The Numbers Paradox – Accounting Is Not About Numbers

By Posted in - Public Blog on April 8th, 2014 12 Comments

It’s ironic. The tag lines of various accounting professional bodies tend to include references to ‘numbers’ and ‘count’ in puns that no doubt please them and their marketing teams, but which reinforce the unhelpful perception the public has of accountants, namely that accountants are…

Bean counters. Number crunchers. Numbers nerds.

What does accounting truly revolve around?

The irony is that whilst numeric tax and accounting skills are obviously at the basic core of the profession, they are not differentiating skills. They are not what makes a great accountant. These numeric, number-crunching skills are expected prerequisites, not competitive advantages.

The Numbers Paradox:

The accounting profession is not about numbers.

It is about people.

You read that correctly.

Here’s some coffee to wake up and smell: The basic tax and compliance work currently done by accountants will soon be performed by technology.

That is inevitable. You know it is.

The tax and compliance skill-sets on the low end of the spectrum are commodities. This is already evidenced by the outsourcing of this level of work, by many firms, to lower-cost providers globally. The next step along this cost-reduction path is automation. In the history of commerce, across all industries and sectors, low-value skill-sets get replaced by machines. They get automated. Think vending machines. Think (low-value-adding) travel agents. Think… the low-end tax compliance work; work that has been the bread and butter of many accounting firms for decades.

That gravy train is stopping, next station.

Now is the time to start planning and making changes for a different future for accounting. Don’t wait for the need to change to be pressingly urgent. You don’t start paddling once the wave is upon you. You see the wave coming, point yourself in the right direction, then start paddling. In advance. Well before the wave arrives. Do that, and you’re riding it, dude. Start paddling too late, and you’ll fall off the back of the wave, disappointed, watching others ride off.

Thankfully for accountants, the higher-level advisory work across more complex tax matters, business advisory and financial advice provide them with a solid future. But it will be a very different future.

The great thing is, all this work still has at its core, numbers.

But what is the point of a good set of numbers?

When you think about it, what is the ultimate purpose—beyond the basic compliance of lodgements—of a set of numbers for a business or an investor?

Decision making.


Business improvement.

Wealth creation.

In short, making changes and improving performance.

And the best way that a set of numbers will influence a business owner to make decisions, to take action, to embark on changes, is when they are guided by a great advisor. Someone who can explain the future scenarios that will result with and without corrective action, the suggested improvement strategies, the risks and how to reduce them, how to measure effectiveness of the changes.

The person to provide this advice should be the business owner's accountant. After all, they have all the numbers. The data. The ‘intel’.

But all too often accountants don’t provide future-focused advice. They merely manage deadlines and report on the past. Important stuff, yes. But it won’t markedly improve their clients’ business or wealth position.

The ongoing lack of proactive advice given by accountants has spawned advisory spin-off professions such as business coaching. The clients of accounting firms wanted advice on how to improve their business, but they weren’t getting it from their accountant. Accountants showed no leadership. So their clients looked elsewhere.

The market had a need, and accountants failed to fill it.

Sadly, there are many flaky business coaching franchises where business coaches who have simply paid a franchise fee and then spent a week in a training and induction process believe they have the ability to advise businesses on a range of crucial commercial matters.

They do not. Not in my opinion. These business coaches should be avoided.

Management accountants, on the other hand, have a deep understanding of the financials and drivers of a business’ performance. They can take into account various tax implications, do 'What If' sensitivity analyses on different scenarios, forecast and track cash in-flows and out-flows for a business, and—when trained in management accounting—advise on strategies for improving the liquidity, profitability and value of a business.

What a shame it is that the accounting profession, by and large, has let this opportunity pass them by.

What has caused this?

So much of the under-utilisation

of the accounting profession stems from

the definition of the profession…

… as revolving around numbers, rather than around people. It is advisory skills that matter, and these are largely people skills. 'Soft' skills.

"We are number crunchers" is a limiting definition and over-arching paradigm that precludes the accounting profession from maximising its value to society.

In short, accountants aren’t nearly as useful as they could be. That saddens me, because their potential to add more value to society is immense.

