Infrastructure, Not Inventory: Rethink Your Talent Model
Brendan Morahan built his firm without a single full-time hire, running it almost entirely on contractors, and he’s convinced it’s the model most accounting firms are too slow to see coming. In this conclusion of a two-part conversation with John Randolph on Episode 94 of CPA Life, Brendan argues that the tax manager role has become an impossible trade: firms won’t offer equity or partnership, and the people qualified for the job already know they can go build something of their own. So he’s assembling a roster of vetted senior tax managers willing to work as contractors, embedded in pods, splitting time between client work and their own emerging practices. John pushes back on the obvious tension. What happens when a firm owner wants loyalty, not a bridge to someone else’s business? They examine hourly billing, remote work, private equity’s effect on morale, and what ownership might even mean a decade from now, as the old assumptions about paying dues for a partnership keep collapsing.
Important Links:
About the Guest:
Brendan Morahan is the Founder and Managing Partner of BPM CPA. An experienced CPA with unique experience, Brendan has worked in both the public and private sector while rising to the levels of Controller and CFO during his time in the private sector. His 15+ years of experience includes working for one of the Big Four as well as being a Controller/CFO within Private Equity and Start-ups.
A 2009 Siena College graduate with a BBA in Accounting, Brendan earned his CPA license in 2011. He resides in Bergen County, NJ, with his wife Paula and their golden doodle, William.
Transcript:
Thanks for tuning in to CPA Life, where today we conclude John Randolph’s conversation with Brendan Morahan of BPM CPA. They get into the mindset shifts firm owners need to make to compete for talent, and where the profession might be headed in the years ahead. Welcome back to CPA Life!
I think that today’s younger professionals want something fundamentally different than previous generations.
Yes. Absolutely.
I think that’s a big thing as well, that is driving a lot of people down that path. Do you think that we just created a system that no longer works for them,
Yeah, as far as like the traditional path and system?
Yeah!
No, there’s no way. I mean, I see it as like it doesn’t, and that’s why even as I’m building my firm, I’m not using any of those traditional methods. I don’t want to because I know what I know to be true, which I think is you should be self employed. Look, not everybody can do this, right? We’re not talking about those people though. I’m talking about people who are capable of starting their own firm, tax managers, things like that. There’s people who, they just want a paycheck and they shut it off when they go home, not those. People who want more, who are willing to be, who are high performers. The system that was set up, I believe, was one that it just doesn’t work anymore for so many reasons, but one is that we are so much more efficient with time now. So, you know, you used to have to—the manual entry and data, putting together tax returns and reviewing it, and even if it was paper or non-paper. We have different platforms now and technology that automate all of that mundane stuff, so now you just need the higher level stuff. You don’t need to work 50 hours a week anymore. You just don’t.
So you know the places are pushing you and looking like, I, there was a place I worked where there was like a 75-year-old partner and I’d be leaving at 5:00 every day and he would grunt. And, you know, meanwhile, he has a pen and paper and paying 90 grand with benefits and taxes to an executive assistant to write down everything, send emails for him. In my head I’m just like, this is crazy. Like I’m doing five times what you’re doing in my day. And I mean, I could even take breaks and I’m going to cruise through that, you know, because I’m automating stuff and I know how to use QuickBooks and I’m setting up rules and, you know, I’m getting access to client’s bank accounts so I don’t have to wait on them to send me stuff. Like, there’s just simple things that you could be so much more efficient. And I don’t think the owners and the partners, the older ones, at least at see at these accounting firms, have really understood how much has changed in the last 10 years. Some still use QuickBooks Desktop. It’s just, that’s like using a rotary phone when we have today’s like iPhone, you know?
And by the way, they make enough money that they don’t care. Like I kind of get their side too, some of them, where they’re just like, oh look, I built a firm. I’m doing like, at least the ones that aren’t working a ton, but like, they build a firm, they make good money, they don’t want to be stressed with changing. I get those guys, but you know, there’s, I think so many are failing to realize just how much has changed, whether it’s how the firm operates, how business operates, the remote environment, the talent shortage, and now like what they’re competing against, it’s not just one, two, three things. It’s five to ten that you know have really changed.
