been interesting over the course of basically my entire career, and I know this this probably tracks with you too. You know, anytime there was a headline about disruption, about you know, a particular industry or segments of our business world that was a good candidate for disruption and massive change, you know, the accounting profession was always at least top five on those lists, if not number one. So when you look at like accounting firms, I think there's always been kind of this background anxiety around like, okay, you know, we're bracing for change, we're basing for serious disruption. I'm ready for it, where is it? You know, but but really what we've kind of found, at least it's been in my experience, is there has been a lot of really natural and good change over the years, but it's been very manageable. Now, it does need to be managed, but it's manageable. Now, of course, in the most recent year or two of that 10-year trajectory we're talking about has been a little bit more accelerated through AI, which I'm sure we're gonna talk a bit about. But but in general, there's kind of been that environment. And I'd say it kind of uh concurrent with that has been this transition of us going from CPA firms to more CPA-led firms. We have a lot of really strong professionals who are not CPAs working in our firms these days. A lot of those kind of advisory services I was just outlining on the intro meet that mark. They're not CPAs and kind of extending that to just being true business consulting firms. So as we've been managing this disruption, this change, we've also been kind of changing our business model and kind of the way we approach our client base.
Speaker 2Sure. Yeah, and I I I'll echo what you said, right? I think, you know, that the change for up until maybe a couple years ago, where, you know, you kind of had ChatGPT kind of open the door to all this, I would say. But it was more iterative and not innovative, even though everybody was working on innovation. Well, not sure everybody knew what that meant. I think they kind of know what it means now, right? You're kind of you're really going to maybe try and work to restructure how you offer your services, how you provide value. And I think we'll get into that a little bit. I, you know, probably the best starting point is AI and you know, general tech trends. And so, you know, I the best question, right, is like, well, what should a client, a prospective client, what should they be expecting from us, you know, going forward as we kind of integrate these new softwares or new AI, you know, opportunities. I mean, what do you think there?
Speaker 1Well, and initially, a comment on your thought around innovation. You know, just I mentioned that, you know, I chair innovation group, and it's been really interesting over the years how we've navigated innovation. At the start of every meeting, we always have to remind ourselves that innovation isn't just technology, but we recognize we're gonna spend a lot of time talking about technology. And today, technology is not just AI, but we have to recognize we're gonna talk a lot about AI. So it is curious that, you know, I mean, I I'm maybe not curious, maybe more just intuitive, that in recent years our innovation efforts have been largely AI-oriented. But but we do try and check ourselves and remind ourselves that innovation isn't just technology. Let's make sure we're constantly thinking creatively and outside the box. But kind of to your question about, you know, what our client should be expecting from us as AI continues to be a more of a component of our business, as well as just, you know, I'd say our colleagues and all the talented professionals at our firm as they're kind of expecting how to have a career here. You know, the one thing I always like to kind of highlight first, my main headline is when we're approaching AI and we're bringing it into our environment and planning around AI, it cannot and should not just be how do we do the same things we've always done, but with AI? Right. You know, how do we deliver the exact same value proposition to our clients, but more efficiently because AI is doing more work and humans are doing less work? That is not the winning strategy to me. I believe that to my core. To me, the winning strategy is how do we improve ourselves? How do we grow? How do we accelerate and amplify the value proposition to our clients by doing things we could not previously do without AI? Now, maybe that was a time constraint, a bandwidth constraint, but I also think it was just a capability constraint of we just didn't have the technology to accomplish that. And so through our innovation approaches, how are we moving forward across the board of our services and even our internal operations to do things we couldn't previously do because now AI unlocks that potential.
Speaker 2And I think and we certainly don't know all the answers. It's more of a thought experiment and and you know, putting a lot of that experiment into practice, right? And so it it really becomes, okay, well, I I agree AI is not just an efficiency engine, it kind of makes you reshape how you approach a lot of things too. So, you know, uh and and then I think the conversation kind of circles too, okay, well, well, if everybody's using AI and using it based on the same general, you know, Claude, you know, whatever it is, if they're all kind of using the similar AI, how are we adding value, right, as a firm? And so, you know, what are your thoughts there on what's our value proposition? What's any firm's value proposition once kind of AI has sort of leveled the playing field from a from a knowledge perspective?