It's happened before. In different fields.

Consider this fascinating historical example… (Grab a coffee. Settle in.)

Back in ancient Greece, people believed that their lives were controlled by the Gods who wandered around in the sky, imposing their will upon them. (Interestingly, the word planet comes from the Greek planan which means ‘to wander.’)

This "Gods wandering the skies" view seems quaint to us now, but that was the reigning belief system. It was not questioned.

People believed that it was the Gods who decided if crops would grow, whether it would rain, or snow or whether people would live or die.

The Greek philosopher Aristotle didn't buy into this idea. He theorised in 340 B.C that the planets and other heavenly objects in the night sky were not Gods, but were spheres revolving around the Earth.

He got one major thing wrong there, but this new geocentric view of the world was a hugely controversial shift in thinking.

And it wasn't questioned for the next 1,800 years, despite the fact that the calendar in use back then was, as a result of this assumption, inaccurate. About every 100 years or so it would be winter when the calendar said it should be summer, and the Pope would then announce, "Ok everyone, the calendar is out again. Let's wind it back." (And many of us think daylight savings is a big adjustment to make each time it comes around!)

That seems incredible, I know. But why was this happening?

It was because astronomy lacked an effective model. It simply was not working. Consider how crucial this was for an agricultural society, with the need to predict the timing of the seasons in order to maximise crop production.

But the plot thickens. 1,800 years after Aristotle's initial erroneous assumption, in the early sixteenth century, Polish astronomer Nicolaus Copernicus calculated using mathematical equations that the sunnot the Earth—was at the centre of our planetary system. Clever guy. (That’s some serious ‘number crunching’, right there.)

However, at the time Copernicus' new heliocentric view of the universe was considered heresy. The consequences of this were so grave that Copernicus waited half a century to publish his De Revolutionibus Orbium Coelestium in 1543, once he was on his deathbed.

But even after the theory's publication, change took some time.

Another 66 years later, Galileo Galilei, the Italian mathematician and physicist, invented the telescope. This allowed him to see that the sun rather than the Earth was at the centre of 'our universe'. (The term 'solar system' did not exist at this time, due to their belief that the Earth was at the centre.) Galileo had visual evidence to support Copernicus’s mathematical theory, and so he wrote a treatise about it.

In an attempt to spread the word—as this was one of the most fundamentally perception-shifting discoveries in the history of mankind, reshaping our view of where we 'fit' in the universe—Galileo wrote his treatise in Italian, rather than in the Latin of academia. This allowed the public to read it and as a result, the heliocentric model of the universe rapidly achieved support in the Italian community.

But not everyone was happy about that.

In 1616 the Church commanded Galileo to never again to “hold, teach, or defend […] in any way whatever […] the doctrine attributed to Copernicus.” The penalty for not complying was to be death. Heavy stuff.

Under attack from the Church, Galileo retreated in his promotion of the heliocentric view of the universe. Just as Copernicus before him, he decided that, for self-preservation, it was best to lay low with the idea.

Then nine years later, a childhood friend of Galileo's became Pope Urban VIII. A lucky break. Believing the ‘I have friends in high places’ factor gave him some protection, Galileo began writing about the theory again.

Alas, despite his childhood friendship, Galileo was forced to recant his belief in the Copernican system in front of the Inquisition. For disobeying the 1616 order, Galileo was condemned to life in prison, his childhood friendship most likely saving him from being burnt at the stake.

Galileo's publications were listed on the Pope’s Index of Prohibited Books. And get this: It wasn’t until 1992 that the Roman Catholic Church reexamined the case and admitted its mistake.

Justice—and admitting when you are wrong—can take time, it seems.

So can change.

And here’s the point…

Throughout the almost 1,900 years of society enduring the effects of having an inaccurate calendar, astronomy was defined as the study of the movement of planets around the Earth.

The very definition of the field of study precluded it

from ever providing its full value to society.

This is precisely the issue I see

with the accounting profession

thinking it revolves around numbers.