And I think it’s a, for that firm owner that you’re talking about, it’s a finite runway that they’re on right now. It’s not an endless runway or it’s not even a finite runway, but we can’t see the end of it. I think it’s a finite runway that you can start to see the end of that runway, if I don’t change some things, if I don’t make some decisions that turn the firm into a different direction. And I think that one of those things that firms are going to need to start to embrace is kind of what you’ve talked about, which is that embedded tax manager infrastructure. Explain that model that you guys are looking at, trying to put together, have put together with some people on the bench right now. How does it work?
Yeah, sure. So the quick basis is, there’s already proof of concept, right? There’s a $4 million firm that I do the contracting for, he only has contractors and you know, he has very high margins and he doesn’t work, okay? So it works for established firms. And then my firm, an emerging firm, a new firm, I have five contractors. It clearly works for me too, and I’m growing to $1 million and I don’t do work. I mean, I don’t do the actual like tax return bookkeeping stuff, right? So clearly there’s proof of concept is my point. And by the way, the two examples I just gave, maybe 85% of firm owners would not believe what I just said. If you think about it, like, okay, a firm three years old, a million dollars, he’s not doing any of the work. And a $4 million firm that’s netting, I don’t want to say the number a lot, where the guy’s not doing any, like the guy’s not even like managing. He is, you know, less than five hours a week. So nobody would believe that. So, okay, I think that’s proof of concept right there.
Now, secondly, what I realized as I was brainstorming this and through my own experience was the tax manager position, as I said before, I think is the most important position at the firm. It’s the only one that’s going to be with human judgment. No matter what happens, you need human judgment there. It can’t be automated, it can’t be offshore, in my opinion. So you need a human, okay. Also just so happens, those are the most qualified people to go start their own firms. Also, that’s one of the highest turnover risk positions ’cause of the amount of dependency firms have on that person. And again, it’s the most important position in my view. So there is just so many things at play here and both sides of the equation, no, it’s not working, right? The firm owner doesn’t want to make them a partner doesn’t want to give them equity and doesn’t want to keep giving them these large bonuses and pay increases. And I get that side. And then on the tax manager side, they know they could go start their own firm and be successful, or there’s another firm that’s going to hire them and give them a partner opportunity. So it’s not working. It’s like the long distance relationship between a man and a woman who like, they’re just oil and water, whatever the phrase is. It’s not working. And we just need to realize it’s not working.
And so what I’ve come up with, through own experience of just working in the contractor model and through hundreds of messages on LinkedIn from people being like, “Please, can you give me guidance on how I could start my own firm? I just need to know more about how I get contract income lined up.” So, as you know, it’s hard to just randomly look in your area and find a firm that’s going to give you contract income. So I said to myself, well, with my platform, I could actually use it for good. First, let me see if I can build up a qualified inventory of these senior tax managers. And so we started going through a few months ago and doing that, we spent a lot of time and we’ve met with dozens. We have like 40 something that fit all criteria qualified that we’re interviewing and we’re vetting, which is what a lot of firms actually don’t do. We’re giving technical evaluations where we’re actually, hey, tell us about an S corp. When would you use one? When would you consider using one? What is QBI deduction, like strategy, small business stuff, not big firm stuff, like this is for this space. There’s people who failed, who we’re not moving forward with, so we’re vetting, we’re doing all of that to make sure what we’re saying we have, we do have.
Now I know the value of this, so now it’s going to firms and I was shocked at how much, how the talent supply we had. Keep in mind, most of these people are tax managers at firms, so that’s how I also know it’s not working for them. And they could go out on their own, the only reason they don’t is they need supplemental income. So I’m trying to build this roster, trying to then find the firms. We will be the go-between, firms pay us, we pay the contractor, and it’s 12 month contracts. It’s kind of set estimated hours each week, and it scales during tax seasons. There’s set amounts paid. We call it an embedded infrastructure because we have this roster and we’re going to keep growing the wait list of people who are going to join this. But I don’t think there’s going to be turnover, much like me who has a million dollar firm and still does contracting ’cause there’s loyalty built in and I get paid really well. So these people are going to get paid really well. I know how long it takes to build a large client base. I don’t think there’s going to be turnover because alright, they’re going to get paid $80,000 a year, maybe a hundred a year, to work 15, 20 hours a week, like while they’re building their firm? They’ll do that, especially, you know, the thing is we’re going to embed them in pods of like teams of ten. So you’re not by yourself just on an island with a firm, and if a unique situation comes through, you now have a chat group and biweekly meetings and you know these people where a combined a hundred plus years of tax experience, and who all passed the vetting, you’re going to get an answer in a minute versus if you’re on your own, if you’re an internal hire at that firm, you got to do research, you got to reach out to your buddy you used to work with who you think knows about this and he tells you about somebody else to reach out to. And before you know it’s six days and before you get the answer, we’re going to have it in two minutes.
