AccounTrends: The tax and accounting thought leadership podcast

Join us as we chat with Bob Lewis from the Visionary Group, an industry veteran with 27 years of experience and plenty of fascinating insights to share. Surprisingly, pickleball and Cornhole aren't the only games picking up pace; accounting is too, with earnings even surpassing some medical professions!The staffing shortage and the capacity problems in the accounting sector are real, but what if we told you there's a silver lining? A crisis can often be the birthplace of innovation. In this episode, we dissect the impact of limited personnel on capacity mix and how firms are getting creative. The old guard is gradually passing the baton with over 50% of CPAs being over 50, and the dynamic field of mergers and acquisitions is stepping into the spotlight. Brace for a deep dive into strategies firms are employing to navigate these changes and harness the potential of our evolving industry.Lastly, it's time to gear up for the future of advisory services. With the accounting industry landscape shifting, we explore the impact of private equity investments, the rise of outsourcing, and the transformation to more profitable service lines. We also discuss how firms are responding to the varying needs of clients, the comparison between corporation and partnership models, and the disruption in the M&A market. Tune in for an episode jam-packed with insights, trends, and opportunities that will reshape your perspective on the accounting industry.

Show Notes

Join us as we chat with Bob Lewis from the Visionary Group, an industry veteran with 27 years of experience and plenty of fascinating insights to share. Surprisingly, pickleball and Cornhole aren't the only games picking up pace; accounting is too, with earnings even surpassing some medical professions!

The staffing shortage and the capacity problems in the accounting sector are real, but what if we told you there's a silver lining? A crisis can often be the birthplace of innovation. In this episode, we dissect the impact of limited personnel on capacity mix and how firms are getting creative. The old guard is gradually passing the baton with over 50% of CPAs being over 50, and the dynamic field of mergers and acquisitions is stepping into the spotlight. Brace for a deep dive into strategies firms are employing to navigate these changes and harness the potential of our evolving industry.

Lastly, it's time to gear up for the future of advisory services. With the accounting industry landscape shifting, we explore the impact of private equity investments, the rise of outsourcing, and the transformation to more profitable service lines. We also discuss how firms are responding to the varying needs of clients, the comparison between corporation and partnership models, and the disruption in the M&A market. Tune in for an episode jam-packed with insights, trends, and opportunities that will reshape your perspective on the accounting industry.

What is AccounTrends: The tax and accounting thought leadership podcast?

A bi-weekly podcast bringing you insights and advice from the accounting & tax industry's top experts and thought leaders. Learn more at

Jasen Stine: Welcome to Account
Trends everybody. I'm Jason

Stein with Intuit Accountants.
My co-host, david Bergstein, and

I are excited to be with you
every couple of weeks to share

the latest news, interesting
perspectives and hottest trends

in the tax accounting world.
We'll have special guests on the

show to help break these trends
down and give you food for

thought as you find new ways to
deliver for your clients and,

most importantly, we plan on
having some fun while doing it.

Welcome, all right. Welcome back
to Account Trends. Another

awesome episode here. As your
host, as always, jason Stein,

and with me, david Bergstein.
How are you today?

David Bergstein: I'm doing great
today. I hope you're doing well

. I did my pickleball this
morning. Have you tried

pickleball yet?

Jasen Stine: I have yet to try
it. I'm going to have to. And

didn't you tell me I needed to
learn on another sport that's

growing in popularity?

David Bergstein: Cornhole yeah,
I forget Cornhole or Axe

Throwing that was up your rally
at this point. That's right.

Jasen Stine: I haven't done any
research on it. I know that my

wife has taken the kids to do
Axe Throwing, but I haven't done

it myself and I'm actually I've
watched people play Cornhole. I

always, just I never thought of
it as like a sport. I just

thought of it as like some
backyard you know game that you

play when you're having a few
beers and growing out. Is there

something more formalized?

David Bergstein: being created
around it. Well, they've created

some leagues. It's now on TV.
There's a channel dedicated to

Cornhole and you know something
you like drinking beer and doing


Jasen Stine: That's right, you
know me well.

David Bergstein: You know, so,
and you know, and you know that

I'm a visionary when it comes to
talking about things before

they happen. You know the
cannabis way back when the

virtual office, and today I
think we have a visionary with

us, do we?

Jasen Stine: Yes, we have a
leader, and we have with us

today Mr Bob Beluis from the
visionary group. Bob, welcome to

the show.

Bob Lewis: Well, thanks, and I
love the banter about Cornholes

and pickleball because it was
not old at all. Again, it's

easier. Although I have played
pickleball, it's not that easy

of a sport. It can move very
well. In the Cornhole. I need a

lot more beer than because they
also drowned it in the misery of

me missing the middle of that
hole in the board. So same. Well

, thanks for having me. Guys,
what would you like to know

today? What would you like to?

Jasen Stine: know Well. So, bob,
you have. So let's start with

just grounding our audience on
who are you, in case they

haven't already heard of you,
because we know you're. You're

on the top 100 most influential
people list with the county

today and have done a lot of
work with you, know consulting

and that sort of thing. Tell us
about your background in the

industry and your road to
creating the visionary group.

Bob Lewis: I think it's pretty
short. I've been doing I've been

only working with accounting
firms for 27 years now. That was

a two and a seven and blur, if
you guys, for a long time. We

help these firms with a lot of
merger and acquisition work. We

either seek out firms for them
to acquire a margin, identify

the candidates for some of our
clients we have to find them a

home to go into. But it could be
a merger or could be an upward

sale. A lot of succession
assessments these days, because

that's also fueling fueling a
lot of the M&A. We've got no

surprise Massive staffing
shortage. Capacity problems are

huge. I got an aging baby boomer
population. Basic economics is

supplying demand. Kick in here.
We don't have enough people.

We've got too much work. We help
firms figure out how to

offshore. There's so many firms
that don't know how to do it or

have tried it and failed, and
we're really helping figure out

how to open up their advisory
arms, because the way to grow

your capacity is to not be as
dependent on CPAs to make that

happen. In the middle of all
this, we've got chaos. We've got

outside investors kicking in.
We've got people tuning in for

how to get out. We've got other
industries being acquired by CPA

firms, the left one on. Prior
to this, before I ever did all

this crazy stuff, I used to work
as an accountant, so showing my

age a little bit. Remember
Green Ledger Sheets. I learned

on those. I was running a couple
of high tech companies that

were doing a lot of software
development, which are now, of

course, gone as time has evolved
. But it's pretty deep in the

technology side in these
accounting departments and these

firms too, so it's interesting
to see how all this has changed.

