474 Should The Next Generation of Accountants be Concerned?

Today we're talking about the youths, the next generation of accountants, the ones that are still in school right now, the ones that may be deciding do I really go into accounting or is that going to be gone in 5 years time? Is AI out to get them? Because in other industries, junior hiring, it's down like that is, that is a real thing. In fact, unemployment right now for new grads, it's higher than it's been in a while. So is accounting on the chopping block? How are we going to put, put like juniors to work if we've got these really powerful AI agents that are taking care of all the menial tasks inside of an accounting firm or inside of a, even a business like an accounting department. I'm gonna give you my take and I don't want to like rose colored glasses this at all. We're gonna get real. And if, even if you run an accounting firm, which is most of the audience here, this also impacts how you hire. So let's get into it. What is the future of AI gonna do to hiring entry level F? Now the first thing to look at is like the data. What do the datas tell us? I can tell you right now, like if you're, if you're new here, welcome. The vast majority of the people that listen to this podcast run small accounting firms. So accounting firms, 10 million a year in revenue or under, and every single one of them are absolutely clamoring for good accounting hires. They need more big hot accountant bodies in chairs doing accounting work because there are more businesses out in the world than accounting firms can possibly serve. So the best data we have is what is reality right now. And reality is accountants are still very, very much in demand. We've got a few examples of larger accounting firms making layoffs. And interestingly, at least one of them has been chopped, chalked up to. They haven't had as much attrition with accountants as they normally do. Like big firms are just an absolute meat grinder. They pour a bunch of people in. All only a few people survive. A lot of people choose to leave. But in this economic environment now, post Covid, fewer people are leaving of their own volition than in the past. And so they said, well, we, we had to lay off people because not as many people left as we thought. We're going to leave. You can decide whether you think that's real or not. But my take is that is when it's happening at the really big firms, that's more a reflection of like economic conditions, general tightening of belt straps at the end of the day, like those are real accountants. Even the auditors, they're people too. But I can tell you both in the world of all but the very biggest accounting firms and in small businesses today, there's tremendous demand for accountants still. So let's just say that. But from a technical standpoint, what is the technology that's just around the corner that's most relevant to the work that, you know, interns, entry level folks can do for you? Well, it's worth calling out. Straight off the top is the notion that AI will automate menial tasks is flawed. This is a carryover from past types of technology that were only capable of doing menial tasks. So basic like software integrations, rpa, robotic process automation, these were very good tools at doing repetitive stuff because they could follow lines of code like they could follow a repeatable sequence of things. Hence the framing. You know, menial, repeatable tasks can be automated. AI, it can do way more than menial repeatable things. That's the novelty of AI. So AI is taking a bite out of work at every level of the skill spectrum. So AI isn't coming for the low level stuff, it's coming for all stuff. And if you want a really good example of that, take a set of financial statements, chuck it into chat GPT in, in the team plan, which is the only like secure enough plan I would trust with my client data. Chunk a set of financial statements in there, balance sheet and income statement, have it review it. Say you're like a senior accountant, you're not reviewing this to assess the health of the business, you're just reviewing this for correctness. And I would say right now, if you want to get technical, use a reasoning model like OH3. Right now. That OH3 model, it is far beyond the level of an entry level accountant, that is like a senior accountant level of insights that you'll get from it. Right now that's an example of a high skill task inside of an accounting firm, inside of a business that AI is already capable of. So AI isn't exclusively coming for the use for the entry level folks, it's coming for everybody. But the most relevant to juniors, AI development. The development that is most relevant to juniors, it is probably AI agents. And if you're not familiar, AI agents are essentially more autonomous AIs that will go out and do your bidding for you. And so the most practical example of this that we have today is ChatGPT operator. It's available on the 200amonth pro plan, which does not come with data Protection. So if you run a business, just be real mindful about how you use that. I wouldn't put client information into it. For example, if you run an accounting firm, but it has a built in web browser and I prompt it and I can say, go out to this website, do XYZ and report back. And so, you know, example I come back to a lot is I'm going to this conference, I'm into AI stuff, give me a digest of all the talks that I ought to catch. It goes out, it finds the website. I didn't give it the website, it finds it, it goes to the agenda page, it navigates through all the different pages of talks and it gives me a summary of what it thinks I should go see. Right now it's pretty slow, it's not very smart, it can break a lot, but at the end of a workflow you can save that workflow. So if I had to hop in and chat with it a bit to say like, no, go do this instead, or, or if it got stuck and I had to help it over something, then in the end when I saved that workflow, it knows all the shortcuts, it doesn't need to make all those same mistakes again. Now right now I could cut loose three of those agents to run simultaneously on that ChatGPT plan in the future. There's no theoretical limit to how many agents can work for you simultaneously. So as these get better, as they are getting better every single day, the future for all knowledge workers looks more like almost being a puppet master for these AI agents that can go out and do your bidding. And it is this type of technology, I think, more than anything else that people say, well geez, what about the interns? What about the person you would have normally delegated that task to? I would still come back to. I mean that task could be any level of work. It's not just junior levels of work. But the bigger impact, but, but the