So we think it’s a major, it’s an obvious one for tax managers, right? Like there’s no question, like that’s an easy one to understand the value. They’re going to get supplemental income, they’ll be able to start their own firms, and this is their bridge to doing that. The firms is the harder part because of the owners, and some of them just don’t see this and they’re still not coming around to it. But they’ll see it because the evidence is there, the case studies are there, the real world studies, and I know the talent we have. This is my bet, once we plug these people in, I don’t see why any firm will hire a full-time tax manager again. I really don’t, because I know the talent of these people and I know what we’re building with the infrastructure. We’re going to have checklists, best practices. We’re going to look out for strategy so they can upsell. Like we’re going to standardize in a review almost the way that AICPA standardizes audits, just to really know that we’re banging through everything. So that’s the plan is just, okay, we have this roster now of all these elite tax manager contractors who want to start their own firm, a few of them already quit to start their own. And now we just need to line up the firms that we can sync them up with.
So if I’m a firm owner listening today and I’m skeptical, what’s the biggest misconception that I probably have about your model?
If I had time to explain it, I don’t think there is one, ’cause I’ve talked to like 60-year-old former firm owners who initially were skeptical and then within 30 minutes he’s like, actually this is a really good idea. But I think when people think contractors typically they think, hey, it’s somebody who can’t get a full-time job. Like, there’s a reason why they’re contractor, they may not be reliable, right? Why don’t they have a job somewhere full-time? Why don’t they have their own firm? Why are they contracting? They think automatically that maybe they’re lesser than, they’re unreliable, they’re not as qualified. So I think that’s a misconception, which all those go out the window when we say these are the most ambitious people who are starting their own firm and taking a risk on themselves and have passed all our vetting and technical evaluation. So that I think is maybe the biggest one. But that’s gone just with what I mentioned. That’s not the case.
But any of the other ones, I think, are risks with the full-time people as well, ’cause they could say like, oh, are they going to be there for a long time? Well, is your full-time person? Look at the manager turnover at most firms is two to three years now, you know? And you’re paying recruiters to find you a new one, ’cause you don’t want to deal with it. And do you know what a headache it is? Every time you have to retrain somebody, add them to your software, add them to this, get them a login for that, add them to payroll. Like to me, that is nails on a chalkboard, where what we’re offering is plug and play. And we’re also going to streamline the onboarding. We’re going to say, these are the three things we need to know. Boom, boom. Okay, we’ll help you. Let’s make this easy. Give us this login, that one, do, do, okay, we’re good to go, Loom video, done. God forbid something happens to this contractor, plug and play, next person up, here you go, here’s the Loom video, logins, let’s go.
So like we’re doing that to say, well, we’re going to provide an elite, in our opinion, the person we’re providing is better than your internal person. You go look for the best internal person you have, ours is going to be better. Why? Because they, first of all, they would be your number one or two candidate if you were hiring internally anyway. Two, you wouldn’t be able to afford them ’cause their costs, they would want more money, or a partner track. So they’re going to be better naturally, I think, than who you would hire internally, ’cause you wouldn’t offer those things. Three, they’re working with ten other insanely talented individuals helping each other. Four, they’re going to be more efficient than your internal person who’s going to take the coffee breaks. Of course they are, why not? They’re not going to break their, you know, next break. You know, they’re going to work hard, but they’re going to take their coffee breaks. They’re going to, you know, text their girlfriend or boyfriend. Our people are, when they’re working there 15 to 20 hours, they’re churning that out, you knowL Like they’re going, it’s going to be way more efficient, higher quality.
I’m so sold on this because I know it works and I wish people could like see under the hood of my firm and the other firm I’m speaking about, you know, the guy who’s the tax manager of this role for me, I have this position at my firm. He is like the contractor in this equation, ’cause he reached out to me, we met, and I realized how talented he was and he wanted to start his own firm, and he wanted to line up contract work first, and he did it with me. And he’s now doing very well: He is about to break six figures in first year of annual recurring revenue, not just annual revenue. So all of it’s monthly recurring. And it’s working for him and he doesn’t have to worry, like he’s only taking on the clients he wants to take on ’cause he’s got the supplemental contract income. So it’s so unique because it’s solving two major sides of the equation, the problems that had existed where most things are solving one side of the equation. This is pulling both together.
