The co-leaders of the Rosenberg Group, Marc Rosenberg and Kristen Rampe, look back at three decades of change in the accounting profession — and what lies ahead.
Transcription:
Transcripts are generated using a combination of speech recognition software and human transcribers, and may contain errors. Please check the corresponding audio for the authoritative record.
Dan Hood (00:04):
Welcome to On the Air with Accounting Today. I'm editor-in-chief Dan Hood. Sometimes the best place to start looking to the future is by looking at the past and anniversary. Sure. A great opportunity to do that. This year marks the 30th anniversary of the founding of Rosenberg Associates, one of the leading consultants to accounting firms and birthplace of the famous Rosenberg map survey, as well as the massive library of Rosenberg monographs on firm management, which I'm sure all of you have in your shelves. And if you don't, you should; here to share the accumulated wisdom of those 30 years and the insights that they offer for the next 30 are Rosenberg founder, Marc Rosenberg. Marc, thanks for joining us.
Marc Rosenberg (00:35):
You're welcome. Wonderful to be with you as always.
Dan Hood (00:38):
Excellent. Congratulations. And with him is his co-managing partner, Kristen Rampe. Kristen, first off, congratulations on the anniversary.
Kristen Rampe (00:45):
Thank you. Glad to be here, Dan. Thanks for having us.
Dan Hood (00:48):
Excellent. As I said, this is sort of a great opportunity to look back and then to look forward. You both spend a lot of time talking and working with firms and looking in the insides of firms and what's going on with them. So you've got a great perspective on the past and the future of accounting firms. So I want to start, Marc with a question for you, which is, what do you think, looking back over the past 30 years, what would you say are the biggest changes that you've seen in those three decades?
Marc Rosenberg (01:13):
Well, that's an easy one. The only hard part of it's, I have about 50, so this podcast is not let all day, so I'll
Dan Hood (01:21):
Give us the top two and then we'll see how much time we have.
Marc Rosenberg (01:25):
Certainly one of 'em is the change in the style of managing CPA firms. I'm old enough to remember back when managing a CPA firm like a real business was. Nobody ever talked about it or just started talking about it. And so one of the parts of that is that firms have moved from what we call a partnership type of a structure, not legal entity, just the way they're managed a partnership to a corporate style approach where the authority and decision making is vested in just a magic partner, maybe a board, instead of having every partner chime in on every single little decision that needs to be made. Something related to that, that's really only been maybe the last 20 years or so, this jargon term we're now using called alternative practice structures. Get it used to be every firm was a partnership, then LLCs and LPs, and they started scorps. And now of course with private equity, and even back in the nineties when the consolidators came in, we started seeing firms split up at the two pieces, a test and not a test. And I could go on and on about that, so that's certainly a big change. Another one is everything and everything related to staff. Staff. My goodness, probably until 15, 20 years ago, staff were a dime a dozen.
(03:00)
The word mentoring literally was not in the accountant's vocabulary. If you didn't work out, you're out. We'll get a new one. And that has changed, thank goodness, to the point where firms now realize that their staff is just important if not more so than their clients. And that's a major change. And I'll throw out one other one, work flexibility. Maybe that's the banner we could use. Again, one of my fellow consultants to coin the phrase buts in seats, that's the way CPA firms were managed and operated. Your butt was in your seat working from home, wasn't even thought of. And then, oh, maybe what, 5, 6, 7 years before Covid firms started flexible scheduling and people started having a little more flexibility. And then Covid obviously kicked in this whole age of remote working. And a lot of firms are struggling with what to do about that, and that's another subject that we could spend a long time on, but I would, that's a good way to start off. So those are some huge changes that I've seen in the
Dan Hood (04:18):
Last, those are enormous changes, and I mean, it is hard for people I think, who weren't around in the profession even as late as into the nineties to realize how fungible staff were. Right. And now they're precious. You treat them like they're crystal and you want to give them everything you can and give 'em all the workplace flexibility you can, but that just wasn't the case for a long time. So it's a fascinating change and I think it's a great time to be an accountant. It may not be a great time to hire accountants, but it's a great time to be an accountant. You worked through those pretty fast, Marc. I have to say we were fully prepared to give you 30 to 40 minutes on those, but you worked through pretty fast. I'm going to let Kristen jump in if she wants, but we might have time for one or two more of those big changes. Marc, if you've got more, but we'll start with Kristen. Give her a look in what big changes you've seen over your time in the profession.
