An emerging lack of certified public accountant talent is starting to seriously concern financial planning industry leaders.
Hit with growing client demand for tax services, financial planners will have to search harder and harder for trusted CPA partners in the coming years, likely even outsourcing the work to India or other countries, an accounting firm executive says.
According to one analysis published by The CPA Journal in late 2022, based on data from the American Institute of Certified Public Accountants, the United States is already facing an acute shortage of CPAs, and the situation is likely to worsen before it improves.
In fact, accountants are leaving their jobs in unprecedented numbers, the AICPA data shows. Professionals are leaving roles in corporations, audit firms and planning shops alike. Many are retiring or simply seeking a less demanding profession, and compounding this high turnover is the declining number of accounting majors since 2020.
The AICPA data shows the number of college graduates earning a bachelor's or master's degree in accounting has dropped 4% since the onset of the COVID-19 pandemic, and the number of graduates sitting for the Uniform CPA Examination has "plummeted," in the words of The CPA Journal. While there were nearly 50,000 candidates in 2010, that number dropped to slightly more than 32,000 last year.
Certified financial planning professionals say they are deeply worried about this trend, as the accelerating decline in CPA talent is coming precisely at the same time that CFPs are being called upon to provide deeper tax planning expertise to their clients.
A Perfect Storm for CPA Talent
According to The CPA Journal, the supply side of accounting has been stretched thin at the same time that the COVID-19 pandemic and other factors have "lit a fire" under the demand side.
"Corporate accountants have been tasked with challenging new types of work, from reassessing the value of assets to determining how supply chain disruptions impact financial statements," The CPA Journal analysis says. "Similarly, the rise of private equity has resulted in a sharp increase in complex transactions that reflect new approaches to deal making, financing, agreements and accounting."
With the rise of remote and hybrid work, The CPA Journal analysis finds that companies have had to alter their internal controls and safety checks, and these new tasks often fall under the purview of overworked CPAs.
"This work is especially critical at public companies that need to comply with SEC regulations, but companies of all types are scrambling to manage accounting teams that were probably understaffed to begin with and are now experiencing significant churn," according to the analysis.
Sources say the work of CPAs has also become more important in the context of wealth management and financial advice, adding yet another strain on the demand side. Simply put, leading financial planners say today's comprehensive client service effort should be designed with tax management strategies in mind — from beginning to end.