Well, and I think it’s a situation that’s a problem that’s not going to go away anytime soon. The supply isn’t going to manifest itself overnight. It’s just not. The dynamics of being able to leave and start your own firm are better today than they ever have been. We’ve talked about that. That’s not going to change anytime soon.
Right.
Let me touch on some questions. I think that a lot of people may be thinking, may not be speaking about, ’cause again, as we talked about, we’ve had some of these conversations in our business with clients, trying to get them to look at people that are trying to take this step, and it’s an uphill battle at times. You know, one of the things that I’ve learned after spending decades in the people business is that people aren’t inventory. They have spouses, they have kids, they have goals, they have desires, they have attitudes, they have life things that happen, things that are constantly changing. So how do you maintain the quality and consistency when the very people you’re relying on are simultaneously building their own futures?
Well, I guess first I would say is, how is that different from a full-time W-2 employee, if we mean like what they’re building is their families and stuff outside of work? I don’t see that as a unique risk to a contractor when it probably exists for a W-2 also, except the W-2 has more risk, in my opinion, turnover and dependency and higher costs, right? So I don’t think that’s an issue. But with these people, if we’re saying it more specifically, to which I’ve had some people ask like, oh, are they really going to give us the effort if they’re building their own firm and all this on the side? And the answer is yes, because we’re paying them, you know? And by the way, if they don’t, they’re out. It’s so selective is my point, it really is. When I say the best of the best, it’s the best of the best, who’s then passed personality, like just normal conversational, who’s then passed technical expertise, who still wants to go. It’s also a community for them and they’re going to learn so much and they have people to rely on.
It would be very much against their own incentive to do anything except exceed expectations with the jobs that we line them up with, especially because that’s all the indications they’ve given. But even if they did, we have a waitlist, ’cause we have so many, you know, like, let’s say we have 35, 40 right now that we’re working with, we’re still looking for firms. We’ve only had 12 meetings with firms thus far, so we’re not going to place all 40. So if somebody was, I think, silly enough to just ignore a commitment and not do the hours, which I doubt because these are the highest level people that we could find, we would plug the next person in.
Somebody would be able to step into that hole. One of the questions that we got from a client about a year ago when we were having a conversation going into tax season about somebody that we had talked to that was looking to start their own firm. So I reached out to one of my clients that I knew was struggling to fill a role, offered this as an option, and his comment to me was, “I don’t really want to be a bridge, I want to be a destination.” What do you say to the firm owner that has that mindset?
Well, I would say one is your destination making them an equity partner? And the answer’s probably maybe, but probably not, right? So it’s like being honest with yourself. Do I think most firm owners want the top talented person at the average market rate who’s going to stay there ten plus years and not want more than a three to four percent raise each year and modest bonuses while working 60 hours a week? Yeah, don’t we all, okay? But I think that’s borderline predatory and taking advantage of the person. So I just don’t think it’s realistic, and I’ve had conversations with some people, firm owners, in the last 12 meetings where I just, I kind of laughed ’cause I was like, I said, I was like, this is not going to be a fit for you. You think an elite tax manager should cost 110, 115 grand a year, and you want them to work 60 hours a week, it, this is not a fit, this is not like, you know, it’s more. But anyway, I’ll just pause there, I’ll answer that question. That’s my answer.
Well, my next question is something you just touched on, and again expand on that a little bit. Where do you think the model fails or where does it not fit?
Oh, yeah, I think it’s owner dependent on the firm, right? So I can already tell you with the 12 meetings we had, do you know who’s going to use this? And because they see me, I think more: newer firm owners who are now at 400 grand of revenue, 600, 700, I’ve had great conversations with them. Their main thing is like, I can’t be the bottleneck here, I need to do business development and run my firm. The mindset of the newer firm owner because of probably social media, LinkedIn, and how running a firm is running a business, they all know right away they need to get out of that. I actually believe in the first year or two, the majority of the firms that use us are going to be what I would call emerging firms under five years old. And I think they’re just going to blow up to two million and above because they’re going to have so much, you know, business development that then they look at the 30 year firm, 40 year firm across the street and they have the same revenue with higher margins, and only then is that firm owner going to maybe believe in this idea. But I think it’s really just a lack of traditional, maybe 15, 20 plus year firm owner, they are their worst enemy, in my opinion, ’cause I don’t think they’ve understood and come to understand that everything’s changed. Everything has changed, and you’re not getting what you thought you could get 10 years ago. You’re not.