It's actually quite fascinating
to sit back and go. Never would

have seen this coming, but
we're here today. Good news is,

jason, accountants are making a
lot of money. Yes, they are.

David Bergstein: So does that
mean people should go into

accounting Because I know we
have a pipeline shortage? I keep

telling people to go into
accounting because it's not

about accounting, it's about the
advisory service. What do you

tell them?

Bob Lewis: I think this is OK.
The ACPA is not endorsing this

statement from me by any shape
or form. I see the numbers that

come across and what partners
make. I'm going to tell you, if

I was doing this all over again,
I would have stayed in

accounting, I would have stayed
in my own firm. I don't run it

and I'd be controlling it
through this day. There's a lot

of capacity issues, a lot of
problems. You can see all the

pipeline issues. But the
opportunity for income in this

profession is massive. It's more
than the medical field pays.

It's more than some of these
professions where you have to

spend so much time in and it's
not easy to become a CPA. But

the regulatory issues inside a
lot of these are just

astronomical and opportunity
here in the CPA profession to me

is right there. I just don't
think a lot of the younger

people see that they aren't
getting exposure to it.

Jasen Stine: I hit the nail on
the head, bob, and we talked

about that with others as well,
and I know a lot of the state

societies and AI, cpa and plenty
of other organizations are

trying to figure out how do we
get upstream and demonstrate

what this industry really is.
And it's not even what it really

is, because we're still
struggling with a lot of the

things that you talked about,
like all of the things you

talked about, but I think the
bigger thing is like this and

I've heard somebody else say it
before the squandered

opportunity that we have in our
profession. It is one amazing

profession that we get to work
in and it's unfortunate that we

have a brand with our younger
generation and those outside of

our profession that it's really
just a bunch of guys with green

visors sitting behind a
calculator just doing crunching

numbers all day long, because
that is just not what it is.

Bob Lewis: My concern in this
industry is, first of all, I

think there's going to be just
massive transformation. You're

going to see a lot of niche
specialists emerge more. You're

going to see firms get more and
more selected who they take as a

client and there's going to be
a very large bottom to pyramid

of businesses out there that
can't find an accountant Just

can't find it. Now some of this
is going to be offset by

offshoring. But the larger firms
are going to have almost all

review people in place. They're
not going to have prep people

anymore. This is not going to be
there. He's going to kick in

deeper and deeper and do a lot
of the manual calculations and

prep it some scanning alone
items into the document. The

documents will start to auto
calculate themselves and then

they'll have a person in there.
They'll do review work. What I

see happening is that
bottom-basic Appearance of

smaller, smaller businesses out
there that can't find anybody.

Automation will cover a lot of
it, but I think there's just

going to be businesses popping
up that specifically just

address them and they're going
to do everything for them. There

were all their insurance. Not,
we're not talking about

malpractice, I'm not talking
about all of our insurance, any

for the business, all their
benefits, all our technology,

everything legal, all in one
shop, one fee. I come in, I make

my cupcakes because I've got
like a cupcake store. I got one

place to go for everything all
integrated. I pay a pretty large

fee for that, but you know, one
center is going to be there. In

this center, I'll also probably
be in my wealth management arm

too, and everything will be set
up for them. I just don't know

how businesses can survive
anymore when they've got so many

pieces. They have to juggle,
and it's always been a problem.

But now, with this opportunity,
I think, with CPA firms skinning

off their client base, I think
it's going to force a whole new

industry. If I was a furious and
I'm going to be honest with you

I'd be probably trying to open
one of those centers up, because

I think it's going to be huge.

David Bergstein: Yeah. Do you
think that these centers are

going to be what we're seeing
here, with accounting firms

splitting up between consulting
and ordering, the professional

service side of the firm doing
everything and selling them

every service?

Bob Lewis: Yeah, but I think
you're going to see tears, dave.

So I think what'll happen is
the way they're splitting up

right now or adding and
consolidating. They're going to

go after that middle market on a
client, and the middle market

is a pretty wide number. Where
do you define middle market? Is

it a 10, 20 million dollar
company? Is it a five million

dollar? Depends on your
definition of it. But I think

they're going to focus up there
and you're going to see a whole

other grouping of companies that
are going to do the smaller

client, because there'll be
different sets of needs,

different level of cost. I mean,
I'm out there thinking this

stuff through because I sit back
and I'm like, what are these

people going to do? Because you
even look at the cost of

technology now and, Dave, a lot
of the larger firms out there

have made significant
investments for decades now in

tech, not that they weren't
doing it before, but firms are

grouping together. We've got a
couple of clients that are in

groups of firms where they've
co-invested into a technology or

acquisition of a client or a
company and they share it

between the group and that's how
they kept their cost structure

down. That's how they get their
development done, because on

their own, even though these are
all good sized firms, it's

still too much money to invest
individually. I think we're

going to see more and more of
that collaboration. The end of

the day is we've got one core
problem in this industry that I

don't know how we're going to
fix it. I don't know how they're

going to fix it. This is
getting back to work-life

balance and culture and all this
stuff. Look, we've got a lot of

regulatory issues that require
315 deadlines, 415 deadlines and

, unfortunately, a lot of work
needs to be done at that

compression period, as we like
to call it. There's no way to

spread it. I can't have a
40-hour work week if I have 70%

of my work being done in a
certain period of time. It's

just impossible to do it and
maintain a company, and you need

a company. So that's the
problem I do see with this

industry. That's going to be the
hardest work around is the

regulatory deadlines, because no
matter what work needs to hit

those deadlines and even if I do
an extension, I'm not counting

any more. So I'm a little bit
loose on my numbers here. But

even if I do an extension on my
315 filing or my 415 filing, I

still have to come back with a
basic understanding of where I'm

at. They file that extension
without getting hit with the ton

of penalties. So a lot of work
still needs to get done, even

though I'm looking like I'm
pushing it. A lot of work still

needs to be done and clients are
exactly the most cooperative,

as, being a client for an
accounting firm, someone has had

to get trained over the years
by their account to not wait too

long to get information in.
That would be someone else on

this call besides me, I'm sure.
Oh, I'm right there with you,

knowing this industry as well as
I do, and I haven't been in it

for 25 years myself and I'm
still like last minute, yeah,

and I've gotten much better
about that. I've actually solved

my problem.