That's tantamount to thinking the planets revolve around Earth. That's old thinking. Yet, it remains the current paradigm. No-one questions it.

The accounting profession—being an advisory profession—ultimately revolves around people, not numbers. The advice game is a person-to-person game. Not a computer-to-person game. That’s why it can never be replaced by technology or fully automated.

Only once it redefines itself, and shifts its paradigm, will the accounting profession reach its full potential for adding value to society.

Heliocentric replaced geocentric in astronomy.

It’s time that people-centric replaced number-centric in accounting. Our hope is that the accounting professional bodies focus on this shift, but in the meantime, it needs to happen at a grassroots level — at the individual firm level. As Mahatma Ghandi said, "Be the change that you wish to see in the world." Make your next hire a ‘people person’, not solely a ‘number cruncher’. (The two attributes are not mutually exclusive.)

But let’s not wait 1,900 years to bring about change.

Once the people-centric view of the accounting profession is widely accepted, the accounting profession can start on a more exciting path. One that will be far more valuable to society. This will flow on to allow the profession to more consistently attract the expressive and assertive 'people person' personality types that will give firms the ability to build teams with the mix of people required for providing a great client advisory experience. (Refer to The True Advisor eBook for more on this topic.)

The typical analytical, bean-counting, number-crunching, people-averse 'Grinders' that accounting firms tend to hire do not make good advisors.

We'll explore why in the next post, The People Paradox.

End Note: This blog post will form the basis of a chapter in the upcoming book, The Practice Paradox – Reinventing The Accounting Profession by Michael ‘MC’ Carter, founder of PARADOX.

We’d love your feedback on this chapter. Enter a Comment below. (Tip: Commenting on blogs is good for your website’s own SEO and Google ranking, in case you needed an extra nudge!) We’ll reply to all Comments.

The Numbers Paradox – Why Accounting Is Not About Numbers
Article Name
The Numbers Paradox – Why Accounting Is Not About Numbers
Accounting is defined as revolving around numbers: number crunching, bean counting. Find out why this very definition holds back the accounting profession from delivering its full value to society.
  • I am the worst phone answerer in the world. I am a grumpy so and so sometimes and almost always brusque (as a kind hearted ex employer put it) so softening my phone voice has been one of the great challenges for me as I want to get prospects interested in doing business with me, I really do and that first phone call is vital in the creation of a relationship (speaking as a start-up myself). The first mention of the R word, first paragraph!

    People seek out accountants because their tax or BAS needs attention but they stay for the service I suppose; maybe they stay for the trust they have built up but are they being real or just lazy? I use whatever I can, service, price, availability and superior knowledge to name a few, to get and keep my clients. Yes MC the profession has a ‘stuffed shirt’ reputation but it’s not a secret world and it’s not rocket science. It might be because we are Agents of the ATO and are its Gate Keepers. We put ourselves in this position as it benefits us but it’s a double edged sword sometimes. This is probably why we are perceived the way we are – we’re lawyers actually.

    If being a good accountant means being interested in the client as a whole not just his tax then we are swimming in shark infested waters. Doing good whilst doing no harm is a good way to operate, good luck with that. Then again, I don’t see my doctor developing a relationship with me. We have to be interested in the client and his life as a whole to give good financial advice but hang on, we’re not Financial Advisors (I know this because I don’t get trailing commissions $$$$$$$$). So what are we? Where do you draw the line? How do we be interested and caring and relate to our clients one to one and still find time to work. Offshore the drudge work? My work in particular is hard to outsource because I take on the day to day workings of the client’s figures and most of them have very complicated set-ups they won’t change.

    A speaker recently remarked to me that Accountants had missed the boat presented by Financial Services (as an industry) but what does he know – I’ve worked in Fin Services and it’s tough, as anyone at Storm Financial will tell you plus every Fin Services firm owner I’ve met except for one was an Accountant in practice in their earlier career.