Kristen Rampe (05:07):
Well, I would thank you for your time in the profession as opposed to 30 years, because 30 years ago I had yet to take my first accounting class still in high school. So 30 years is hard for me to give a reference to, but I have been in the profession for almost 30 years, so close to I think technology, in addition to what Marc mentioned, technology comes up for me as one of the biggest changes. Just there was a lot, even as I started in the profession in the early two thousands, but the continued advancement and development of that, I mean, I still did get trained on how to use this really funky device called a Corner Punch, which was a very specially designed thing that went with a Brad, I think you call it through the paper. Yes. And I don't think we have those anymore. I tried to find a picture of one for some joke article I was writing, and I, it was very hard to find.
Dan Hood (06:01):
I think they were outlawed by the Geneva Convention because they were
Kristen Rampe (06:04):
Dangerous probably. They really could be. Yes, it could be weapon like you're right. Anyway, so definitely the advances in technology, and I agree with Marc, the staffing, especially the workplace flexibility, the work from home, but then also the offshoring piece. I think that was, I mean, that's really, really recent, but when I was beginning my career, I was with PWC out in the San Jose office, and the interaction that we had with workers from other countries was all the expats that they brought to San Jose to do the work. So we didn't outsource the work to people in their home countries. We brought them to the country to do it, and now we have the opportunity with all of the technology and the video calls and things like this to make some of that more seamless. So those are a couple of things that come to mind for me. And then I mean, just some other smatterings throughout there. The Sarbanes Oxley Act made a few big changes that one particularly impacted me early on. And then of course, more really current stuff is the private equity situation and what we've got going on there. So there's been a lot that's changed. I also think there's a fair amount that is somewhat consistent, but it's been fun to be a part of it.
Dan Hood (07:15):
Yeah, it's exciting. It really is. We don't think of the profession as changing enormously. We think it progresses through time in a stately manner, but there's actually been enormous changes. Marc, any others you want to bring in there? Like I said, you were very quick on the first one, so
Marc Rosenberg (07:29):
If you maybe throw one other major thing. Mergers. Mergers, my goodness, there were again, I think maybe not until the mid nineties, the earliest were there many. It just wasn't a news item. Of course, we went through, going way back, there used to be this group of firms called the Big Eight. They had over a period of 10, 12 years got down to the big four, but they were along with BDO and Grant Thornton, arguably there were only really six national firms, but now there's about 20 or 30, nowhere near the size of the big four, but they're coast to coast and they have 15, 20, 25 offices, so they're truly national firms.
Dan Hood (08:22):
Well, the interesting thing there is that they're acting like even though you're quite right that they're not the same size as the Big four, but they are acting much more like the big four than any firms did back at the turn of the century, for instance. Can't say,
Marc Rosenberg (08:35):
It's
Dan Hood (08:35):
Weird to me to say turn of the century, but there you go. Of course there were the big four and then there was a huge gap between them and how they operated micro all your points about management structure and corporate approach to management, all that sort of stuff. The Big four had that and most other firms, but this group, as you say, the 20 or 30 national firms now are operating in many ways like the big four. Yeah,
Marc Rosenberg (08:54):
Yeah. And of course a big part of that, this is coming about the last four years, is private equity. How could anybody who knows anything about the cpa, a profession not be talking about private equity, will it be like Y 2K, everybody gets anxious about it and then it just withers away? Or is this a major game breaker that not only will not go away, but will be a huge factor going forward. So the whole merger, private equity thing is just a major game changer.
Dan Hood (09:32):
Well, it's I saying as you say, that's a's good point to bring up though. Is it the cloud, which has enormous changes. Everyone thinks it's going to have big changes and it does. Or is it going to be blockchain where everyone thinks it's going to make a big change and then it doesn't, but I mean, I suspect it's going to be more on the long lines of the cloud, but we're still relatively early days on, so we'll be keeping an eye on it. Awesome. I wanted to ask this, and I realize this is a slightly weird question, but you talked about a lot of those big changes, and many of them were things that nobody could predict, right? No one could predict socks is a great example. Something that no one could predict. I don't think many people, even if you might have been able to predict, not many people did predict the enormous upsurge in m and a and its continuance. It's just been every year we think, well, this is as much m and a as there can possibly be, and then it's another record breaking year for m and a, and it's been that way for 15, 20 years. Were there developments that really surprised you? It really jumped out. You like, whoa, where did that come from? I would never have imagined that happening in accounting. Anything like that jump out at you?