Jasen Stine: I went to
counseling to get that thing


Bob Lewis: But I've solved that
problem finally. But most

smaller businesses don't, and
even some of the large ones.

That creates even more problems
than we pressure them to get

Inside that forced timeline and
make the problem worse. Every

firm has a B and C kind of
employees. I don't mean I'm

calling anybody out for any
specific reason. You got those

employees that if you asked them
to continue to run into a wall,

they would run into the wall
Because they got to figure out

how to figure to get through the
wall. Then you've got other

employees that are like well,
you know, not my problem, I'm

going to go home. And those
employees they're often the ones

that will do more than I'm
going to do. And those employees

they're often the ones that
will do anything for you, or the

ones that are given the hardest
tasks or pushed hardest, and

they have a tendency to resist
the burnout but at some point

they're probably more likely to
explode. And in this marketplace

we got to be careful with that
because it's not on a time of

like a violence factor. I'm just
talking about the fact that

they'll get fed up and leave.
And then he's a really key

person. But options can be
somewhat limited in this market.

So you want to get back to your
core theme of like M&A. Now

you're kind of hitting that.
You're hitting a lot of points

here before you even get to that

Jasen Stine: Right. Well, but
they're all relevant to that

right, Because that environment
is creating this opportunity for

M&A and private equity to come
in and really shift the

direction of our profession. So
perfect transition, Bob. Please

unpack that.

Bob Lewis: If we had no
restrictions on people like we

had unlimited supply of people
we wouldn't be talking about 90%

of what we talk about in this
industry, because nothing would

have changed. We'd be making
money, we'd be hiring more

people, nothing would change.
Technology get a little better,

like it always does, but we
wouldn't be dealing with any of

these issues. So we're forced to
address a problem on capacity

and I don't want to make light
of the fact that we want to make

sure people are taken care of
and respect for the work week

and try to get that work-life
balance. But the reality is

everyone's chasing the same
limited number of people and the

pool keeps shrinking. So we're
kind of fooling ourselves if we

don't think, if we don't change
the capacity mix and how we

address this or this business, I
can't continue to steal people.

There's a two-for-one shortage
of people coming out of college,

they got two jobs for everyone
person going into accounting,

assuming they even stay in
accounting. So I've got a 50%

shortage right out of the box,
just on any new stuff. And, dave

, I don't have any handle on
this, but I can't find concrete

numbers on how many exiting CPAs
there are and if they truly

exit. But it's different if I'm
asked to leave the firm because

I've now hit my mandatory
retirement but I still may be in

the firm. I'm no longer an
equity partner and I may be

doing a consulting role. I don't
even know if people don't know

if the stats are there, how do
you report that?

Jasen Stine: Yeah, I heard a
stat thrown out. I don't have a

source for the stat, but it came
from other thought leaders in

the profession. Everybody seemed
to have heard the same thing.

That I think was in. The next is
either by 2025 or in the next

five years, 50% of our
profession will have retired,


Bob Lewis: Well, there were two
states where we were able to

actually concurrently get actual
information on aging and

population New York and North
Carolina. Both had information

out there. North Carolina, I
think it was over 15% of the

CPAs were over 70. Already, oh
yeah. And in both of those

states the number of CPAs over
50 was well over 50% and over 60

in some cases were over 50%. So
it's like you start to do the

mapping, like it's just going to
continue to get worse. That's

why firms got to be looking at
how do I put the right

technology in place? How do I
offshore? Firms have resisted

off showing for a long time and
some have done it and failed

because I put the wrong person
in charge, but I picked the

cheapest option. If you pick the
cheapest option for anything,

you're probably going to get
massively lucky for experiencing

the failure. It can be very
dissatisfied with your $5 shirt

that you found on sale and it's
like, well, it was five bucks

and looked good at the time, and
then you put it on later. It's

like I'm going to buy a $5 shirt
, it's just going to get thrown


David Bergstein: Yeah, but the
truth of the fact of the matter

is that in the future, there are
going to be more accountants

hired outside of the US than
inside. There's more CPAs,

especially making the CPA exam
change giving it outside the

United States. So people got to
reconcile to the fact that

you're the man with mergers,
acquisitions or offshore onshore

. Where does the firm go? By the
way, 664,532 active CPA

licenses in the US, according to
NASBA as of July 24th.

Bob Lewis: Interesting, and
75,000 is the estimate of the

new accounting grads coming into
that pool. But how many of

those days do you think you've
got more handle on this than I

do? How many of those 75,000
grads are actually going to sit

for the exam? 60 maybe.

David Bergstein: Very few.

Bob Lewis: yes, yeah 60, maybe
50 if we're lucky, and currently

the number of people sitting
for the exam is like right

around 90,000 or a little under.
So that number is just going to

drop like a rock Pool, is going
to continue to shrink and we're

all going to continue to fight.
Now you want to go back to YJ.

So we have some problem with the
M&A. So the typical firms model

is built off of the third top
system. So I put my 10, 20, 30

years in whatever the number is
right, and normally, normally 20

years to get all five of the
deferred comp program. And

that's an unfunded program in
about 85% of the firms in the

United States. So what's going
to happen is Bob Jr is going to

come in and the Bob Jr's,
believe me, are going to come in

and look at that number and go.
I don't know if I want to buy

it or not. I want to pay for
that. So the model before has

been perfect. So you know, dave
would sell his firm to me. I'd

come in, I'd pay Dave's Deferred
Comprogram off, I'd make him my

money, I'd figure my
calculations. I'm waiting for

the next person to come in to
the same thing for me. The chain

is broken. They don't want to
buy the Deferred Comprogram

liability. They don't think the
firm is worth what it's worth

because there's too many 1040s
in there or whatever the number

is okay and they're too low of
value and I can't find people.

So if I'm concerned about
thinking, if I'm finding people

and I'm buying this liability
off at the rate the partnership

agreement has and I don't know
if I'm going to buy it, so

what's my option? If I'm that
person, I'm that firm that's in

the middle. I bought Dave's
practice. I'm paying Dave off.