    And for myself, what am I? A bookkeeper or accountant? Why can’t I be an accountant since I am in fact an accountant (to my public)? Because the public relate Accounting to Tax (Income Tax etc.) and I am not predominantly Tax – I’m more Management. But what’s in a name? Charge rates for one thing! If the public are hiring an accountant to do bookkeeping they expect relatively high fees. As an accountant working in the Back Office Space of the business it’s hard to categorise myself without going to the lower end of the spectrum.

    The Public are pretty set in their ways for instance they associate ‘bricks and mortar’ with stability and honesty. We are working hard to gain and keep the Public’s trust but do we have to ‘buddy up’ with them? Financial Advisory firms with AFS Licences do. It’s kind of needed but also gives out the required warm and fuzzies that you need to be liked hence the reason why Facebook is so popular. Sorry, what was the question again? (Is a big topic)

    • Michael Carter says:

      Thanks for your comment Dianne. Yes, soft skills (such as the first impression made in that vital first conversation with a prospective client) are important. It’s great you have a self-awareness of your natural tendency to come across as ‘brusque’ (hey, I learnt a new word today – thanks! 🙂 ) Soft skills can be learnt and honed, like any skill, albeit there is natural aptitude to take into account.

      It’s true that often clients come to an accountant for the basics of tax and compliance — and isn;t that wonderful, on one level — though it’s possible to attract clients who want more than that from day 1 as well — that is, who want the management accounting and future-focused services. It all depends on who you’re targeting and how well your marketing/educational content is influencing them. It’s about positioning yourself (and your team) as an authority and advisor, not as an order-taking underling.

      I’m interested in your “the client as a whole” and “shark infested waters” comment. Tell me more about what you mean there.

      Regarding your question, “How do we be interested and caring and relate to our clients one to one and still find time to work,” I would say it is a core part *of* your work — not ‘extra’ work. It needs to be embedded in the conversations had when you meet with your clients each year and/or quarter. The meeting times with clients (including face-to-face, and phone/web) need to be budgeted into servicing each client, otherwise the capacity to do it won’t be there and these crucial conversations won’t happen consistently. The “still find time to work” thinking is a symptom of the “clients as interruptions” syndrome I wrote about in The True Advisor eBook, where many accountants view client calls and meetings as “interruptions to their work” when that *is* their work — that is, it is integral to it.

      Re your question, “but do we have to ‘buddy up’ with them”, it depends what you mean. Not on a “We’re all chums now” level, no; but on a level of being an advisor who is teaching them, leading them and guiding them to a better place financially, then yes. Note that is not about “smiles” and “being liked” — the best advisors don’t seek to be “people pleasers”, as often clients need to hear “tough love” reality from their advisors.

      My call to the profession is to see clients are the core of their work, not just the “number crunching” work, which is clearly important to do well, but will not differentiate an advisor. Ultimately, it’s the client experience delivered that sets firms apart, and this all comes back to how well a firm manages client relationships and perceptions..

  • Ben Walker says:

    Hi MC,
    Great article, and definitely relating to a few points, including:
    – Rogue and meaningless business “coaches”
    – People, not numbers
    – Hilariousness of the Catholic Church

    Touching on the compliance commodity section, in particular, outsourcing, I’m in two different minds about this. (or 3 if I’m honest…)
    1) Not go near it and keep the ‘born & bread’ or ‘owned & operated’ point of difference
    2) Outsource administrative and operational functions
    3) Outsource admin, ops & base technical ‘ground work’

    About 2 months ago, I would have been 1)… I’m more and more realising that the 2)nd sounds attractive, especially as support for myself and other team members. I’m just not at point 3) yet, and would love your opinion on this.


    • Michael Carter says:

      Hi Ben. Thanks for your comment too! Great to hear from you.

      Regarding your three different ‘minds’/options around out-sourcing, yes, there are many valid approaches. It’s important to get clarity on your position and then stick to it. It’s not a black and white situation and some people get emotional about the ‘off-shoring of jobs’ aspect.

      My personal view is that we’re in a global economy, and that functions/processes in a business either need to be eliminated (if they don’t add value), automated where possible (e.g. by software) and lastly delegated (if humans are actually required!) What matters for a business, is getting the outcomes (value) for the stakeholders and for the greater economy and, indeed, for the planet.