Speaker 1Yeah, and and that's where just kind of looking at the new environment, just recognizing everything we're trying to build today, every objective we're trying to accomplish today, not losing sight of the reality that the world is different today than it was even yesterday because of AI. And I say that to me, the the the nearest thing that I reflect on when I say that is like when the the dawn of the internet. You know, I I remember, you know, well, don't remember, but just I've watched back, you know, YouTube videos of, you know, Bill Gates trying to explain to late-night talk show hosts what the internet was, you know, and how this was gonna be a revolutionary thing. And they just weren't buying it because he would explain things like, well, you know, you can get a newsletter on your favorite interests, or like, well, I get magazines delivered to me every month about my favorite interests. So, like, well, you know, you can call your friends, like, well, I have a telephone, you know, we can watch a baseball game, I have a TV. Like all the initial use cases of the internet were just trying to repeat things that we were already doing on this new technology. But when you kind of go forward, even just bringing it back to an accounting firm, an accounting, you know, a department at an organization where pre-internet, you know, we had green bar paper, you know, we had different paper ledgers and ways of keeping books. And all of a sudden, when the personal computer came out, you could all of a sudden have these, you know, spreadsheets and databases. And then when the internet came out, you could now have cloud-based accounting systems to where now the modern approach to accounting is you have an online ERP system with bill pay functions, payroll functions, all these different systems integrated for a more automated approach. So at the dawn of the internet, we didn't really know in 20 years what accounting was going to look like, but it substantially changed. So, you to your question about like how we're trying to build the future for our firm, to me, it's trying to be creative, vision the envision the future we want, and then build toward that vision. And I think that those of us who who have that creative vision and can appropriately deploy to that, that will be the differentiator. Because what you said rings true as well in terms of, in a sense, we're all using the same AI tools. You know, the the anthropics, you know, with their Claude and the Open AIs with their ChatGPT and Googles with Gemini and on and on, perplexity. You know, we're all getting access to the same underlying powerful technology. It's just how are we bringing that into our environments and deploying it to try and differentiate and deliver and amplify the value to our clients.
Speaker 2Yeah, and I think you you kind of hit it on the head of what might differentiate people is the creativity. And I think we'll we'll we'll circle back to that when we're talking about, hey, you know, what what the future accountant looks like and how to train them and everything. But I agree. I think, and and we've been talking about this before, right? Where you can even you can use AI agents and everything and and you know, help them interpret certain guidance and whatnot, but that's the interpretation itself that's the value most of the time. And you can't train an AI, you can't train yourself to interpret things the same way all the time. So I think it's it's working towards that level of okay, creativity and communication and whatnot to to help your clients forward, right?
Speaker 1Exactly. Because this whole concept, I mean, for the longest time, you know, all the information of humanity has been at our fingertips through the internet, you know, and like so. If we were just to look at a subject matter as an example, like the tax code, the tax code is accessible to all of us. And then when you look at authoritative guidance and interpretations from the IRS around the tax code, that's been available to all of us. And you look at like non-authoritative, really strong guidance around how to kind of navigate, uh, being in compliance with those tax laws and authoritative interpretations, that's been accessible to us. But still, it's so much information. It's so great, it's so hard to navigate, parse through, and apply to my circumstance that we've still needed professionals to navigate that. Now, with AI, it does kind of change the environment a little bit in that getting to that data, getting that to that information is easier than ever. You know, you can just you can ask it a question with limited context prompts and it can give you a pretty good response. But we're still in that environment to where navigating, you know, communicating with the AI to give it the right context and get the right outputs is challenging. And then very importantly, the word you used, interpretation. It's not just getting the facts in front of us, it's interpreting those facts and applying it to us. And I'm sure there's someday in the future, I don't have a crystal ball, to where the AI models get better and better, to where they can be more effective at the interpretation and the application toward our environment. But you know, at least for the foreseeable future, that that that combination of a subject matter expert human properly using these tools is just game-winning.