I'm sitting there looking for my
turn to have somebody come in

and buy me off. What do I do? I
go upward. This is what opens

the door now too. Traditionally
there's been a lot of M&A upward

. I look for a bigger firm that
can absorb me. I use the word

guarantee my Deferred
Complibility. Maybe they're not

going to pay me what I think the
firm's worth. But that's all

subject to the quality of my
firm location, lots of variables

. But they say, let's say I move
my firm up, I get some comfort,

the fact that I'm going to roll
into the Deferred Comprogram.

That's option one. Now a new
option which has been the last

couple of years private equity.
Do I take an outside investment

in Now if I've got a smaller
firm, two, three, formerly no

firm? It's not a small firm, by
the way. It's a large firm Most

of the firm's United States but
still small for private equity

Pretty much not what they're
looking for. They can make $10

million by an up but eventually
they'll be rolling in smaller

firms into that. But that's one
option private equity and

there's a cost to that. There's
an opportunity and a cost to it.

I could look at what's happened
recently with the Bergen KTV. I

can mention names because it's
public, it's all over the place,

right. 600 plus person CPA firm
gets acquired by a large wealth

management company. Yeah Well,
there you go. That's a huge game

changer. By the way, we've done
these in the past. I've

actually done a couple of wealth
management firms buying account

firms Never went to that size
because I think if I did that

I'd probably retire off of that
commission. So the point of the

matter is that's another entry
way now. So I got a traditional

method emerging upward of
selling. I've got internal

succession, which is my first
option If I can pull that off

and Sony wants to buy me off. If
not, I got to merge up and sell

. I can go private equity or
look at that option. I can look

at registered investment advice,
which is similar to private

equity but a different outcome,
and this session probably won't

get into that today. So that's
quite a difference from a

registered investment advisor
and private equity options, from

what I've been able to tell.
And then my other option is I

don't do anything, I just run
out, close the doors, fire's

there at the end. And then we do
hear that from a lot of firms.

So like, well, why would I sell
out at this price when I can

just work for three more years
and make the same amount of

money? And the answer to that is
very simple You're not ready to

retire, you don't really want
to get out. Then, if you're not

serious about getting out, you
can't make owner comp and get

out at the same time. It doesn't
work that way. You have to take

a reduction in your own comp
because, jason, if you're going

to buy my firm, you don't want
to pay me all the owner comp

that I've been pulling out, and
then maybe you can make money in

three years I'm gone. It's an
attractive option. However,

jason, if you're willing to do
that, I have many firms that

would love to talk to you. I bet
they would.

David Bergstein: So what about
all these? Why is private equity

putting in all this money to
get these accounting firms when

they went to the accounting firm
or they want something else?

Great question.

Bob Lewis: So let me answer that
with the registered investment

visors. First, I'll go right
back to your private equity. So

the registered investment visors
got a little bit of a window.

They've got a ton of clients
already in place that need

accounting and tax services and
the accounting firms got the

accounting and tax services
available to deliver and a lot

of clients that maybe have
wealth management opportunities.

So that's an interesting shift.
The private equity they're

looking at this as a straight
investment where they think that

they can make money off the
fact that it's a recurring

service model. Okay, they
believe that they can increase

the multiple and resell it in a
four to five year window. Now

some are saying it's a family
office so they don't have to

resell it, which is fine. I
believe there's a lot of

different models popping out of
there, but they believe they can

run the operation in a more
profitable pace and it's a

steady, steady group of
businesses. Now my understanding

was initially when I saw the
private equity market and

there's many of there's so many
opinions out there, so everyone

just calmed down when you go.
Well, that's not the way it goes

. There's a lot of opinions and
options that we're seeing. I

would think if Dave was the
private equity organization

looking to acquire my firm, he
would bring in maybe the

insurance company of the owns,
the technology company of the

owns, so he has investments in.
Bring him in, cross-sum them

into my client base of three,
400 business clients, or

whatever. And then my firm now
becomes much larger in size

because they're purchasing other
services from Dave's other

clients on top of it all, so
everybody's winning. That would

be the great model. Now, as my
profitability begins to

significantly go up, so will my
EBITDA, which means my multiple

will be more attractive for Dave
to take my practice and maybe

sell it to you, jason. Now, if
he has to hold it for four or

five years if that's his minimum
maximum term he can hold, or he

sees the opportunity to sell it
to another buyer because he's

been increased it over the next
couple of years and made it more

valuable, great play. If he's
not doing that, though, if

Dave's not bringing in all those
other things he just purchased

my firm or part of my firm, we
can still continue to grow it,

and I may get 40% of the next
bite of the apple, as they like

to call it, because it's still
on 40% of it. How's it going to

grow more exponentially with
Dave's money. I'm not sure how

it is Really. Would Dave's do
when I'm looking at this. Is

he's buying Mt Mayday to my
deferred comp program? You give

me money to pay that off, maybe
giving money that I can invest

into some of the employees, or
maybe provide some stock options

for the employees, or buying
another company with which may

then allow me to get bigger as
an organization. But it's a

little less clear than the whole
RA-Cyclehouse right now. The

difference is the RA-Cyclehouse
is still fairly new. I mean, it

made a big shakeup. To me. That
was big news because we've been

playing in this market a little
bit for a few years. But I saw

that deal and went well, that's
a game changer in this industry

because now we have another
option. I did miss another point

, though. I know it's hard to
believe, but I missed the point

and we were chatting before the
podcast a little bit. I've

gotten several inquiries over
the last couple of weeks from

all sorts of companies that want
to acquire accounting firms.

Yeah, and that's something else.
Yeah, that's another channel

amount. Right, that makes sense,
because I don't know, dave, do

outsourcing companies provide
tax and accounting and insurance

services? I think they do, if
I'm not mistaken.

David Bergstein: They all do,
whether you're in India, the

Philippines or whatever, they're
rendering that service. You

made a great point for that
because you really think about

it. All these firms overseas
have a lot of money. They want

to grow. What's a great way to
grow? Buy a client base, but

always try and sell to the CPA
firm. Now you bought the CPA

firm and they become captive to
you the other way around. So you

got a great idea of it.