Absolutely. I think that it comes down to a mindset that a couple of years ago that I was arguing with my coach about some things that we were talking about doing. And his comment that I’ve held onto since then, ’cause it was a blinding flash of the obvious when he said it this way, is “Average people spend time making money. Above average people spend money to make time.”
Yeah, absolutely.
And if you see yourself as an above average business leader, you’re going to see the value in bringing somebody that frees up ten hours of your time that you’re sitting, preparing a return, reviewing a return, getting stuck in the weeds, where you can go do more higher value work, bring in more clients, bring in more value to the clients that you’re already delivering services to. That owner, like we’re talking about, is somebody that’s going to be able to look at this and see there’s value here.
And it’s not theoretical, it’s happening. Like it, whether you want to use me or the other firm, it, you know, in theory it all makes sense also, but it’s reality as well. It’s just the way it is. And you know, the way I look at it is like the trajectory of using this type of model with a younger, modern firm is just a spike. Whereas the traditional firm is very kind of just slow, it just, that’s how it is.
Well, I think like you’re saying, the curve in this, in a new model where somebody is embracing all of the resources from a talent perspective, as I’ve mentioned, a talent stack, if people are buying into understanding, look, there’s multiple ways to attack this problem, let’s don’t get married to one thing, let’s bring in the best talent that we can bring in. Some of it may be offshore, some of it may be on a contract basis. I may need 45 hours of work, but that may take me three people to get because they can only each give 15 hours, and that’s okay.
Right! And John, let me say this, it just made a thought in my head. Do you know how many people I’ve talked to, business owners or like outside of accounting firms or firm owners, what’s your biggest problem? Employees. Okay, so let’s not act like—almost every one of them, what’s your biggest problem, employees. There’s always this, there’s a kid’s game, there’s a headache, there’s this person in the hospital, there’s this event I have to go to, there’s this happened with my house. Employees are their biggest headache. So this kind of solves your biggest headache also because it’s taking an elite person who is more reliable, you just don’t have them at 40 to 60 hours a week, okay? You have a set 15 to 20 that are far more efficient with no headaches, how about that? But I just thought of that off, like, because I, these are the conversations I always have, where people are just like, my biggest problem is employees, is finding talent.
You know, every business model has trade-offs, doesn’t matter what it is. What are the downsides in your opinion, for either the talent providing the service or the firm owner looking for solutions?
So, I would say the downside for the contractor is if you are not going to embrace self-employment, I think it’ll be very difficult for somebody, because this is self-employment. You know, you’re going to be reliable and you have to step up in there. There are people who need somebody to tell them exactly what to do, they need a PM system to tell them exactly what’s next on their queue, and they need to be told what to do, how to do it, and they need to be able to go to somebody to ask questions to for everything. I don’t think that’s the right person for this.
For firms, I had an older, you know, 60-year-old firm owner say to me, under this model, then I lose all control, I won’t be able to really control. And my point, I was like, that’s pretty much the point, yes, right? Like, you’re not supposed to control these people’s lives. So again, mindset, and I think there’s going to be so much that has to go into just breaking the mindset, because I don’t think there’s a downside if you’re a modern firm owner who’s growing and emerging. I don’t even think, and I’ve had many conversations with them, the only thing was cost. And it’s just like, I need this, can I swing a hundred grand a year? Well, yeah, you know, if it gets me out of all the review and now I could go grow and get 300 grand in new business, it does make sense for me and it’s higher quality review. They’re even justifying numbers that are like a fraction of what that cost would be to a larger firm, but they can’t justify it, and they can’t justify it ’cause of their mindset and thinking they need to control the person long term, they could slave them into hours or they’re in an hourly billable model where they’re like, wait, 15 hours a week, if I’m only billing them out at 300 an hour, it’s this. But it’s like, well, maybe you should be billing them out at 600 an hour because they’re going to do it three times as fast. You know, maybe your hourly billable model is just wrong. Which I know it’s. So, I think it’s more those two things for each side.