Speaker 2And I I think we've gotten pretty theoretical, and I know we could go down that road the whole time, right? Where it's like, okay, we I I think you and I both have a good vision, or at least uh our interpretation of a good vision of what the accounting industry might look like and how how AI, you know, augments that. You know, let's take it from a client's perspective, right? Where it's like, okay, I I hear you, but practically, what does that mean for me, right? It's like how, how you know, what can I do? Like, what can I provide to an accounting firm so that I can get the maximum value that you guys are building out, right? It's just like I kind of go to that that Jerry Maguire thing. It's like, help me help you. You know, it's like, what do I need to do as a client to be like, okay, well, uh that all sounds great. What's what's my part of this?
Speaker 1Yes. Well, and I think that a lot of just the fundamentals of being a business leader still apply here. It's really making sure we are properly truly understanding the challenges we're facing. What is the objective I'm trying to accomplish? Is that growth? Is that becoming in compliant with some type of new or you know ongoing regulation? Is that having more timely financial reporting? Is that having more insights from what my financial statements are telling me? What is the challenge I'm facing right now? And then helping communicate that challenge. Now, in a lot of ways, I like to put that on us of where a client just comes to us and says, Brandon, something's not going quite right. I, you know, I'm really good at my business, I'm good at doing what I do, but something feels off. Help me get a sense of what really is off. Help benchmark me against best practices. I know you work with a lot of different clients that look and smell a lot like me. Like, what are they doing differently? How have you helped them? How does that apply to what I'm what I'm doing wrong? And then when it comes to like the actual practical application of these technologies to our professionals, again, I always go back to creativity and communication. If we need to try and creatively help these clients solve these problems, that creativity can be just pulling in the best practices, what is best that we know and have lived, but then also having clear communication with these technologies that we've deployed in order to help them help us get the right outcome. So to me, it really just has come down to just a deep understanding of our business, of our challenges, creativity, and communication. To me, that's that's the the boots on the ground, the the way we actually make this happen.
Speaker 2So, Brandon, from a more practical perspective, I guess how would you say our firm is, you know, integrating AI or any other technologies into our you know daily operations and how that might lead to value for our clients.
Speaker 1Well, and and this is obviously something we're paying a lot of attention to and putting a lot of work into. But I also want to frame this perspective of every business leader listening to this, regardless of what business they're in, the answer is gonna be pretty similar. And and that's where just like a practical action plan of bringing these technologies into our environment and then deploying them to try and meet those lofty objectives we were talking about earlier, you know, whatever our strategies might be. And to that, the first thing is just to try and understand what the technologies out there are and how do I responsibly bring those into our environment. And that's going to be largely an IT challenge in terms of having our IT operations people and maybe our MSP, if that's what we have, to help us responsibly bring in these AI tools into our existing environment and deploy them to our talent and to our people responsibly. By responsible, I mean like making sure that data governance practices are being adhered to, you know, that we're not just also putting people's social security numbers out into some public-facing model, right? Being really careful around that. And then the next thing is once we have it deployed responsibly to our people, just giving them the freedom to use it, play with it, explore with it, see when it comes to branding, my day-to-day, my responsibilities and tasks at hand, how can this technology help me personally with my day job? And then just have an avenue to have conversations around what's working, what's not working. Whenever somebody is having a success, how do we deploy that around other people so they can also, you know, benefit from that use case? And then from the maturity model, is then getting us to a point to where we are now changing and evolving our standard operating procedures and our methodologies where AI is a standard component to it. So now our institutionalized practice, whatever it might be, has AI as a component of that. And so that's an example of kind of what we're doing now when it comes to, for example, our tax and audit compliance services, is when we look at the end-to-end methodology or standard operating procedure of performing a tax service or performing an audit service, it's bringing in AI to be a part of that. So whether that's doing some type of financial analysis or trying to assess an entire population rather than sampling it, or giving some additional tax planning opportunities rather than just here's our finished tax return. Right. When it comes to the standard services we do, elevating those through the AI, but you kind of have to work that maturity journey. You got to bring it in, you got to play with it, and then you have to actively work with your operations personnel and your client services personnel to actually deploy it in a way that makes sense to elevate your business.