Bob Lewis: And I can control it.
Now, if I'm the outsourcing

company, I can control how this
service is provided. It doesn't

mean I'm going to get rid of the
employees, but it takes me out

of the fighting, for the
employee pool is hard. Do I even

need CPAs to run my CPA firm?
Is there going to be a CPA firm

moving forward? I don't know. I
have a question about the

assurance side of the house. I
think that's one of those niches

that are going to emerge. It'll
be all. I do our audits and I

do it really really well and
I've carved out everything else.

I find it hard for the
generalist firm. So when we look

at an M&A transaction firm
comes to us and they go here,

we're generalists. We have a lot
of different industries some

new government, nonprofit,
public, not public trade,

privately held companies, and
then, Jason, you'll be one of my

people, but you also do audit
and tax and accounting. That's a

big ask. They ask you one
person to know all those

regulatory issues and all those
systems. So I think there'll be

more and more niching.

David Bergstein: Well, dave, so
I think the big niche is going

to be audit, like you say. I
think that's going to go its way

because everyone is doing
private equity. Are they

splitting off the audit firm and
saying all the growth is going

to be in a professional service
consulting area?

Bob Lewis: They are because of a
couple of reasons. Well,

obviously, if I have a CPA firm,
I have to create an alternative

practice structure. I can't
have an outside investor coming

into a CPA firm because of the
ownership rules, typically by

state, so they carved that off
into a separate entity. But when

you look at it, historically,
audit has never been the most

profitable when I can look at
other service lines, so if I'm

an investor and I buy your firm,
jason, and I start looking at

all the different service lines,
of which ones are more

profitable, I'm probably going
to put a bigger emphasis on the

ones I think that are more
profitable and start to decrease

the ones that don't sell as
well, or I shouldn't say, don't

sell as well but aren't as
profitable. All right. The

interesting thing, though, is
we're getting back to what's

required. What's required Really
. Accounting isn't really

required, but you can't really
create the outcomes without

doing the accounting. But I've
got tax regulations in place and

I've got audit regulations in
place. So if I choose to maybe

skip on the audit regulations, I
don't mean to short come, but

defocus that and let that group
begin to shrink. That's great.

Part of this, though, is here's
the mystery. I can't figure out.

I can't figure it out. I just
don't know how we got here. If

I'm not mistaken, the only
people that can certify a

financial statement are CPAs.
That's right. I can't get that

service anywhere else. If I have
a monopoly which is exactly

what that is it's a monopoly I
should be charging a very high

fee for that service, yet
somehow the industry has managed

to beat that fee down to the
lowest level, which is the thing

that they sell. That is the
most premium thing that only

they can sell. Dave, I can do
your tax return fee. It would be

absolutely horrible, but I can
do it legally. I don't have to

be a CPA to do your tax return.
Jason, I can do your accounting

for you. Again, folks, if you're
going to hire me for those

services, suggest strongly, go
to somewhere else. The audit,

though, that has to be done by
the CPA. We've taken the only

thing that they actually have a
huge monopoly on and have

managed to crush that fee
structure. One, because people

don't value the audit. The
consumer typically isn't like oh

great, the auditor is coming,
I'm getting very excited. They

don't do that for the tax person
either, but at least the tax

person has some glimmer hope
that I could get some money back

or something. The auditor I'm
just going to try and escape to

make sure everything went okay.
That's their job. Their job is

to make sure that my financials
are strong. They're looking for

holes in case I do have holes in
my financial structure, which

I'd like to know. I just don't
want to hear it if that comes up

. The one thing that we have,
that we own the monopoly on,

we're selling at the lowest
price. Anytime you pull up to

the pump at the gas station and
you're wondering, wow, why is

gas worth 50 a gallon or
whatever it is in your

neighborhood? You're like the
old companies got it right, they

got together, they figured out
let's charge more, let's say


David Bergstein: That's why
people don't see value in the

audit, because all the law, I
think audit analytics says I

think 10 firms control 69% of
the public audits. They pass

them around. Of course, I think
we as CPAs have devalued the

audit. We've solely ordered at a
lower price because we wanted

to sell them other services. Now
, by splitting the firms off,

you can sell them all those
other services and you got your

audit firm on its side. I think
maybe government regulation will

make audits separate.

Bob Lewis: Well, dave, look at
this too. They keep increasing

the regulatory issues inside the
audit the stuff that I have to

do as an auditor now and Jason's
my client. I have more steps I

need to go through. I have to
talk to Jason about IFC and

prestations fee. I didn't want
to do this, I didn't want to go

through these other steps, but
I'm being forced by the

government, which will be you,
dave, in this case. It will be

the government that will force
me to make changes. I got to go

back to Jason and I need to find
a way to tell him it's going to

cost him more, and here's why
Jason's like well, I don't

really understand why we have
those regulations, and I don't

care, me being maybe not the
greatest salesperson as an

accountant, which many of them
are not the best salespeople in

the world.

Jasen Stine: A lot of really
good ones I've met that you can

sell me into the ground.

Bob Lewis: They're great. The
way for me to avoid

confrontation with Jason is
really not to increase the fee

or to increase it so small that
I cover part of my loss with

Jason, but not all of it. My
downward spiral continues that

way. It's not because I priced
it necessarily wrong, but you,

dave, in the government role,
forced me to do more regulatory

issues. Me as a firm is going. I
got more and more regulations

and checks. I got to watch. I
watch how I sell the client at

the same time. Do I even want to
invest more in resources and

energy in this? And then I've
got to look at my incoming staff

and sell them on the school.
Sexy world of audit. But hey,

it's a great world. You should
enter it. Honestly, there's so

much opportunity in that
marketplace right now for price

improvement that really good.
Progressive younger accountants

could kill it. In that market.
Supply and demand. Somebody's

got to do the work. The work has
to be done.

Jasen Stine: Yeah.

David Bergstein: I'll do it
overseas. That'll happen, sure,

but everything you said brings
us back to what I think, jason,

you started with. The future,
where the value is in making

more money, is selling advisory
services, because every business

wants help. They don't want the
audit, they'll take it as a

necessary evil, but everybody
who has a business or has money,

hey, tell me how to be more
liquid-solving and profitable.

It's something.