      Whether you delegate work to people in Australia or in other countries is a choice for you as entrepreneur. I agree with Mike O’Hagan’s view on administration work heading towards extinction in Australia, due to off-shoring. It will also apply to lower-level compliance and bookkeeping work. People can protest about the injustice of this, or they can accept the reality of a global marketplace (and shifting technology).

      The modern approach to business is to keep in-house those core competencies that are crucial in your value chain, and to out-source the non-core activities. (That’s easier said than done, of course. managing an out-sourced team is a whole new skill-set and there are many different models available there.)

      The lower-level keyboard-operator roles that get off-shored will mean that the local labour-market (people’s skill-sets) will need to shift to higher-value activities that cannot be automated or off-shored. The long-term effect of that is good for everybody.

      Am I saying that an accounting firm needs to use off-shore labour? No I’m not. Some of the smartest young firms I know don’t have any admin staff at all — in Australia or anywhere else. They just have shit-hot (can I say that? sorry, just did 🙂 ) technology and processes to eliminate low-value process steps and labour at every opportunity.

      It would be a valid strategy to choose your No.1 option and to hang your hat on that as a point of difference down the track, when it’s commonplace for firms to have globally distributed teams. That will take a number of years yet though.

      In the meantime your business will forego the cost savings available through off-shoring the manual tasks that you’re unable to eliminate or automate in your firm’s processes.

      I’m not being prescriptive and I wouldn’t judge any business owner on which option they choose–I’m not out to impose my values on anyone else–but if I was in your shoes (seeing as you have asked for my opinion), I’d go for option 3. Be lean. Have a team in Australia that provides an amazing client experience for your clients. Have team members in other countries who perform other roles, but that don’t need to be done in Australia.

      It’s crucial you are transparent with your approach with your clients. And to do that, you need to be clear on your own reasoning and values around how to marshall the resources for your business. That way you can explain with confidence and integrity why you operate your business the way you do.

      If you went with Option 3, you could take a Thought Leader approach and actually be blogging about the new way of doing business and the opportunities available for small and medium businesses through tapping into the global workforce. I’m sure that would attract innovative business clients to you.

      Equally, you could choose Option 1 and stick to your guns. (Admittedly, this is the mainstream/laggard view of business now, so it wouldn’t support the innovative brand message you’re building. Over time though, if you stuck to this, you’d eventually become a contrarian!)

      As Arthur Schopenhauer wrote, “All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident.”

      I think out-sourcing labour to other countries is (in the Australian market) currently in the second stage and will get to third stage in about 2020 or beyond. I personally already think it is self-evident, and inevitable.

      I would also add that over the longer term (measured in a decade or two) the current situation where developed countries have this, in effect, “international labour arbitrage” opportunity will disappear as living standards and levels of pay increase globally. The global playing field will get more level.

      Personally, I think that’s a good thing as a citizen of the world (and not just of Australia).

  • Thanks MC. This is really thought provoking, and has touched a few raw nerves for me.

    I believe that most accountants have too many clients and don’t do enough with them.

    In the book The E-Myth Accountant: Why Most Accounting Practices Don’t Work And What To Do about It, by Michael Gerber and M. Darren Root, the co-author (a CPA in the US who has built a successful firm) says that he has observed the following themes to be common for many accountants:-
    – they “care deeply about their client’s wellbeing and feel a deep sense of responsibility for their financial success”; and
    – most “harbor a deep-seated fear of losing clients and failing to attract new ones”.

    What a fascinating contrast!

    The result is often “mass client acquisition” – continuing to “take on clients, no matter whether they are a good fit for the firm, …”. In other words, we’d better get another one, just in case we lose one. And then another one. And another one. Pursuing unattainable certainty.

    (And yet, as Simon Sinek says in Start With Why, “the goal is not to do business with anyone who simply wants what you have, but to do business with people who believe what you believe”.)

    Interestingly, the title of chapter 16 of The E-Myth Accountant is “Making It All about the Client”. It’s about relationships, connection. “Finding the People Who Believe What You Believe.”