Speaker 2Yeah, I think that makes sense. And it's been fun to see, right? And and obviously the the step one is data security, make sure that everything is kind of you know insulated where it needs to be. But but yeah, and and then an understanding of, hey, what's your order of operations now? Like you really have to understand how things get done, and then you know, the sandbox thing. And it's just like, ooh, I like that part. That should be that should be part of the the standard order of operations now. And it's been fun to see just kind of you know that evolution. And you're right, I think everybody just, hey, go nuts, but then then just kind of fine-tune it's like, well, here's how people are getting value, and then you can kind of see the the collective knowledge group grow that much faster, right?
Speaker 1And and I know there's a a lot of desire to just want to jump straight to that last component where we're looking at all our SOPs and evolving them with AI and now feeling like we're we're a bleeding edge organization, or that you know, we've completely evolved and transformed ourselves. But really, it's just like any change management exercise. You you have to start at step one and then walk the journey. And I'd like to encourage everyone too is no matter what headlines you're seeing and and what you know different press releases you're seeing, you're not behind. You know, we're we're all everybody's experience with this, even those who are making really big investments in things, the technology is changing very rapidly too. In three months, it might look completely different in terms of how well these models handle context and specifications and can integrate with different systems, right? It's all moving pretty quickly. You just have to just be a little bold here, just you know, and be a little creative. I love that word creativity. I've said it so many times, but just bring in the environment and just get started, you know. But then have that roadmap, bring it in, let people explore, and then actively work to your SOPs, just kind of follow that guideline, continue to improve and iterate. And and you're you are with the times today, you're not behind.
Speaker 2Yeah, yeah. I think that's great advice. Yeah, and so it I would say the we've hit on it a few times, creativity communication, you know, as an accountant starting out, I'm sure you kind of remember, hey, the first couple of years. It's it's it's kind of grunt work, right? It's like you know, I think we both think the future of that will change. You know, how how should firms, advisory firms, be approaching new, you know, the talent pipeline, you know, training new staff, training associates, like what should change, or in your mind, like what should be different about that that approach?
Speaker 1Well, and and to me, if you reflect on a firm like ours, like Malden and Jenkins, you know, we've been around over 100 years now. We've had to reinvent ourselves multiple times over that 100-year career. And every generation that joins our firm is a part of that evolution of our firm, is a part of moving us forward of operating in the current environment. And if you were to look at people like you and myself, who came in here, you know, around the same time, what it looked like for our generation to have those first couple years of experience, kind of get the reps in. There's a lot of just understanding the systems, how to interact with those systems, how to understand our clients and how they get information to us, how to kind of get that data ready. For our services, there's a big lift on the front end in terms of just getting the environment ready so that we can actually act on our statement of work, right? The scope that we're the value proposition we're actually there for. And to me, the current transition, again, over 100 years, there's been a lot of transitions, every generation has handled it differently. To me, the current transition of our new incoming staff members, I see that kind of the intro years of just a lot of data entry, of a lot of just getting documentation ready for our services, of kind of that bridge to getting us to the value proposition. I can see that really getting smaller and smaller and smaller to where earlier and earlier in our associates' careers, they'll be tied directly to the value proposition we're delivering to our clients. And so I think it's just a matter of them as they're going through their studies in college and then as they're joining our firms in the first couple of years, is both them to have that mindset of just trying to really get closer to the value proposition as soon as they can, and then us making sure we're giving them the opportunities to do that.
Speaker 2Do you have any concerns that that it may be the reps, right, that that helps them understand the value proposition? Like maybe it takes a number of years or something like you mentioned green paper earlier, right? It's like, well, did writing green paper, you know, or writing, and I didn't use it, right? But it's just like, is that what they did? Yeah. But but you know, me importing trial balancers or cleaning up data, like eventually you make the leap of, okay, this is why. And now I understand, you know, like is that and you're do you do you believe that leap will still happen, just it'll just be shorter, or you know, is there something we need to do to help effectuate that leap?