Bob Lewis: Yeah, I want to know
how I can make my cupcakes at a

higher profit margin. I don't
want to know how much it costs

me to make my cupcakes. So I
know that, because I already

know that I don't need
historical reporting, I need you

to tell me how I can run my
business better. Not all

accountants are equipped to that
. It's Dave. I want to touch on

another interesting point. I
know you read everything, so

nothing slips by you. Well,
maybe a few things, but not much

, not much. No, you're right.
Why are the large firms laying

off their advisory staff? Why
would we? Why, if I have my

30-person CPA firm, why would I
want to go into advisory when

the large firms are laying their
staff off? The question is Lay

one up there.

David Bergstein: Well, the
question is I follow my Reddit

sidelines and listen to all the
complaints out there and why

people are working that way and
I think they're more rightsizing

. Just like Google, apple and
all the other companies, they've

had tremendous staffs. The
pandemic forced them to be more

efficient with the use of
technology. So do they need as

many people? Probably not. Plus,
they've become global. They're

doing a lot of work out of the

Bob Lewis: Well, the other thing
too is we're serving two

different markets here. So if
I'm a big four firm, my clients

have a different series of needs
for advisory, which many of

those clients, by the way, have
their own in-house advisory

councils and staffing to help
them with. If I have a 30-person

CPA firm and I have clients
that maybe they got $100 million

clients, most of them are going
to be probably five to 10. That

five to $10 million client,
they don't have that staff

in-house. They don't have
anybody to help them with that

advisory. So that market is ripe
and it's a market that the big

four firm isn't going to go down
to sell into because the price

is too high. So the difference
is, when you read the stuff and

I was to the newspaper, that's
what it really dated me when you

read the news that's out there,
you're thinking, oh, look at

the trend. Advisory services are
not working out. It's because

it's two different things,
that's two different markets.

Completely Inside the pyramid
we've got the base of smaller

clients going up the pyramid,
those clients at the base and at

the second tier of that pyramid
, they need a ton of this all.

They have no idea how to do this
stuff. And when you get into

the advisory, which is why so
many firms are struggling to

open this. They think they've
got to bring in an in-house.

I've got to hire Jason to run my
advisory group and I'm a

30-person firm. I kind of hired
Jason to run this. Plus, does he

have a team that he can bring
in? What's his focal area? I'd

rather have Jason come in and
develop all kinds of

relationships with different
partners partners meeting

different organizations out
there that he can bring into my

client base until we get large
enough to go. You know what we

need to bring exit planning 100%
into our firm or cyber 100%

into our firm. Also, go out and
hire Dave to run our cyber

department then, because we've
got a ton of work In the

meantime. Thank you. I should
start slow by partnering to get

ready for any of the redacted
position or merger to bring in a

company or bring in a person.
We see the mistake happening

over and over again and they
jump in and the guy that they

bring in wants to do quality
earnings which doesn't even fit

99% of my client base. Like,
what good is that? Cause I

brought it down from a larger
firm consultant that either got

let go or they cut back and they
want to bring this guy in

because it looks like he can
really run the advisory group.

What are they selling to those
clients? That's the kind of

match your advisory service at
your client base, but- 100%


David Bergstein: You're talking
like Jason. Now he says when you

want to start something, you
got to make a decision. What do

you say, jason? Buy, build Build
buyer partner.

Bob Lewis: Yeah, build buyer
partner Exactly what we use.

Jasen Stine: Yep.

Bob Lewis: Yep, we use buy it,
merge it. We use build it, buy,

merge or partner, you know, and
we're seeing the buy merge

happening more too with when you
get into, like non-accounting

firms. So I want to look to
acquire Jason's technology

company. I really don't maybe be
acquiring it, maybe I'm

acquiring controlling interests,
like I'll take maybe 51% or

keep 49%, I'll pay them off a
little bit, put some money down,

but we co-brand that company,
run it separately. We sell

Jason's firm into my client base
for cross selling and we have

two entities now in play or just
merge them in, which can make

great sense too. Maybe I don't
buy them. There's all kinds of

options out there right now that
we're seeing and somebody's you

know 20, 30, 40, $50 million
firms. We're seeing 50% advisory

. That's a huge statement for a
firm that's sized to have that

kind of advisory level and more
and more from coming out of that

market that way. The sad start
we see a lot of companies that

have 10% or less in advisory
Right and then where the

counting is, advisory is CAAS.
I've never understood that. I

have a client accounting and
advisory get lumped in and

advisory is a whole different
animal than client accounting


Jasen Stine: I've never
understood that either, but we

do, everybody do that, and Jen,
it's just generally accepted

like, oh yeah, caas, we call it
CAAS 2.0 or 3.0 or whatever. But


Bob Lewis: would you lump your
accounting services in with your

advisory? It makes absolutely
no sense, is it? A pipeline

feeder for advisory, sure, but
two different disciplines. So,

to my mind, we've got insurance,
we've got tax, we've got client

accounting services and
advisory, and the reporting on

the numbers is very confusing,
because how you ask the question

on the survey depends on when I
answer it, and if you don't ask

the right questions on the
survey, I might answer right. So

we've got people blending
numbers together and chasing

goals that, honestly, don't
always make sense.

Jasen Stine: So, and that
probably has a lot to do, bob

and you're closer to this than I
am, so help me bring clarity to

that but it probably has a lot
to do with the way that the

firms are structured, and I know
there's people out there that

call for the death of the
partnership model right, because

that's very restricting in how
these firms are able to approach

these services and there's so
much more to it. And so all this

kind of spins together, this
M&A and private equity and how

we structure and how these firms
are evolving. And what I

thought something that you said
as well is the larger firms 50%

advisory revenue, right. One of
the big problems that we have in

our profession is there's no
real burning platform for these

firms that are at the 10%.
They're making money, they're

doing well and you mentioned it
before like, even if they're at

the retiree stage and they're
not thinking about succession

planning, they're just like, oh,
I'll buy, a, sale it at the end

or let it die on the vine
because I'm doing good, I don't

need to change. But the firms
that have been leaning into this

already and have gotten to the
50% rate, those are the firms

that are gonna be on the other
side. So what's the point of

this? Not ones that are

Bob Lewis: The interesting point
in the fire sale, though. So I

am kind of playing with fire if
I decide to continue on my own,

because the recruiting thing's
not gonna get better. The

technology investments are gonna
get better. Oh, what if I get

sick? Ooh, there's an issue
there too. What happens then? So

there's a risk reward you do
when you look at the situation.