Marc Rosenberg (10:33):
My responses to that won't be exactly answering your question as opposed, but how about I just am stunned that starting salaries for accounting majors, entry level positions, whereas they were about as high a number as it was until, I dunno, 20 years ago now it's kind of in the middle and CPA firms are recording record profits year after year after year. How did this happen?
Dan Hood (11:07):
And they're surprised that they can't attract. Yeah.
Marc Rosenberg (11:10):
Surprise, surprise. I just don't get it. I don't think there was any pundit than any cabal in the CPA profession. They say, Hey, let's hold back salaries while we make more money. It just sort of happened.
Dan Hood (11:27):
Well, I guess that's the question. Is it them holding back salaries or is it, as you say, it's in comparison to banking went crazy and finance went crazy and tech went crazy. Is those salaries took off and accounting firms didn't take off?
Marc Rosenberg (11:41):
No, that's a good point. There's always the question when something changes, is it because that entity changed or entities caught up and passed them? It used to be if you got no offense to marketing majors out there, but if you had a marketing degree, you're lucky if you made half of what a starting accountant would. Now they've passed them by. So I think it's just, yeah. I had a client of mine, longtime client of mine, pose a rhetorical question to me over lunch one day. He said, what would happen? And this is a firm making 700,000 a piece, 15 million firm in a big city. We're making so much money, way more than we ever thought we'd make, don't we? Each of our partner, each our eight partners take $50,000 off of our comp and use it to pay higher salaries for our staff for bonuses. Again, one of those great ideas that probably never happened, but actually I hope it will. I think it's a darn shame that what a great profession we had. What a great career and a job it is to be a CPA at a CPA firm and only get at average pain.
Dan Hood (13:06):
Yeah. Well, I think that's probably going to start to happen, but not out of the altruistic sort of, Hey, they deserve this and more because please, we need people. Please come work
Marc Rosenberg (13:17):
For us. Another item I toss out is why the heck haven't we changed this goofy 150 hour rule, not the biggest scholar on this. I know why it came about to make us more well-rounded to make us Coors, to use the words of our great head of our profession. That's
Dan Hood (13:37):
A deep cut.
Marc Rosenberg (13:38):
Sorry. He ever came up with that, but it was never served its purpose. People didn't take those extra 30 hours to get more English courses or history courses or writing courses. If anything, oral and written communications have dramatically dwindled over the years, and now we've got so many obstacles to stop or prevent young people from going into accounting, and this has got to be one of them. I got to go five years to college instead of four. It serves no purpose whatsoever. Maybe I'll acknowledge that maybe in the beginning sounded like a good idea, but boy, oh boy, it's killing us now.
Dan Hood (14:29):
It certainly is in hindsight, it seems that way. And it's a tough call because one, it is all tied up in the CPA mobility issue. That's the real, I think the thing that's holding it back there. There's some interesting things going on in various states to try to experiment with that. We'll see what happens with those, but it is certainly part and parcel of a whole bunch of other issues. I mean, the salary thing you mentioned is a big problem, just the difficulty of the exam. If you can make a lot more money in tech and they don't make you take a test. Sounds good to me. Kristen, as you look back, are there developments that surprise you or that you're like, well, how did that happen?
Kristen Rampe (15:06):
The biggest one for me is very much along the same lines, and I would just characterize it as the declining interest in the profession. I think all the things we just talked about are the contributing factors to that. I think very few accounting professionals, not none but few, grew up in an accounting family and really wanted to carry the accounting family line forward or from some early age where, you know what I want to be, I saw this guy downtown and I want to be an accountant. It tends to be a great career for people, and I'm going to put myself in this bucket who are reasonably intelligent, reasonably good at school type things at numbers go to analysis. There's the whole suite of skills, but maybe you don't have a thing. I sure didn't, right? I got out of high school and I was like, well, I guess I'm going to college because that's what my parents told me I should do.