One of the things that you’ve said, made a comment about, is this isn’t a staffing agency. What’s the difference?
Yeah, I look at a staffing agency, I think is like an infrastructure play, honestly, at the most important position of an accounting firm, because staffing is, you have somebody come in, you hope they work out. If they don’t, they leave. And sometimes it’s your control if they leave, if you fire them, which is bad because that means they sucked, or sometimes they find a better opportunity and leave. But you’re engaging with somebody and you’re engaging with a company who’s putting them in there as a staff. Where I look at this as an infrastructure play is that, one, this exists beyond the one individual because there’s a team of 10 they’re working in and we are providing all best practices, methods, ways to do things, standardizing, and we’re going to constantly improve it. It’s more than just a random person coming in and being like, hey, be my manager, and like, best of luck with the review, thank you. It’s, this is how we’re going to do the review and this is what we want it to look like and this is what we want the clients to say about us is this and this. And we want to identify missed strategies if we see them, to help them upsell. And if that person, that contractor says, you know what, I built my firm to a million dollars, I’m done with the contracting, and the next person comes in, in theory, like it’s the same exact service level because they’re going to just be doing the same exact methods and all of that. So I see it more as an infrastructure play in that sense than anything else.
And when I think about, you know, say you’re an older firm owner and you’re 65 and you want to retire, but you’re doing all the review, this is the easiest way I think of the infrastructure is, well, if you hired this company that we’re doing with this tax contractor and that comes in and sits between the staff preparing it and they’re the final reviewer before it goes out the door, you as the business owner now, what happens? Your valuation goes up ’cause it’s not as owner dependent. You are getting more time to do business development and look for potential buyers of your firm, and you’re able to upgrade and do better things with, you know, your firm outside of that because all of your hours are taken away if you were the owner-partner who’s doing the review on the final say, like, so that to me is an infrastructure play. You’ve just locked down the most important part of your firm with long-term reliability, because it’s bigger than any one person, so you know that’s going to be there. And any acquirer will look at that and be like, we don’t even have to change that, the most important part of the firm is the tax manager aspect, and that’s locked down? Great. We’ll just buy it and we’ll keep that there. So that to me, I think demonstrates it’s an infrastructure play, not a person or staffing play.
I like how you put that, and I would completely agree with you. So it’s an infrastructure play that is dependent upon an owner shifting their mindset, and seeing that there’s an alternative model that we need to look at, which do you think that private equity has accelerated the demand for alternative talent models in the CPA firm space?
I think that’s a good question. I think it probably has because I think it’s forced a lot of people from, you know, but there’s such a difference between the larger firms and the smaller firms, and I don’t think private equity’s necessarily buying up firms that are 10 million and under, although I could be wrong. But I think it has because I think you have a lot of people at the larger firms who hate working for private equity and they see that, okay, they were going to be okay with a partner track, but now they’re leaving and they need different options and they’re looking for different ways to do things. So it’s accelerating the amount of talking about starting your own firm or a different type of employment, or what could I do besides a Big Four partner path or a Big 50 firm partner path. So I think indirectly it has, in that sense.
I think that it’s opened up a lot of people’s eyes that the security that I thought I had was just perceptive, it’s not reality. Not reality at all. If the model that you’re talking about building succeeds, what do you think changes for CPA firms over the next five years?
I actually genuinely believe this: I think that anybody who adapts this early on in their firm life is going to excel. Like I was saying, like if their first hiring decision for a manager is this, they’re going to just skyrocket, especially because they can now afford an elite tax manager years before they would’ve otherwise been able to afford it because they can get it on a fractional basis, right? So I think we’re going to see all younger firms adopt this, and I think the older firms are going to adopt it, but they’re going to come kicking and screaming, and only after they see these firms that are five years old surpassing their 40-year-old firm and all of the talent wanting to go this route. I think it’ll eventually maybe have a counter thing where people are like, alright, we got to add equity again and we got to give people partner path. Hopefully, by the way, hopefully that’s what happens, and just kind of, you know, making things more advantageous for the top performers again. But that would be my dream if that was the result and the reality of, you know, where things end up.
A follow up to that, what belief about talent, partnership, firm ownership ten years from now, do you think people are going to be laughing at?
