I delivered on the feedback from these discussions at the National TaxAssist Conference, breaking it down into relevant topics. A summary of my comments on the day is set out below.
Consolidation
We are still seeing huge amounts of institutional, PE and investor money looking for a home in our sector. This has been a driver of change for a few years now, but interestingly we are starting to see some cracks in the underlying model most consolidators are working to.
Many of them are struggling to achieve the efficiencies and profit improvements they hoped for (and their new owners/investors need). There are lots of reasons for this, but it means that deal prices are starting to reduce from the high (and in some commentators’ views ridiculous) multiples we have seen in recent times.
What does this mean for TaxAssist Accountants? We have no desire to be involved with consolidators, but we can see the potential impact of some of the actions they are having to take to improve profits and value. These include reducing staff numbers and pushing up prices for clients, significantly in some cases. This should mean more qualified and experienced people coming on to the labour market over time and unhappy clients looking for a new home.
As many of the acquired businesses in consolidation models are looking to move their client base into the mid-tier, focusing on medium sized businesses, we are likely to see the bulk of unsettled clients being in our target market.
Technology
Almost every conversation happening in the accounting sector includes references to technology in some way. This can be around AI, software, digitalisation, integration, automation of a combination of all of them, but it’s dominating thinking for many at the moment.
What I have noticed in the past year is that there now seems to be a better understanding of what AI can do to benefit the sector and that, if used in the right way, it is a tool that will support and supplement what we do, significantly improving margins and client engagement/experience.
It’s also clear that nobody has a clear view as yet as to exactly how they need to change their businesses to get the best from emerging technology. This is true of pretty much every firm and practice I have spoken to, big or small.
What is agreed by most is that there will be significant fallout over the coming years. What does this mean? Practices who fail to adopt technology will struggle and start to fail, or more likely exit. We are already seeing more practices and fee banks coming to market and we are likely to see ever more owners recognise that they are unable or unwilling to embrace change.
All of this represents a huge opportunity for TaxAssist and our network. We are far better placed to manage change than any of our competitors. We have scale, dedicated central resources and a willingness to adapt as needed. We are ideally positioned to capitalise on the benefits that technology can bring and to absorb the fallout from others who cannot. This will be a significant part of our strategy over the next few years.
Brand and Service Breadth
This is another significant topic of conversation in the sector recently. The general view is that branding will become increasingly important and valuable as the market ‘levels up’. What does that mean? It’s referencing the likelihood that most practices who adapt to reflect new technology will be less able to differentiate around client experience. This means their branding and positioning in the market will become ever more important.
This clearly plays to our strengths. TaxAssist Accountants is a significant national brand and much admired by our peers and competitors. We continue to invest heavily in brand awareness and will be ideally placed to benefit from the brand assets we have created over many years. Others will try to catch up, but that will be an almost impossible task.
The branding discussion is often linked to service breadth, i.e. what services are aligned to the brand. This is considered to be of growing importance as practices look to do more for (and sell more to) their clients, using technology and underlying data to help target opportunities. Again, we are ideally placed to benefit from this change, using our established partnerships, emerging TaxAssist Plus relationships, technology and data strategy and natural advisory stance to generate new client relationships and revenue streams.
Pricing
This has always been a difficult subject for accountants. The historical approach of linking time and chargeable hours still works for many, but technology is forcing a change in this view.
As practices invest in technology and automation, they are recognising that a time-based approach doesn’t work in all cases. If they retain this approach, they could simply end up reducing their fees, passing on all of the benefits of technology to clients. Some would argue that this is only fair, but is it? If investment in technology is driving this efficiency it has to create a return. And if the value of the work done of advice given is the same, why reduce fees?
The answer for most is to move to more value-based pricing models. This will be hard for those who have timesheets and hourly rates engrained in their systems but will benefit those who have more of a hybrid approach, combining time and value. TaxAssist Accountants sits in the latter category. The opportunity for us is to continue to recognise the value of the services we provide to our clients. We need to be confident about retaining the margin improvements technology can help us achieve.
People
The final topic I talked about at Conference was people. Ultimately that’s what any business is made up of – people and the relationships they represent. The challenge the sector is trying to come to terms with is that their people are likely to need to do different things over time. As technology provides ever more automation opportunities, accountants and their teams will need to change their roles.
Production (in its historical form) will become a smaller part of practice functions, with a shift to exception reporting, review, analysis, advice and, critically, client relationships. This is another key strength of the TaxAssist network. We are not a collection of practice accountants trained on a single process and way of doing things. We have franchisees and team members with valuable commercial experience and the ability to advise and support clients in ways traditional practices cannot.
The very nature of our business model – franchising with entrepreneurial owners – will allow us to focus on the combination of AI and HI (Human Intelligence) that most believe to be the critical component for future success.
Our Mission and Values
Our Mission is to empower businesses and individuals to achieve their goals, creating meaningful relationships and lasting value.
Our Vision is simple – to be the ultimate partner. In a changing world these principles are more relevant than ever – they certainly still resonate for me.
Daren Moore FCCA - The TaxAssist Group Chief Executive Officer
Daren joined The TaxAssist Direct Group Board of Directors in 2018, having spent his entire career in the accountancy and professional services sector. Prior to joining TaxAssist Daren had partnership positions in national and regional practices, including membership of the Management Board of a Top 25 firm. Daren was appointed as Group CEO in 2022, with responsibility for all aspects of group operations and the implementation of an ambitious strategy for longer term growth.
Daren's LinkedIn profile can be viewed here.