Speaker 1I again think this is something that is manageable, but needs to be managed. We can't just lose sight of it. I think just as we're all over the days, weeks, months, years working together, we'll continuously improve and iterate on this. But but I even reflect on back, you know, when when I was, you know, back in high school and I'd be doing my homework and I had AOL Instant Messenger open on the side, and my folks would get so upset with me, like, stop talking on AIM, you know, you got to just focus on your homework. But the thing is, now you come to work and we're talking on G chat and Teams, and we have instant messaging services there while we're doing our work. That's just how it means to operate in today's environment. So when it comes to our new staff coming in, they're not gonna experience those first couple years exactly the same way we did. But I think that what they're experiencing in college and then what they're gonna be experiencing the first years will be the best ways for them to learn how to operate in the new norm, right? But again, we do have to continuously make sure we're giving them those right tools and being mindful of are there any blind spots in their continuing education, in their development, in the talent training that we're missing, and then correct those rapidly.
Speaker 2Yeah, yeah. Just in terms of just kind of the the mix of of future CPAs, is it all CPAs? Are we are we hiring other types of people? You know, like what is it, what and go kind of go back to AI a little bit, what what is kind of this next round of innovation gonna change about what the advisor looks like, right? I mean, is it data scientists, is it coders, or or is it kind of a mixture of it all?
Speaker 1So on that, I mean, the first thing I want to say is I love being a CPA, and I'm so proud of being a CPA. And I'm both excited and confident in the future of our profession. Now, when I say that, it is a recognition that a firm like ours that's going through the evolution of a CPA firm to a CPA-led firm to that true business consulting firm, we're going to continue to add more and more professionals and subject matter experts who are not CPAs. But there is going to continue to be a very important, very large vertical of our firm that's going to be CPA-specific services. When it comes to our profession, though, as CPAs, just speaking as two CPAs with one another, to me, it's just critical that as we try and envision what the future looks like or what we want the future to look like, and then architect that future, it's making sure we're being mindful of what does, for example, assurance look like in the future? When it comes to a business owner who wants to establish a relationship with a financial institution, or a nonprofit who wants to get a grant from a foundation, or a government who just wants to give confidence to all of the residents of its state. Right now, they're going through a financial statement audit to help give that assurance around its financial reporting. What does assurance look like in the future? And how are we building and architecting that future? Same comes with tax compliance. What does it mean to navigate this really complex world of tax, of federal taxes in the United States alone, little international, state and local taxes, income taxes, sales and use taxes, property taxes? When it comes to maintaining compliance with that really complex world of tax, what does that look like in the future? And how is the CPA profession architecting that future to help our clients navigate that? So once again, I'm very happy, proud to be a CPA. I'm confident that we are and will continue to build that future. But to me, the question is kind of, you know, I wish I had a crystal ball in 10 years. What is what does the market want from assurance? I just really believe that we're on a path to deliver whatever that is in 10 years.
Speaker 2Yeah, and I think it's a it's it's a word of caution, but at the same time, excitement, right? Where it's just like, hey, this is not just the next iteration. It's it's hey, we really need to rethink what what assurance looks like, what tax looks like, and kind of, you know, not whiteboard it, but it's like, hey, services will be delivered differently, they will be, you know, installed differently, you'll be communicating with clients and the IRS and everybody very differently. And it might be your AI agent calculating talking with their AI agent, which I think we talked about maybe this time last year. Um, and so it's it's all happening very rapidly. And you know, I think we're doing a good job of keeping pace with that and and understanding that, yeah, that the the evolution of the uh the industry is is really there. And you know, I think we'd be remiss to not, you know, if we're talking about the, you know, kind of the the state of the CPA industry, to not discuss, you know, what private equity might be doing to it, um, you know, negative or positive, and and just kind of what their place is. You do you want to talk a little bit about that? And hey, you know, maybe a little bit of history there, right? We can get a little history lesson and and what you expect from uh from PE's investment in in the CPA industry.