    I know that so many accountants in “practice” (wow, I hate that term “practice” – there must be something better) want to do more meaningful work (and as a result having more meaningful relationships) with their clients beyond the number-crunching and tax compliance. So-called “value-add” work. (There’s another term I need a replacement for in my vocab.) Many of us have heard the message year after year for a long time.

    So why hasn’t it yet evolved for so many of us?

    I think there’s actually a crisis of confidence amongst accountants (save as to a few standouts) when it comes to selling and then delivering high quality business advisory / management accounting / value-add services consistently in a systemised way.

    • Selling (= educating) – If clients are used to us just talking about historical figures and maybe some tax planning, we need to learn to have different conversations. Otherwise, they won’t know how to take in or even trust the advice that we decide to spring on them. (Fortunately, this is one area that Practice Paradox can help with. We’ve experienced that first hand. #shamelessplug)
    • High quality – We can run a set of numbers through any one of a variety of excellent software tools to give us dashboards, metrics and projections. But converting the results into meaningful advice that will make a real difference to the client, ie. add value, is a totally different skill set to producing a set of accounts and a tax return (and training on the software doesn’t teach this).
    • Consistent – After delivering an advisory engagement once, we should make it sustainable in order to gain / maintain credibility with the client and also to build a sense a achievement for ourselves. This means having (maybe even holding back) something to talk about next time.
    • Systemised – The service needs to be marketed / sold and delivered efficiently. This means systems for monetising the service, for creating the next engagement, and for presenting the advice in a professional and valuable way. It involves some whiteboard planning, team training and development of procedures (again, this is more than software training).

    I’ve all too often made the mistake of getting bogged down in the tool – usually software. But that’s not execution of strategy. That’s technical skill. I don’t need to sell the output of a piece of software – I need to sell advice.

    By the way, the number crunching part can be fun – it’s just that we’re not going to get paid much to do it in the future, so we’ll have to do it more efficiently and more effectively to keep it fun, leaving plenty of room for the services that can’t be automated and that are based on human relationships.

    For many accountants, the shift from number-centric to people-centric won’t happen in an observable way until we back ourselves and get organised; or otherwise, until we are forced to in desperation, by which time we’ll be laggard adopters risking obscurity and irrelevance.

    Is that a harsh assessment?

    • Michael Carter says:

      Hi Jeremy. Wow. What a comment! There are great elements in your comment that you could use on your firm’s own blog. It’s great to share your philosophy with your clients and prospective clients.

      Great point re “most accountants have too many clients and don’t do enough with them.” I agree. That’s why I far prefer the High Clientshare model of having fewer clients, but doing more with/for them and having more meaningful relationships, rather than a purely transactional high-volume model (a.k.a. compliance sausage factory).

      Thanks for the share re The E-Myth Accountant and those contrasting beliefs/fears. I would say that the fear around losing/not attracting clients is because for most firms referrals/word-of-mouth happens randomly and is not something that the firm controls, other than doing the best job they can do for their existing clients. A lack of a sense of control breeds fear/anxiety.

      On the other hand, firms how learn how to consistently generate targeted leads can move beyond that fear and know that they have a steady stream of clients coming through.

      Great phrase, “mass client acquisition”! For firms who do that, it’s a sign of either, (1) not having a clear strategy (re targeting specific client types), and/or (2) not having the discipline or, indeed, courage to stick to the strategy, (Again, that comes from fear.)

      I love that you have fully embraced Simon Sinek’s ‘Start With Why’ message. (A quick aside on that: I have noticed that many firms and some advisors to the profession have misinterpreted Sinek’s “share your why” to mean things like, “Create long self-interested videos and content all about yourself’ and they have failed to make the What’s-In-It-For-You connection (or perhaps, in more modern terms, “remind me again why I should care about your story”) for the readers/marketplace. I would like a dollar for every boring, uninspiring “Our Why” type web page I have read in the past couple of years. It’s a great concept, but it takes great copywriting and content to make it work in reality,)

      (For anyone reading this comment and who has not yet come across Sinek’s book, have a look at this blog post and watch the TED video embedded there: )

      Re your comments needing a replacement for “value-add” services in your vocab, I like “future-focused” services, because it sends the right message to clients and to your team. Some mercenary coaches to the accounting profession have tainted the phrase “value-add” to mean purely “up-sell”, and the phrase “value pricing” to mean “extreme premium pricing” — naïve formulaic advice.