I think the hourly billing. You know, it’s funny, it’s interesting actually, that’s a really good question. I think like the obvious one is like, oh, hourly billing, people really did that. But I think, I always think the pundits are a step behind with what they say. Like, but even if you were to listen to them, which most people would agree, like, hey, it’s more relationship-driven now and more advisory-driven because automation and Claude and all this is going to help. And a lot of the tax softwares, there’s platforms now that’ll populate your tax return for you. So really, everything comes down to the review, does it not? So I think people are going to find it, at least younger people, like, “Whoa, what did the staff used to do what?” Like, I think that’s part of it as far as the partner track thing. I don’t, that’s, you know, that’s a good thought provoking question in the sense that I think it looks so much different in ten years, but I haven’t thought about it, so I’m hesitant to in real time brainstorm, but I think it’s going to look a lot different than the tip. I mean, look, it’s already broken, it’s already not the same. It used to be, you know, three years to this title, seven years to this, 12 to this, 15 to this, and then you’re partner, right? And it was pretty spot on. Like that’s how it worked. That’s broken the last ten years because it doesn’t happen that way anymore, with private equity in the mix with and with other firm owners being like, actually, let’s wait a little longer. Like so maybe it’s the fact that right now it’s in this transition phase and with all the advancements in technology and changes, only thing I think I can guarantee is going to look wildly different.
I completely agree with you, I think that it’s going to have a very different look tomorrow than it does today. So some real quick questions that have a little bit to do with this and have a little bit to do with just the industry in general, just real quick, gut reaction thoughts. Some of these we’ve touched on, so I think I know where we’re going to go with some of this, remote, hybrid, or in office
Remote.
What do you see as the value there in general?
Look, I think if it’s for a lower end position, hybrid or in office, but who I always believe in, and by the way, my whole firm is based on premium clients, so I’m a premium kind of guy and I believe in premium talent. Those people are going to want remote ’cause they can get remote from somebody, you know, that’s how I look at it. Like they don’t want to go in office. Look, there’s some people who maybe prefer like, I like to go in office ’cause I like to leave my house. And that’s fine, you might find some, but I think by and large you’re going to get the best talented person when you open up to the whole country.
Yep. I continue to lean into with clients that we talk to, the statistic that on a time to fill basis, I don’t care what the role is, if it is a fully remote role, our time to fill is anywhere from three weeks to eight weeks. If it’s a hybrid role, it’s about six weeks to 14 weeks. But if it is fully in office, like we need you here five days a week, it’s about eight months.
Yeah. And you know what, like, you’re not a good manager if you’re not seeing production from somebody who’s remote. You should be able to know in two weeks if they’re doing their job. It should be no different than the, if they’re in person, you should know what they’re doing and you should see if they’re producing. It seems so simple to me, how do you not understand if they’re producing or not, if they’re remote?
Well, I’ll disagree with you on the fact that it should be like if they’re in the office ’cause in my opinion, in the office, physical presence can cover up not working.
Correct, I agree. Yeah, people staying till 9:00 PM just on the internet though, to make it look like they work really hard, and it’s like, wait, you know?
I worked for a guy years ago, Brendan, and his philosophy was anybody can hide anywhere for one year.
Yeah, I agree with that
Doesn’t matter the size of the company. It’s going to take about six to nine months before the people around him start to realize this guy doesn’t know ****, he is BS-ing everything he’s doing.
And to that point, you’d find that out quicker when it’s remote because you’d be looking, you know, you don’t have to rely on, oh, he did show up to work every day. It’s like, no, what remote is more outcome driven, what did you do, did you get that done, where are you on this. It’s not like insulting, it’s like, no way, I need to know ’cause obviously we don’t see it.
Absolutely, absolutely. Most overrated service offering in public accounting today?
Probably, man, I’m going to get maybe killed, like tax strategy. I think even though I do it, I think it’s the most overrated because there’s so many pretend people doing it and everybody’s trying to get into it. And to me it’s not something you could just—look, I’m not a believer in selling a tax strategy package. I do it as part of like a full package with a client, or if I see it, I do it and like, but I don’t sell it like that. If I see you didn’t do something and we could do this and I could save you $80,000 and I’m going to charge you $8,000, that’s just like common sense to me. But I’m not formally doing that. I don’t know. So that it always kind of strikes me weird. And then you have these people on social media, non CPAs and stuff saying all this stuff. So I would say that one.