Speaker 1So on this topic, I always like to have the right starting point. You know, it wasn't you know, too long ago, I was just talking to Wendy on one of these podcast episodes, and we were talking about how she's always counseling and advising our clients through different kinds of complicated and challenging uh business decisions. And one of them is always getting capital. Very oftentimes her clients are coming to her, they have some kind of capital need. And her first question to them is always, why do you need the capital? Like, let's understand that first. Is why are you seeking capital? You know, are you trying to get a line of credit, some kind of a term note? Are you looking for outside investors? And what are you gonna do with that capital? Is this hopefully it's not just for working capital to shore up cash flow shortages? You know, are we trying to expand geographies? Are we trying to open a new factory? Are we trying to do some MA activities?
Speaker 2What's the investment behind this, right?
Speaker 1What's the investment behind the capital that we're trying to gather? And so now we want to kind of take that frame of mind and point it at professional services firms, specifically more the accounting-oriented firms, in terms of what is happening right now in our industry that's calling a need for firms to want capital. You know, and that's where it kind of ties into everything we've been talking about, just the environment generally, we're finding there is a lot of value to having a certain degree of mass. That whatever strategic initiative we have, that having a certain mass, a certain amount of margins to reinvest is just helpful. So there's that's driving a lot of MA activity, a lot of consolidations of firms joining forces together. And to do M&A activity, that needs capital. The next thing is obviously we're all making significant investments into our technology infrastructures. We're building out these AI tools to help our professional services colleagues serve their clients well using frontier models of artificial intelligence. That takes capital. And so, right now, just the question it kind of begs is where is that capital going to come from? And private equity is right there ready. They want in. You know, they they they they want a part of what we have, right? The proof is in the pudding that this is good business to be in, right? And so, you know, they're very happy to take an ownership share in our firms, provide for uh private capital, and help us move the objectives on those things like MA and uh and technology, as well as other things pulling on capital needs. Uh, but I'd say what what it's kind of doing to the industry generally is firms like ours, where even we're kind of in that fiercely independent camp where we're not taking private equity, it still is the same environment to where we need capital. It's just our partner group is helping provide that capital. So we're doing we're we're bringing the capital from our existing owner group rather than bringing in outside owners through private equity to provide it.
Speaker 2Yeah, I mean, it's really accelerated the investment portion of the accounting industry where it was like, hey, we just kind of plot along and it was a great cash flow business, right? And that's part of the reason that private equity invested. Um, but but that cash is now being deployed as truly investments, whether it's consolidation and roll-ups and or or investments in technology, all of which should, you know, be gain efficiencies at the end of the day. I mean, from that perspective, it's like, is is it is it good to be a small firm now? And can they survive? Are they do they want to, you know, like what is their perspective on that?
Speaker 1Well, it's well, and that's where it kind of ties into our early discussion of where the the when it comes to AI, especially, that that that component of technology, of how the companies like like Google, OpenAI, Anthropic, delivering those models, we're all getting access to the same core technologies. So to me, it's a question of of innovation and deployment, right? And and agility. And I like to reflect on something like a like a Blockbuster. You know, Blockbuster was a large, successful company. They were on almost every corner and all the you know uh major markets, right? We all knew the name as a household name, and they had capital. They had the ability to deploy, to innovate, to change, but it was difficult for them to be agile, you know, and it was difficult for them to really envision what was the future they wanted and how are they going to build that future. And that allowed something like a Netflix to come in, you know, and kind of completely reinvent what it meant to rent a movie or just to watch something from the comfort of your own home. And so I think we're in that environment right now where it's okay, what is that future we want to build and what is the right size to be agile enough, but also to be able to acquire the capital in order to try and meet that objective. Now, I am very happy to be at a firm our size with the level of agility we have and with the level of investment we're willing to make to try and meet that reality. But there is a degree to where that's one more reason I'm very happy to be CPA, to where really none of us are in this alone. The large firms, the medium firms, the small firms, really in the background, we're all working together. We all at the end of the day want a successful and healthy profession.