(15:58)
And I go to college and I'm like, well, I guess I have to pick something to study. What am I going to study? I don't know. But I liked math. And then I ended up, I had taken an accounting class. I thought, well, maybe I'll study, maybe I'll go into business. And then I met with my, what do they call it, your advisor, your college advisor. Well, whatcha going to major in? I was like, I don't know accounting or finance. I seem to be okay with numbers. He's like, you should do accounting. So I said, okay. And that's how I got into it. And I think that that is how a lot of people get into it. And to me at the time, I remember very specifically one thing that sort of kept me interested in it, it was a fellow student of mine that she was two years ahead of me and we were in the elevator in the sophomore year dorms. And at that time, our school required a busy season internship for all accounting majors. So you actually had to pay full tuition for busy season semester, and you only got three credit hours. They'd give you summer for free to make up for it. So she's now doing this busy season internship, and she showed me her paycheck and her paycheck had a comma in it. And that blew my mind at that point. The biggest paycheck I ever got was probably a couple hundred bucks from some crappy part-time job.
(17:12)
I think the comp keeps the fact that accounting just inherently isn't the most really cool job. Interesting when we've fallen down to not keep up with that along with other possible professions. I think that's been a downfall. So it's surprising to me that it's come to this and that it's really impacting our profession significantly.
Dan Hood (17:33):
Right. Well, I mean, we sort of talked, it is a bunch of different factors, the difficulty of joining the profession, but also the allure of other professions. There's a lot of different things going on there, but it is a giant huge difference from the way it was in, we'll say, could we go back 30 years? Right from the nineties? The nineties was, there was this endless stream, enormous stream of people coming into the profession. Happy to be there, happy to get a very good salary. It's still good salaries. It's just not as good as some of the other salaries that are out there, and that's one of the issues. Anyway, we could, again, all of these are issues that we could talk about for a long, long time. But I want to flip the script on that question, and Kristen, I'll go to you first with it, which is, we talked about the biggest, most surprising development for you. I think it's the decline in, we'll call it the pipeline problem, the decline in the allure of the profession for people. Was there a big change that you expected to see that didn't happen? Were there big differences that you thought, oh, this is definitely going to be a big deal, and then it wasn't
Kristen Rampe (18:32):
In that vein? So my lookback period starts as a staff person, if you will, first year right out of college. And one of the things that I was surprised by as a new person, and I think it certainly has moved along, but I gave technology as one of my answers for a big change that I've seen. But I would also say that the speed of adoption and development of technology did not change as fast as what I would have thought. I think the adoption was lagging and slow, which again, does it surprise me? Maybe not in a, I can't believe accountants aren't bleeding edge adopters of technology, not so much. But another memory of my early days as a staff person at pwc, I was on the Yahoo audit, which back then was one of the cool clients, and I remember, I don't know what I was doing, auditing, accounts payable, tying out invoices to schedules or something matching up numbers, what we spent a lot of time doing.
(19:35)
And I just even then remember thinking, I, I'm getting paid to make sure that the number on this piece of paper matches the number on this document. Why is this not automated? I mean, that was kind of what get into my head is why is this particular task something that needs to be done that we can't just rely on? I hear you mentioned blockchain as being the blip, not the big exciting thing, but stuff like that where we don't have to manually inspect these things. So I think the speed of adoption of technology and also the rate of change and acceleration of that wasn't as quick as I was thinking would help our profession.
Dan Hood (20:10):
I would buy that. I would definitely, we find ourselves, whenever there's a new technology, we find ourselves telling the story of this new technology over and over and over and over again for several years until finally people are like, oh, okay, we'll adopt it. Marc, how about you? Any things you expected to happen that didn't?
Marc Rosenberg (20:25):
Yes, A couple of things. First of all, as you know, maybe some of our listeners know I created a national MAP survey. We're in our 26th year now. So I watch these metrics very closely and year after year after year, I just have not been able to understand why CPA have hardly raised their billing rates they have raised. They definitely do that just about every year. Maybe they didn't do it during a couple of the sessions we've had, but I think the billing rate, which should be a reflection of your value, I think CPAs have a tremendous amount of value that they under appreciate or they think their clients don't appreciate. Right? So now finally, I'm starting again. Things are changing as everything's stemming from the staff shortage that firms are saying, all right, we got to do, go back to our economics classes. We got to reduce our volume and increase our rates and have more revenue and more profits with less work.