      Man, have you hit a nail on the head with your comment about a “crisis of confidence amongst accountants (save as to a few standouts) when it comes to selling and then delivering high quality business advisory / management accounting / value-add services consistently in a systemised way.”

      There’s so much in that. In this year’s Masterclas we will be addressing that very issue with the model of Design > Market > Sell > Deliver. Design refers to designing your business model and service offerings (especially in the future-focused advisory areas) so that they are scalable and systemisable; Market is about generating targeted enquiries for the services; Sell is about how to convert and on-board the enquiries into new engagements (whether new clients or existing clients for the firm); and the all important Deliver is making sure you have the systems and tools in place to reliably, impressively and profitably deliver the services.

      Unless an accountant has confidence in that entire process, they won’t actively “sell” their advisory services (even if, in theory, they know how to) because you won’t sell what you don’t believe in; and you can’t truly believe in a service they firm has not delivered consistently before.

      Your 4 dot points about Selling, High Quality, Consistent and Systemised are spot on. (I think you’re going to get a lot out of Masterclass.) And you’re not alone in getting bogged down in the tool (e.g. software). Analyticals tend to do that, and most accountants necessarily have a moderate to high degree of Analytical in their profile.

      The change management model we teach of Mindset + Skills + Systems is designed to emphasise that Systems (e.g. software) is the lats piece on the puzzle. If a firm lacks advisors/client managers who do not truly believe (i.e. have the mindset) that they are doing the *wrong* thing by a client if they *don’t* talk to them about future-focused strategies and implementation plans; and if they then don’t have the skills (soft skills and technical skills) to have the advisory conversations with clients, then no system or piece of software will help. It’s like a hammer in a toolbox. Potential value only.

      The mindset + skills aspect is something I’ll talk about in my next blog post about the People Paradox. In my observations, firms are simply hiring the wrong type of people. They keep hiring Grinders who see client calls and meetings as interruptions!

      Another model I like is that a business can be viewed as an overlapping collection of three things: Purpose, People, and Process. Purpose includes strategy, business model, your ‘why’ and the big picture. People is the leadership team and the team they build. And process is tech, procedures (formal and informal), workflow etc. So many firms over-focus on Process and don’t get the People area right, and never get the Purpose element right either, in terms of having a scalable business model that doesn’t create bottlenecks at the Partner/Principal/Director level.

      And I agree, number-crunching can be fun, especially at the higher end of advisory work. At the end of the day though, all that matters is that the set of numbers reflects real-time reality, and also paints future scenarios where relevant. That gives context for the conversations.

      But most firms just are not having the conversations. Not often enough anyway. They transact with clients, They don’t connect with them, Lead them. Truly *advise* them.

      I don’t think your closing remark is harsh. I think it’s accurate. Regarding “the shift from number-centric to people-centric won’t happen in an observable way until we back ourselves and get organised”, I firmly believe that the first two steps are (1) the leadership team in a firm getting crystal clear on the mix of people they need in the firm to provide a great client experience and great quality work, and (2) commit to building a team so they get the People aspect right.

      Otherwise their Process element will be doing the same ol’ same ol’ compliance and previous year/quarter accounting work for clients, and they’ll watch their margins erode (and the meaning of their work evaporate) as the commoditisation and automation of the lower end work continues.

      With these models of Mindset + Skills + Systems and Purpose > People > Process, each element is mandatory. Like a chain, it only takes one link to be broken, and the entire firm is broken. Firms that get all elements in place have a great future and a wonderful present.