I wanna go back to your
partnership model comment,

though. So we all know who. Who
just go on to a corporate model

right, by the way, not right or
wrong, no, I mean, they did it

for their own reasons. But let's
look at, like a corporation,

Corporations run by board of
directors. Okay, in elected

board of directors, right. If I
go back to a partnership model,

a partnership model has an
executive committee, an elected

executive committee. I would
just do just the same. Elected

was common on both right. So the
difference between corporation

and partnership model is, if the
board of directors screws up

and makes bad decisions, they'll
get voted out of the board and

there'll be new people put in
the board, but still that

board's making the decisions.
What should be happening in a

partnership model is the
executive committee should be

making those decisions, and
let's assume it's a commitment.

It's a decision that goes to a
higher level like the only good

super majority votes kind of
thing. What happens to the

corporation? All the
shareholders vote on certain

issues, right? What's the
difference really? I mean I just

I don't want to go off there. I
know BDO has put a ton of money

into this and there's a reason
why they would do it versus

other. But when you look at it,
what we need to be doing is

empowering the executive
committee inside these

partnerships, and the boards and
the corporations are letting

them do their own thing and if
they do the wrong, make their

own decisions. They get voted
out. We move on. But in the

partnership model we got 18
partners to vote on whether we

should put a new copier in. Okay
, that's what the executive

committee should do. They should
only be focused on putting new

copiers in. But seriously, I
think that's part of what we've

got here is if I'm in a
partnership model. But you know,

a fortune thing is, dave, how
many CPA firms are there in the

country? I've heard 45,000, I
don't know. It's a very number.

David Bergstein: I think that's
what the AI CPA constantly talks

about 46,000 and then, once you
go past the top 600 firms in

the rural, 20 ULS. But that's
what they talk about.

Bob Lewis: My understanding is
there's only a thousand firms

from a million over a million
dollars of those 45,000. So most

of the partnerships that are
out there are dictatorships.

It's just me and I got some
people, which is fine, it all

works. Or we've got that group
in the middle there that's got

like five or six partners and
maybe they're not that big and

those are the firms, I think,
that struggle because they don't

really have an executive
committee. They got a bunch of

partners that meet around a
table and there's a managing

partner, but he or she really
doesn't have this decision

without the other partners
behind him or her. So I think

it's when we look at the model.
I'm not sure if the model is

really the driver. I think the
driver is who we give authority

to make decisions on that, but
that's probably a conversation

for a whole separate day.
Getting back to your initial

four about what's happening in
the M&A, we've got just a ton of

disruption right now. But see,
everybody looks at this as a

negative. Like, oh, it's a
disruption, I don't wanna deal

with the change. There was so
much opportunity out there for

anybody who's got any
like-minded progressiveness at

all to think about firms that
they could acquire. And I've had

other people tell me why would
I acquire this firm with a bunch

of old clients in it and not
enough staff? Well, you probably

wouldn't make that acquisition.
But there's other firms out

there that have great staff,
great clients and in need of a

transition because their
leadership team does not have

the right succession in place.
And it doesn't mean that their

team is bad, it just means
they're not ready to take over a

firm yet, or that it wants to.
You know, there's a lot of

people that are good. I just
wanna be a manager. I like being

a manager, I don't wanna deal
with responsibility, I don't

wanna take the debt on, and you
gotta be able to kind of read

the room of what you're looking
to acquire and inside your own

firms, read the room Right Firms
go. I've got a great succession

plan all laid out, but I
haven't shared any of it with

the team yet, nor have I talked
to them about the buy-in or how

much money they can make. You
know, dave, you've seen numbers.

Jason, I'm sure you've seen
them as well. Do you think every

partner in the firm shares with
staff how much money they make

per year? Of course not.

David Bergstein: To know. Well
in some case, they're afraid to

tell them how much money they're
really making versus how much

they're paying. Well, you know
what, though?

Bob Lewis: It took me 30 years
to get where I'm at. Okay, it's

like oh, wow, you're right, I
should pay you almost as much as

I'm getting paid now, because
you know I need you to stay to

work. The problem, though, is if
you don't tell people what

you're making, they leave. Well,
they don't know what the

opportunity is, right. I think a
lot of accountants feel like

you know, oh, I'm making, you
know, 125,000 a year, I'm doing

really great, I'm killing it and
they don't know the managing

partner is making 900, or the
core partner is averaging 500 or

400. And I guess I'm throwing
numbers around that are very

variable here, by the way, for
anybody listening to this but

they don't know the gap in
income. That's like well, I

didn't know that you could make
that much money in a firm.

Jasen Stine: Yeah Well, and
that's still based on the

traditional model, right, Bob so

David Bergstein: you know, it
doesn't really matter, as he's

saying, traditional model,
corporate model, but really what

really matters and we keep
forgetting it and you fed it.

You go by those thousand firms
or those top firms. There's lots

of firms in the middle where
people can make in 500,000,

600,000, a small firm or even a
sole practitioner, three to

$500,000 a year. And that's how
you're doing it.

Bob Lewis: We see, we see the
numbers come across with. I mean

I see people with a two million
dollar firm sole owner making

$1.2 million. I mean great, that
person CPF profession, great

place to be.

David Bergstein: People should
become CPAs yeah.

Bob Lewis: That person, that
person in that kind of example.

They're working those. They're
working a heavy hours, but not

like crazy hours. They're just
really good at what they do.

They're value price everything.
Well, they got the right kind of

clients, you know. And there's
others that do it by grinding

out the numbers. I make $500,000
a year because I built $2,500 a

year, you know right. And so
this is a different place for

everybody. The question becomes
what's saleable when you really

get into the M&A world. Is that
2,500 hour billable person? You

know saleable Odds are really
not. When we see that, that's a

sign of really deficient culture
all the way across the board.

When I see a firm doing $400,
1040s, you just pretty much told

me your entire pricing scheme.
I mean, maybe I don't know, yeah

, we'll look any further, we'll
look. But there'll be no

surprises Like, oh, you're doing
$400, 1040s but your average

billable rate is $750. Well,
that would be a surprise. Or you

know, you're making some
astronomical number off of that.