(21:41)
Another one is, again, I put this in the I don't get it category why more CP, A firms haven't done more outsourcing. Now, again, you got to put in perspective, the world that Kristen and I live in, it's primarily firms say 40 million and under, maybe even the vast majority are five to 20. So we don't have the big four perspective or even the top 10 perspective. And I bring that up because those larger firms have realize that outsourcing is the way to go. The typical local firm, I think our survey shows about 30% of them do outsource it. That's 70% that do not. When you can't find staff, if you're life dependent on it, everybody, I assume everybody knows this. You go to the doctor and you get an X-ray and he or she sends the X-ray over to India and have some doctor analyze it, and then it comes back and you got it the next day. Why is that different than us doing a tax return?
Dan Hood (22:56):
I suspect a lot of people are listening to this and going, wait, that's what happens with my X-rays. So you may have you just quietly created a revolution or a counter revolution in medical practice. But I will say that for that, that more firms are getting excited but interested in offshoring and outsourcing. That does seem to be a big, just over the last year or two, a lot of people talking about it and exploring it. But as you say, it's from a very low base.
Marc Rosenberg (23:21):
I'll talk one more out about what Hasn it materialized. We wrote a book, one of our books is on mergers, and one of the chapters has a title one times revenue is a Steal.
(23:35)
Whether that means is for those who aren't aware of this, that for a lot of years, and maybe even a little bit still today, CPA firms have this notion that their firm is worth about one times revenue. Now, before PE came about, that number had gone down to the 70 to 85% range, unless you are a real spectacular firm. So what are PE firms doing? They're offering double that or somewhere around that. So they figured it out one times revenue is a steal and we can still make, of course they do it other ways mainly by slashing the compensation of the incoming partners. But, and again, I don't think there's any one pundit that got up in front of the world that says, now shall not stop paying one times fees for an acquisition. The market firms started catching on, and I can remember the days when I sold firms for 120 to 140% regularly. Of course those are, that's good 10 years ago now. So that's one that I am surprised hasn't materialized. But what did it take? A huge outside influence, like private equity
Dan Hood (24:59):
With a lot of cash burning holes in their pockets. It helped that they came in with a lot of money to spare. Whereas most accounting firms when they're going into mergers, didn't have tons of capital to throw at a firm. As we said, we've covered a lot of ground, there's a lot more recovery. It was 30 years we're talking about. So it's a lot. But I want to turn to the future and start looking ahead, taking all this accumulated wisdom and focusing in on the next 30 years. But first, we're going to take a quick break.
(25:32)
Alright, and we're back. We're talking with Marc Rosenberg and Kristen Rampe of Rosenberg Associates. We have comprehensively covered the last 30 years. I think we've discussed everything there is of any importance over the last 30 years in accounting. But now I want to turn and talk a little bit about the future. As we said, this is the 30th anniversary of Rosenberg Associates, but I want to talk about the next 30 years or the next five or whatever timeframe you feel is reasonable. Marc, I'm going to throw this question you. What do you think is next? What do you think are going to be some of the biggest changes in the future? And like I said, I won't make you do 30 years, but I'll in 30 years, we'll all be uploaded into computers and living in orbit around Jupiter. But I'll let you set the timeframe, but what do you see in the future?
Marc Rosenberg (26:12):
Sure. And we've touched on these and some of the other discussions we've had already, but how could you start a question to answer a question? Well, first saying AI and artificial intelligence. I don't think anybody thinks it's going to go the way of Y 2K, but it's certainly here to stay. And I don't think anybody really knows what the impact's going to be, but it's going to be a huge change. And I think firms are for the most part ready for it. And it'll be interesting to watch how that evolves. Another one that I mentioned earlier is what's going to change in the next five firms have got to do something about this labor shortage thing.