bigger way that this impacts juniors is what we're now seeing in say, software development, where it is such an aid to the people who already have that job that the need to make additional hires goes down. That is where juniors are impacted. That's where new graduates are impacted. Not because it automated the junior's job, but because it just made everybody more productive. So like organizationally the need is not as great as it was before because AI is making people more productive. Now if you want a big juicy counter argument to why juniors still have a very important role to play in the future of not only accounting, but Any industry is getting organizations to adopt AI right now and use tools like ChatGPT is like pulling teeth. A lot of concerns still around security, which frankly are misguided. For over a year now, well over a year, we've had perfectly secure ways to use AI in our businesses. The problem with change management of all kinds, I mean, it's, it's two things. It's one, inertia, the fact that by default everybody will just keep doing the same doing things the same way they've always done them. And it is hard to get out of that rut and change your habits. But number two, in most businesses, it's a question of incentives. Is there anything in it for that person to be more productive? Because if all we're doing is paying somebody to sit in a chair and work 40 hours a week, if you give them a tool that will make them more productive, like, what's in it for them if you just assume that that person will do everything they can to line the pocket of the business owner? Some people will, in fact, entrepreneurial folks like me, like, that's how we're wired. We want to help the business in any way that we can. This episode is brought to you in part by makershub, who helps you automate your accounts payable department. With AI. There's still such a huge percentage of businesses today that rely on like manual approvals, even paper processes and stamps and all that stuff. That's because most accounts payable products do not give you like, the level of detail in your approval processes that you need. Maker's Hub got a bunch of flexibility here from separating bill approval from payment approval, because oftentimes those are two different groups of people that need to manage that. But when you can't separate those approval workflows, you end up kind of like fudging. Well, this person's got the keys to the castle. But we'll let them improve this bill because they're the only one that can make the payment. But they may not actually know anything about the bill. By separating out your bill approvals and your payment approvals, but also being able to drive these workflows based on any little fiddly item on the bill, this is where they're using like AI vision models and large language models to extract better information from bills than we've ever had before, having that flexibility, then in the approval process, we are like saving loads of time by using AI to automate extraction and then having a greater level of control over approvals. Super powerful tool makers Hub would help so Many of my clients that had like hairy, ugly AP workflows. To learn more about that one, check out the link down in the show notes. Team up is a recruiting firm that helps you hire direct in the Philippines. Talented accountants. That's different from the outsourcing or offshoring companies you most commonly hear about. Where you're actually hiring the company. With Team up, you're just hiring a person because you can just hire people in the Philippines, same way that I may hire somebody in Reno, Nevada actually. Great example. This is a pretty, pretty suspicious place. I'd say the Florida of the west side of the United States. How do I trust them? How do I train them? How do I do xyz? Well, how do you do it for like your onshore people? But you really are just working with them. They're an extension of your team. That's what Team up specializes in. So with Team up you do a flat one time price to recruit that person. Most hires are about four grand this one time fee. Team up, no ongoing costs. Most offshoring groups, about half of what you're paying is actually going to the company, not to the person. Team up even has a guarantee if that hire wasn't a fit for the role that you put them into in the first six months, Team up will find you a replacement at no cost. Does indeed do that. They don't do that. Hiring in the Philippines is simpler and easier than you think. My last four hires in the my firm, this was like three, three and a half years ago. They were all in the Philippines. If you want to learn more, check out the link down in the show notes to schedule a call with Timo. Folks that have been doing a job for decades, that is most people who are just happy being staff level people, their default will be the most comfortable 40 hours. That like that's how that will play out. And doing something new, doing something different when there's nothing in it for them, that's not the most comfortable version of those 40 hours. So I come into a meeting, everybody has what feels like a productive talk. Everybody, everybody goes out and then nothing changes. And in an organization like that, where it is pulling teeth to get people to change, you want to know the best way to inject some inspiration in there? Hire a snot nosed kid just out of school who spent a thousand hours with ChatGPT the last two years because it was like the ultimate tool for students. Right? So the folks coming out of school, you have a level of aptitude with AI. That's the olds don't and I, I mean I do, I do a lot of talks to, to these folks, business owners and all that, folks with, with lots of experience. You sit in a room with them and you're like, tell me, if ChatGPT had come out when you were in school, like, you know, you would have become a freaking wizard with that thing, right? Like, like it's the ultimate tool of all time to, to learn, to produce homework, whatever it is. You would have known that thing like front to back. You would have used all sorts of AI apps that frankly old people like me probably have never even even heard of. And when you tell people that and they sort of like reconceptualize. Oh yeah, no, I guess students, like, they are cranking on this stuff, aren't they? It dawns on them, oh shoot. Like that's the person that I need in my business right now. They might be short on the technical experience and all the stuff that I had to do to learn X, Y and Z, but what my team is lacking right now is exactly that capability with AI tools. And so there's an argument that you can make that, well, nobody will just ever hire juniors because everyone already in the company's getting vastly more productive, so they don't need any people. But