Well, I think it goes back to the conversation we were having earlier about advisory services. It just comes back to do what you do. Best piece of business advice you’ve ever received?
I think it’s, maybe this is controversial, but I think it was like a mix between—I forget the people who said it—but I think my dad was in there slightly, which is ironic ’cause he’s a blue collar union carpenter, but it was basically “Know how to do every job in the business.” And so for me, that was one of the initial things I did, is I needed to know how, I needed to know how to do the bookkeeping. I needed to know how to do the review of the bookkeeping and the management. Then I got a bookkeeper, I need to know how to review that and be the manager of the bookkeeper. I needed to know how to do the tax prep, how to do the tax review once I get a tax preparer. How to do all the admin stuff, adding clients, removing clients. So I know every job in my firm, meaning I know if somebody’s not performing or not, or I know they’re not living up to, maybe they don’t need to be up to my expectation of how I would do it, but I know if they’re not doing what they need to do because I could do it. Whereas I’ve seen at other clients or other businesses, if you don’t know how to do that job, how do you know if they’re doing the right job? Especially if they didn’t have a manager there or something. So it’s easier said than done, and I get that ’cause you’re not always going to know if somebody’s doing their job. But I think that’s, you know, an underrated, very important piece of advice.
I couldn’t agree with you more, because there’s also may be a day that you may be the person that has to step in and do it.
Yeah, absolutely.
In a perfect world, you never have to do it, but if it did come down to it, you could. Brendan, this has been a fascinating conversation, and one of the things that kept surfacing throughout our discussion is that the future of this profession may not be about finding more accountants, it may be about creating more options: options for firm owners, options for experienced professionals, and options for the next generation of leaders who really want to build careers that fit their lives instead of forcing their lives to fit their careers. So if someone is interested in finding out more about either one, from a firm ownership, hey, what are you doing, how did you grow this thing so fast, or, hey, I’m thinking about stepping out, if someone wants to get ahold of you, have a conversation with you, what’s the best way to do that, where can people find you?
Yeah, I would just say on LinkedIn, Brendan Morahan on LinkedIn, that’s the only place I’m decently active. I get a lot of messages, so I try to respond, but it’s difficult. But I would also encourage them to look up similar profiles to me, ’cause there’s other firm owners who just, they’re building communities, even free communities and things like that, where if you just follow our posts of like, there’s a dozen or so of us, I think, of like newer firm owners, you’re going to get all the free information you could possibly get and guidance. And I’ve even spoken to people who never liked one of my posts, never commented on one of my posts, and then I spoke to them and they’re like, oh, you convinced me to go do my own thing actually, I’m now two years in. And I’m like, two years in, but I’m only three years in. Well, he’s like, yeah, well like you, it was the final push, like when you first started posting. So it’s interesting like people, you know, really it’s valuable, the stuff that gets posted and all of that. But anyway, LinkedIn.
Isn’t it amazing sometimes how we just throw stuff out there, some of it thought provoking, some of it not, but unless it goes crazy and you get a few thousand reactions, you don’t really know if it impacts. And then like you’re saying, somebody sends you a message or somebody creates a post that says, hey, thanks Brendan for these things, and you’re sitting there going, man, I have no idea what you’re talking about.
Yeah, right!
I’ll absolutely take it, it at least validates the work and effort that you put into it, right? Well, I want to thank you for joining us and sharing your perspective, because I think it’s a perspective that people are going to have to buy into and lean into if they want to continue to be competitive in this space.
Absolutely, yeah, it was a pleasure joining, you’re actually the first podcast I’ve done. I think part of my mystique is that I don’t publicly do anything, so, you know, here you go.
Yep. For those of you listening, if you are interested in connecting with Brendan, learning more about BPM CPA, or following the work that he’s doing around the tax manager contractor model, we’ll make sure that we have all of those links in the show notes down below. And as always, if there’s things that you’re wondering about in regards to your career, where are you going, how are you going to get there, reach out, I’ll have a conversation with you, hopefully give you some advice of what the path is that you should look at or consider. For those of you that are interested in learning more about CPA Life, subscribe, hit the like button down below, that way you’ll get notifications for anybody that we’re going to be talking to in the future, different show notes that you may be able to download that help you on the journey for your career. Thank you guys for joining us on the CPA Life podcast, we’ll see you next time.
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