(27:02)
They got to wake up. There's all sorts of creative outside the box things they can do to tap into labor pools that they haven't before. One of 'em, a firm at one of our round table groups recently shared that they started hiring non accounting college majors with the thought being we could teach 'em whatever they want to know. And they said that at the same time, accounting's not that hard. Sure, it's hard at the most complicated sophisticated areas, but as we all know, the vast majority of CPA firm work is not that hard. So I think we've got to start doing, there's a lot of other things we could do to solve the labor shortage issue. And then again, I mentioned earlier, I don't know what it takes, it's like what does it take our government to get an amendment passed? It's like it takes years and years and there's a lot of controversy and discussion. So changing this 150 hour rule, I don't see any concerted effort by any impactful organization like the A-I-C-P-A or like a state CPA Society to Changes. As the words came out of my mouth, I think it was Minnesota, was it maybe they've even gone away with the 150 hour
Dan Hood (28:42):
Rule? No, the law, the legislation is still in their state house still being argued over.
Marc Rosenberg (28:50):
And
Dan Hood (28:51):
It doesn't do away with 150 hour rule. It offers two alternatives to it. It lets you either get your extra education with, I think it's an enormous amount of CPE in a short period of time, or it's like a doubling of the work experience requirement. Those are not exactly right, but it's basically they either significantly, you don't have to take 150 hours if you do a lot more work experience or if you get a lot of extra CPE in a very short period of time. Well,
Kristen Rampe (29:17):
That sounds really attractive, Dan. So I'm hopeful.
Dan Hood (29:21):
Well, at least they're trying, Kristen, give them, a cut them some slack. Yeah, I appreciate that. Thanks. But anyways, but yeah, not a lot has been done. I think it's one of those things that a lot of people, it's like, let's try everything else before we go to that. As you say, Marc, it's sort of like getting an amendment passed. It's be passed in every state in the country, or it will seriously mess with CPA mobility, which is particularly these days when more and more people are working remotely. It's an issue.
Marc Rosenberg (29:52):
Kristen and I talk about this all the time. I got a feeling that she's got some ideas on this as well.
Dan Hood (29:57):
Alright,
Kristen Rampe (29:58):
Yeah, no, absolutely. When I look at the future, Marc, you mentioned ai and that's certainly a piece of this, the ongoing technology advancement, because I don't know, we talk about the salary increases and things like that. I think there's still going to be a talent pool shortage. I mean, even just with baby boomers moving into the age that they are and just the lack of total human bodies coming up, the need to leverage that technology because I think there will continue to be a shortage of staff resources. And then the other side of that is, and this has talked about and lip service given, although I don't think we're really that far along with it, but the continued elevation of accounting positions in more of an advisory and consultative and value add role. So less seen as a compliance resource because we're going to take care of compliance with technology.
(30:55)
I mean, somebody's got to oversee it, but other than that, somebody else is going to check the boxes for us. And then it's adding a lot of value. And I think that could even add some of the cache back to our profession of, oh yeah, I go see my accountant and they give me all this great advice on how to run my business and how to make decisions and how to get better information for decision making and things like that. Because I do think there's aptitude and interest for a group of people that might like to do that for our profession. So I think watching more technology come into play to take care of some pieces of the labor shortage, and then allowing professionals to rise up and do more professional consulting and advisory type work, I look forward to seeing that over the next five to 30 years.
Dan Hood (31:40):
Well, I get the pace at which the accounting profession adopts things. Maybe 30 may the right outside, but it's interesting. Will that mean a different sort of candidate pool for accountants, right? I mean, if most of accounting work has been compliance oriented, backwards focused, that attracts a different kind of person than the kind of person who's like, Hey, I want to tell you all about the future and help you plan for it and make promises to you about what it's going to be like.
Kristen Rampe (32:03):
Yes. Yeah. Well, it could be, or just acknowledging, we are talking about with hiring non accounting majors. Well, I can teach them accounting. Well, how would we hire the accounting majors and teach them advisory, consulting, communication and people skills. I think it can be done like any good bell curve, right? There's 10% that there's no chance. There's 10% that are fantastic already and then the other 80 in the middle we can make progress with and do some great things. I mean, if you had told me when I was in college studying accounting, I would be on a podcast for accounting today. I'd be like, no, wrong person. It's not me. Nope. I'm going to be behind the computer on the spreadsheet. Right. So I think it's doable.
Dan Hood (32:45):
Alright. Alright. Well,
Marc Rosenberg (32:47):
Somewhat related to that, I'll just toss out showing my age. There was a long time highly admired, CEO of a Fortune 500 company called name was Jack Welch.