there's a counter argument to make that is this next crop of folks coming out of school for whom they're like kind of the first AI native generation where they've used this stuff a ton before they ever enter the workforce. That's almost certainly the most productive generation of workers we've ever had. And when a business is blocked by not having people that are comfortable with that stuff inside of the business, the best way to change that is to augment that team with folks who can do it, like embed them into those teams. And while they're gonna come in outta school with their own set of, you know, weaknesses and shortcomings and all that, there's a version of that where we, we are like marrying the very best of those two things. I really push accounting firms to right now meet every single week internally to share with what they did with AI that week that worked and what they did that didn't work. I think the best way to learn this stuff right now, because it is so user specific, is to just create more contacts between your team to share experiences and then you, you learn and pick that stuff up faster. But I hear especially from, from small firms that it's like, ah, we've tried that. It's not an interesting conversation. Cause like nobody's really hitting the ground running. What they need is that champion. And hopefully every accounting firm has that champion where they can come in and excited to share a couple of things. They're ahead of the curve because they take to this stuff naturally. And then the rest of your team is, is kind of riding that wave with them because they can get a little bit of that excitement and get some fresh ideas. And this is where accounting firms like this is. This is an opportunity. This is something we actually need to assess as we're making hires now. Because we all want those people that are really, really good with AI. You've got this generation of folks that are kind of terrified. They're like, AI, how? Like, will this profession even exist post AI? Meanwhile, the people in the actual profession are like, does anybody around here know how to use AI? And there's definitely a timeline where it's like, okay, I just kind of wipes out a really big percentage of white collar work and kind of everything changes and people work less. And you can make an argument that, like, that's actually a fundamentally better world than we live in today. There's a bunch of issues in that timeline still. Like, everything isn't perfect, but there's for sure a timeline where AI changes a lot of things. But if we look at history, if we look at the Industrial revolution, if we look at personal computers, stuff like that, the human condition is, is kind of one that just always makes more stuff to do. Because when we were all farmers and then we moved to the factories, everybody's like, you know, we don't have to work as much. Look at how much food we can crank out. We got these uncrustable factories. We're not going to have to work as much as we used to. Even, even electricity, like they said that around everybody having electricity in their homes. Like, we're all going to be vastly more productive. We can have these in home machines that will do stuff for you. For goodness sakes, the microwave. If I got a chest freezer full of hungry mans in a microwave, think of how many hours last week I spent cooking that I'm not going to have to waste anymore. The human condition has just kind of always been like, we'll find some more stuff to do. That's almost certainly the case here. Definitely what we're doing will change because AI is going to be able to help with, with a lot of the stuff that we do. But we've never really had an example in the past of somebody snapping their fingers. We have this cool new technology and Everybody's just kind of spinning in their chairs with nothing to do. My hope, and this honestly feels like the most likely timeline. You've got some other countries that have like experimented with, with four day work weeks and stuff like that and just maybe there's an American thing, but like there's definitely still a very real struggle with overwork and, and priorities and all that. I would love a timeline where maybe the 32 hour week becomes the norm or the 36 hour week becomes the norm and maybe it's even, maybe it's even shortsighted for that to be the best it can be. Maybe there's something even better. But I feel like there's actually a pretty likely timeline where the post AI world is a better world than we're living in today and there's still a lot of stuff to do. I mean right now, like, you know, the data of how many accountants are leaving the profession, how we're already just chronically understaffed and the problem is going to get exponentially worse over the next five to 10 years. All of the ingredients are here to make me think like, yikes, it sure seems like we are still going to need a whole bunch of accountants. Time will tell. Nobody has a perfect crystal ball. But it would be pretty hard for me to say no, I shouldn't do accounting. And any of the arguments around that not also being equally relevant to just about any other white collar profession. If I look at software engineering, if I look at, you know, engineering, medicine, stuff like that, I'm not aware of any profession and I'm sure there are others, but I'm not familiar with others that have like this kind of shocking numbers stacked against them that the accounting industry has right now. With the number of CPAs that are retiring, how many folks left the profession during COVID If you look at the industry, every signal says there's going to be a lot to do. And the only counter argument you can really make to that is equally as applicable to other types of white collar work as well. And even if you go away from, even if you go blue collar like you look at robotics developments right now, goodness sakes, there was a time when it was like, well, the only thing left to do will be becoming a plumber. But boy, robot stuff. I know I got a hard time buying into that. That's my take. Let me know your take in the comments. I think I still see a huge need for junior accountants as far as I can see into the future. And I don't suspect that'll change anytime soon. If you're new here, we talk about running accounting firms, whether you already got one, whether you're thinking about starting one. That's what we do. And I go around the US Helping people do this with with live events. So a few events I got coming up July 14th I'm going to be in Los Angeles. July 16th I'll be in Denver. July 22nd in Chicago. July 25th in Atlanta. Those are actually all accounting AI events. Learn more about those events and get tickets. Head over to Jason on firms.com events. Thanks for being here. I'll see you the next one. Sam.