Speaker 2Unlike Blockbuster and Netflix, which from what I remember, I think Blockbuster could have bought Netflix for maybe a million dollars or something like that. Somebody can fact check me on that. But um, so maybe that's why you're consolidating accounting firms, too. It's like maybe somebody in there's got the secret sauce that we're missing. But um That's right. But yeah, no, I think that's you know, I like you said, wish we had a crystal ball. Um, you know, and I don't think you or I really knew where this conversation was going to go. It was more of a thought experiment for us too, right? Hopefully we got some value out of it for our listeners as well. But I mean, is there is there any just kind of overarching theme you want to you want to leave the listeners with, you know, as we kind of think through the evolution of the accounting of the CPA-led, you know, advisors?
Speaker 1Yeah, maybe just a comment to our, you know, to different businesses and business leaders out there who are working with, you know, uh um professional service experts like us, as well as to just, you know, colleagues in the profession and and new talent coming out. You know, I guess the first, just two business leaders out there, is you know, expect a lot more, continue expecting a lot from your professionals, you know, from your relationships. You know, but but also recognize this is not a reality to where you just want to try and find the lowest cost provider because they're good at utilizing the the AI of today to do the same thing but faster. You know, because in three months it might look different, in six months it might look different. Really try try and work with the provider to figure out how do we together get to that next level for your business. Whatever your objectives are, how do we use this infrastructure to help you get to that next level? And then, you know, to our to our colleagues and team members in the profession, I say just continue to maintain excitement around the profession. You know, I really feel like there's a lot of really fun things, interesting things happening. Um, a lot's gonna be changing over the years, so we just need to be comfortable with that change. Uh, but also as you're joining firms, especially out of college, push your firms, help them evolve. You know, as I said earlier, we're a very old firm. Every generation is pushed. Brent, you and myself, when we join this firm, we push this firm. We continue to push this firm alongside with all of our partners and our peers, and the new generation is going to be looking, we're gonna be looking to them to do that too. So so overall, I just, you know, I'm just excited.
Speaker 2Yeah, I'll echo that, right? It's like if you find an advisor that is experimenting, working, you know, through that, I think that's the right place to be because they're at least, you know, understanding of the change that is coming. And and I think that's where we are right now. And so agreed on on future advisors as well. Just push your firm. Not not everybody has the answers, especially, you know, just uh there are gonna be partners of all ages that have that have different things. So they're different perspectives. So I think that's a good harmony of, hey, let's, let's move along, let's, let's innovate, and let's uh let's get to the next level.
Speaker 1Well, and and and to me, one of the biggest takeaways is, you know, when you look at a firm like ours, we're not just compliance check the box. You know, we're clearly not just here to help you file an annual tax return, you talk to us once a year and to help you issue that audited financial statement. And then, you know, okay, that was fun, great time, see you again next year. You know, there's so many capabilities we have. We have such a range of business experts, people who have lived this across industries, whether it's banks or nonprofits or governments or construction and energy. You know, we have entire industry groups specialized in these areas with a range of capabilities on their teams in terms of yes, making sure we're staying compliant and we're meeting our compliance objectives, but also looking forward, not just reporting the past, but looking forward and meeting our future objectives. You know, and so it's really just just when you're working with your providers and looking to this future landscape, just make sure you're you're demanding the most out of them because we have so much to deliver and we want to help deliver that additional value.
Speaker 2Yeah, no, and I'll echo that too, right? I think, you know, the the the days of, hey, I'll see you in a year are long gone. You know, I think that was probably the beginning of our career. And so the more you know about the client, the more you can add value. You know, we want to be here day after day, call us every day because because that's gonna make it the most valuable, right? Is when we know everything about your business, about your situation, and I think, you know, and and also, you know, your your call to the the younger generation. It's like, hey, push your firm, do your best. Um, you know, we're all just kind of in this together. Uh I think it's a great takeaway.
Speaker 1Exactly. Love it. Thanks, Brent.
Speaker 2Well, thank you for for being a guest instead of a host this time. Uh, hopefully you you like it in that chair just the same.
Speaker 1Yeah, this was fun, Brent. Thank you so much. I really enjoyed the conversation. I hope our audience did too.
Speaker 2Yeah, absolutely. And uh and thank you, listeners, for joining us. If you have any questions or want to reach out to Brandon or myself or any of the advisors that he mentioned, please listen to our our prior podcasts or or visit us at mjcpa.com. Thank you.
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