Dan Hood (33:00):
I've heard of him.
Marc Rosenberg (33:01):
He was the CEO of General Electric, and this was back in the days of the conglomerate. So he had umpteen division presidents reporting to him, probably regional presidents. And the number one criteria he had for how to evaluate them was not revenue growth, it wasn't profits. It was what have you done to build a team? What have you done to build leaders under you? Boy, why wonderful Would that be if CPA firms could get there at least the typical under 30, 40 million firms. But I know that the Big four and many of the say the top 15, 20 firms do have that as a major part of their program. But CPA firms could learn a lot from that.
Dan Hood (33:57):
Absolutely. Well, this leads us to just beautifully to my next question, which is as we look at the future, we look at what the future's going to look like. What do we think firms, if you're a firm leader, what do you need to do? Marc, obviously you're saying they need to be building up the leadership ranks below them, their successors, training them, getting them up to skill. In many cases that'll involve the sort of skills, Kristen, that you were talking about, right? The client communication skills and the leadership skills and that sort of stuff. But Kristen, when you look ahead and thinking of the things you and Marc are expecting over the next five to 30 years, if you're a firm leader, what do you do to prepare yourself and your firm for all that?
Kristen Rampe (34:30):
Yeah, absolutely. I think some firm leader qualities that are going to best serve those who can do well into the next five to 30 years, depending on your timeline being adaptable, being willing to try out the new things. I mean, offshoring scary, AI scary, and who's the person who's going to say, Hey, yeah, I think I am willing to try that. And again, do you have to be the first out the door on it? No. But if you're the last right, it's not going to serve you well. And with that, I think it's important for all firms to really know that purpose, that mission, the vision. What are you aiming for, right? What's your goal as a firm? Some firms really want the high growth, high prices, high profits, and that's really the trajectory they're after others. It's more of a lifestyle business or a community business like, Hey, I just want to be in my town here and I want to be serving my local people.
(35:24)
And as long as I can keep things together enough to do that, I'm good. And how it looks, depending on your goals, what you need to do as a leader is different depending on which of those paths that you want to follow. But for both, I think having the ability to stay adaptable and flexible, and then also another, a word for accounting, words that are difficult, accountable, being accountable for doing the things that you want to do, the things that you need to do, holding your partners accountable, that I feel that's always a key to success for any firm.
Dan Hood (35:58):
Makes sense. Makes sense. Marc, I want to pivot a little bit. We're talking about firm leaders.
Marc Rosenberg (36:02):
Can I just share a couple of things real quick? Sure. People, I mean, that's got to be number one on any list. How if someone prepares to be a leader, one of my nominees for the most silliest or self-destructive traits of magic partners of typical local firms is the magic partner has a sizable client base. How in the world can you manage a client base and manage the firm if you intend to manage it properly? And I just spent a lot of time with my magic partners talking about that. And finally, I just throw out, I have a lot of quotes from that. It really means something to all of us, not just me. And one of them is from Steve Jobs. He said, we grow up inside a world in which we live and tend to think that that's the way it is. But once you discover that the world, as you know, it was made up by people no smarter than you, that's the instant you realize that everything around you that you call life can be changed. I think that's sort of a proverb for life.
Dan Hood (37:23):
Absolutely. And I think that may be a good place to leave us here, right? To realize that the future is in your hands, in all of our hands, and that we are capable of changing it. That's a great quote, Marc. Thank you so much for that quote and for joining us and sharing us the wisdom of the last 30 years as we prepare for the second. So thank you.
Marc Rosenberg (37:43):
Well, I really appreciate you inviting us to do this. It's always fun to do these things and work with you, Dan.
Dan Hood (37:49):
Awesome. Thanks. Well, it's great to have you with us, Kristen. Thank you as well. Share your perspectives and the time for what's coming ahead.
Kristen Rampe (37:56):
Absolutely. Thanks, Dan. Always glad to be here.
Dan Hood (37:58):
Awesome. And thank you all for listening. This podcast is produced by Accounting Today with audio production by Wen-Wyst Jeanmary. Rate or review us on your favorite podcast platform and see the rest of our content on accountingtoday.com. Thanks again to our guests. Thank you for listening.