  • Wow, some fantastic conversation here! I don’t quite have the time to add my own take on all of this – I’m about to go to my team sales meeting (I wonder if many accounting businesses hold those?).
    Anyway, a seriously good take out that will get a mention in this morning’s sales meeting is:
    Value Add is now called Future Focused
    Client calls and meetings are opportunities not interruptions (the correct forum for this one is actually my accounting team meeting – I think the sales team already get it).
    Thanks – a great way to start the morning.

    • Michael Carter says:

      Thanks Christian. What was the conversation in your sales meeting like, around this topic?

      And yes, ‘value add’ is too generic. So is ‘proactive’. Motherhood statements. I would hope that *all* a firm’s services (including backward-looking ones like compliance) *add value*! ‘Future focused’ gets a more effective mindset going for your team, in their conversations with clients: e.g. “Where do you want to be in x years time in this area of your life/finances?” “How do you feel about your progress towards achieving that?” “What obstacles or constraints do you see to achieving that?” “Let’s look at some modelling/figures to see how realistic your goal is here, if you keep on the same path/trajectory you’ve been travelling in recent years.” “Interesting… looks like something needs to change here, doesn’t it?” … and an engagement ensues… assuming the fit for the client is there re aspirations, frustrations, timing, affordability and their level of trust and belief in the advisor.

  • Alycia Edgar says:


    I absolutely love what you have to say here.

    Some 8 years ago I setup my business and focused on providing management accounting services and bookkeeping. Back then there was a real divide between what a tax accountant was doing for clients and what they really needed. My background is in management accounting so this was an easy course for me to take. But I saw the opportunity back then and its only now that “some” tax accounting firms are in fact focusing on this side of the business. Trying to get tax accountants to provide this function though, big mistake. I am often the educator of information between what a tax accountant is telling their clients. I simplify the jargon and dumb it down so its easy to understand. These advisory services can only be performed by those with the skills to communicate effectively with the clients about what’s really going on in their business and what can be done to make improvements. Those that know every single tax ruling etc are fantastic, we need those tax accountants, but management accountants are an entirely different breed. We are generally fabulous networkers, communicators and educators.

    I knew that one day the industry would see the light and some in the industry have. But I’m very glad we have someone like you Michael leading the charge, bringing more awareness to this most important issue. If accountants do not innovate their practices to be NOT reliant on compliance they will die a slow death and the accountant jokes will get worse…… 🙂

    • Michael Carter says:

      Hi Alycia. And thanks for your comment. You make a great distinction that management accountants and tax accountants are different breeds. As you say, each has a role to play due to their different focus and natural strengths.

      The mistake smaller firms make is expecting tax accountants to advise clients about business matters and be management accountants. It’s not going to happen, except in the rare occasions where an advisor is great at both disciplines (and able to keep up with the latest in tax as well — a big ask).

      I’m speaking on this very topic of ‘breeds’ tomorrow at this ICAA event in Albury (the first event in the Practice Forum series). The focus of ‘A new breed of accounting firm – strategies, technologies and choices’ is on the bigger picture of the overall firm and the shifting (and exciting new) business models available to firms (especially new firms, who are free of legacy issues).

      Congratulation on making the leap 8 years ago. You sound like you’re having fun and no doubt making a difference to your clients, due to the future-focus of your services. A great combination for an advisor.

  • Whoa! I had a great time reading this morning not only this piece by you Michael but also the comments section. I have a busy day, though I would like to jump here and talk as well!

    I would like to say that some of the parts like having an up-to-date excel sheets in your computer for different clients can help a lot in terms of planning as well as presenting your clients the extent of growth which as a financial planner you see for them.

    Things do evolve from time to time but yes, as you mentioned it’s the people that matter more than the numbers and honestly speaking understanding a client’s emotion would help way more to have him sticked to you for years than having him wander around to your teams here and there.

    For many financial advisers, the shift from number-centric to people-centric won’t happen in an observable way until we back ourselves and get organised; or otherwise, until we are forced to in desperation, by which time we’ll be laggard risking anonymity and inaptness.



    • MC Carter says:

      Thanks James! Glad you enjoyed the post. By the way, I’m guessing you’re a colleague of Marcus Roberts? Where are you based? Just curious.

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