There's places in it, just for
everybody out there. It just

that, unfortunately, when I go
to sell my practice, if I'm an

accounting firm, I have to
realize that isn't what I think

it's worth. It's what Dave is
willing to buy for me and if

Dave's expectation is much, much
lower than I think it should be

, I have to make a decision to
either look further or continue

to do what I'm doing for a
period of time. I'm going okay.

I just can't sell this thing for
what it's worth, because I went

to Dave and I went to you,
jason and three other people,

and they all told me basically
the same thing that I either

have to decide to sell it at
that price or hold it, work it

as long as I want to work, but
when I do that I don't get my

life back. That's a decision. I
mean, then I'm probably not

ready to exit. More people,
lower due to some of that, not

because I want to exit. I need
to plug in, right, I need to

plug in to somebody's got the
outsourcing, the advisory, the

recruiting in place, the
technology, because I can't do

it on my own. I've got a client
that I really like, this guy,

and he's in a process of making
some changes that I'll leave it

that vague so that it can't be
picked up off this podcast. He

goes I'm really good at what I
do with clients. I am really

good at it. I spend about 10% of
my day with clients now I spend

the other 90% dealing with
personal issues and technology

problems and other stuff. He
goes stuff I don't want to do

and I'm not even that good at it
. The stuff I'm really good at,

I don't get time to get to it
because he got enough to sell.

He got large enough where that
has become a major problem for

him and we hear that story a lot
. Some people aren't cut out for

that kind of work. Some people
are really great cut off at the

client work. They're not cut out
to run a firm. They're not good

salespeople. They don't want to
run technology. I sure don't

want to do billing here. God,
the last thing I want to do is

pay bills and issue bills here.
I used to do and it was horrible

at it. So I have somebody that
does it for me now and it's much

better, because you know what I
don't do. I don't spend any

time paying bills. We're issuing
bills or dealing with insurance

or dealing with anything else
technology. I don't do any of


Jasen Stine: So you don't want
to not get that good at that I'm

good at other things that is
not my strength and then you're

ultimately happier and more
successful. Your clients will

follow that philosophy and,
coming right back around to kind

of where we started, right, and
then, I think, want to be

respectful of your time. We'll
wrap up after this. But it's not

even just that right. It's also
the opportunity that we talked

about as being squandered and
the way that these firms are

going to look as we come out of
the other side of all of this.

Everything that we've talked
about that will be happening

over the next five to 10 years,
not sooner. What's already

happening, but when we will come
out on the other side of it is

yet to be seen. But if I were to
look into my crystal ball, I'd

say five to 10 years out, we'll
see a very, very different

profession in front of us, and
that's because of the

opportunity that, when these
firms are engaging in these

activities that we've been
talking about, it's because not

only are they trying to stop the
bleeding on a problem, but

they're also seeing the
additional opportunity beyond

the way that we are operating
the last several hundred years.

Bob Lewis: We talk a lot about
problems and there are always

going to be problems and when
we've solved all those problems

there'll be new problems, but
the opportunity and the results

are astronomical. Now Sometimes
the path they got there isn't

quite as clear. But you think
back, jason. Look at the cell

phone you've got, which I'm sure
you have a cell phone at this

point in your life. Look at your
cell phone and think back 20

years ago. What you had. It was
just like, oh my God, the

computing power, the you know.
Remember the old flip phones and

the razors and all this. They
motor all in a big box phone.

That was the initial ones that
came out. That's just something.

That's main state where we're
going to be in 10 years. People

are going to be looking back at
this going. Everybody,

everybody's using outsourcing
and they'll look at the

technology stacks, look at what
they're doing. They're doing

most of the work and it's me
directly dealing with a client

now going here. Here's what I
would do if I were you. Based on

the information you've got,
going on financially or whatever

, that's what accounts are going
to become. Then you got those

that are going to niche out like
deep, deep, deep into the tax

areas like they're doing obscure
tax code, because no matter how

much AI covers it's, ai can't
determine how I'm going to

interpret tax code versus how
Dave's going to interpret it.

There's a looseness there and
that person will be highly

valued and highly paid and
probably very aggravated by all

the tax code that they'll need
to memorize. But that's a whole

separate issue.

Jasen Stine: Well said, all
right, bob. Well, thanks so much

for joining us today and
sharing your insights. These

were really cool conversation
and I think we uncovered some

additional things that we hadn't
really covered on the show

before with other guests. Love
that we could bring some more of

that to light as we see this
profession and the landscape

before us changing in ways we've
never seen before.

Bob Lewis: Appreciate the time
and I'm no adjacent to my

coolness. It's like that's a
thing. It's like I think it's my

middle name, but yeah, Bob

Jasen Stine: Lewis, that's a
danger. Put danger in the middle

of that Danger.

David Bergstein: Before you go
though, Bob, how can people

reach you if they're looking to
find out more about you or how

you can help them?

Bob Lewis: Okay, so 800-995-9186
, the old school dial way, or

you can just go to think it's,
think visionary,

b-i-s-i-o-n-a-r-ycom, and
everything's there. Everything

you've always dreamed about is
there. So, look, we deal with a

lot of managing partners, a lot
of partners and firms, and I'd

like to say we're the smartest
people out there, but we learn

from a lot of smart people
repackage a lot of lists, come

up with different ideas. We're
pretty deep. What we don't do

for firms, everything else
besides we don't pick their

technology. We want to order it
in tax software. We're not the

people to talk to about that.
You want to go through workflow

processes. We're not the people.
You've got a partnership

dispute, partnership agreement
issues, anything else M&A, auto

open advisory, all the rest of
it that we cover. But if you

need help with technology
assistance, we'll put you to the

right person that we know that
does, because we know just about

everybody out there in this
industry. So appreciate it. Have

a great time, Guys, enjoy.

Jasen Stine: Thanks again, Bob.
Have a great day and to everyone

out there, thanks for listening
. We hope you enjoyed the

episode today. Thanks for
listening. If you enjoyed this

episode, please follow us on
Apple Podcasts or Spotify. If

you want to learn more about any
of the topics discussed on the

show, visit IntuitAccountantscom
. Forward slash podcast Trends

is produced and edited by Luke
Johnston. Copyright Intuit 2023.

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