Overcome the Accountant Shortage with Technology-Based Consulting

The United States is currently experiencing a shortage of accountants, which has reached critical levels and is impacting businesses across various sectors. There are a variety of contributing factors to this shortage.

The current workforce is aging. A significant portion of the accounting workforce is nearing retirement age, with fewer young professionals entering the field to replace them. According to Controllers Council, almost 75% of the CPA workforce met the retirement age in 2020, as estimated by the American Institute of Certified Public Accountants (AICPA). This demographic shift, combined with the high demand for skilled accountants to navigate intricate financial landscapes, has created a significant gap in the labor market.

Fewer students are pursuing accounting degrees, limiting the influx of new talent into the profession. This trend is concerning given the increasing demand for skilled accountants who can navigate the growing complexity of financial regulations.

Financial regulations and reporting requirements have become increasingly complex. Modern accounting is not just about number crunching; it requires a deep understanding of intricate tax laws, evolving financial reporting standards and stringent compliance requirements. The heightened regulatory environment demands more from accountants, making the scarcity of qualified professionals even more problematic. 

The emergence of new technologies and the rise of data analytics have transformed the accounting profession, requiring accountants to possess advanced technical skills that many current professionals lack. Businesses are now seeking accountants who can not only manage traditional accounting tasks but also leverage technology for strategic decision-making. This evolving skill set has further narrowed the pool of qualified candidates. As a result, companies are struggling to find and retain talent, leading to increased workloads and stress for existing staff. The shortage is particularly acute in sectors such as private markets and hedge funds, where complex financial operations demand high levels of expertise and precision.

Impact on the Investment Management Community

The current shortage of accountants poses several challenges to the investment management community, affecting their operations, compliance and overall efficiency.

1. Investor Confidence

• • Transparency and Trust: Investors rely on timely and accurate financial information to make informed decisions. Any delays or inaccuracies caused by a shortage of accounting staff can erode investor confidence and trust.
  • Communication: Effective communication with investors about fund performance and strategy is crucial. A shortage of accountants can hinder the preparation of detailed and accurate investor reports.

2. Compliance Risks

• • Regulatory Compliance: Investment management firms operate in highly regulated environments. A shortage of skilled accountants can make it more challenging to ensure compliance with complex regulatory requirements, increasing the risk of fines and legal issues.
  • Accuracy in Reporting: Accurate and timely financial reporting is crucial for compliance and investor relations. A lack of qualified accountants can lead to errors and delays in financial reporting.

3. Operational Bottlenecks

• • Increased Workload: With fewer accountants available, existing staff may face increased workloads, leading to operational bottlenecks. This can slow down routine processes such as financial reporting and transaction processing.
  • Burnout and Turnover: Higher workloads can result in employee burnout and increased turnover, further exacerbating the shortage problem.

4. Increased Costs

• • Higher Salaries and Recruitment Costs: The demand for accountants has driven up salaries, leading to higher labor costs. Additionally, firms may need to invest more in recruitment efforts to attract and retain qualified staff.
  • Opportunity Costs: Delays or inaccuracies in financial reporting and analysis due to a lack of accounting staff can result in missed investment opportunities or suboptimal financial decisions, which can have a significant financial impact.

5. Delayed Strategic Initiatives

• • Expansion Plans: Investment management firms often have strategic plans for growth and expansion. A shortage of accountants can delay these plans, as financial management and due diligence processes become slower.
  • Innovation and Technology Adoption: Implementing modern technologies and innovative financial solutions requires skilled accounting professionals to oversee these initiatives. The shortage can delay the adoption of such technologies, impacting the firm's competitive edge.

Strategic Response

To mitigate these challenges, investment managers should consider the following strategic initiatives:

• Perform an Operational Risk Assessment: To effectively navigate the challenges posed by the accountant shortage, it is crucial to conduct a thorough review of existing operational and accounting processes. Utilizing visual tools such as process flow charts to map out each workflow allows firms to gain a comprehensive view of their operations. The result of this risk assessment is the creation of a strategic plan identifying redundancies and areas to streamline, enhancing efficiency and reducing the burden on accounting staff.
• Invest in Automation and Technology: Investment managers should prioritize investing in financial technology to streamline operations and reduce the reliance on manual processes. Automation tools, such as robotic process automation (RPA), can significantly enhance the efficiency and accuracy of accounting tasks by automating high-volume, low-complexity tasks that span multiple systems. Implementing these technologies allows firms to manage larger workloads with fewer human resources, effectively bridging the gap caused by the accountant shortage.
• Outsource Non-Core Functions: Outsourcing can significantly alleviate the challenges due to the accountant shortage by offering specialized expertise and scalable resources. This allows internal teams to focus on strategic activities and core business functions. Outsourcing offers the flexibility to scale services according to the firm's needs without the overhead costs of hiring and training new employees.
• Improve Data Quality and Governance: Implement robust data quality and governance frameworks to ensure the accuracy and consistency of financial data. High-quality data is essential for reliable financial reporting and decision-making.
• Enhance Recruitment and Retention Strategies: Offer attractive salaries, bonuses and benefits to attract top talent. Competitive compensation packages can help in retaining skilled accountants in a competitive job market. Firms can also explore promoting work-life balance and investing in professional development.

The current accountant shortage presents significant challenges to the investment management community. As outlined, there are a variety of initiatives that firms can implement to mitigate these challenges. Each firm faces unique issues, requiring a comprehensive understanding of its current state to prescribe the right blend of people, processes and technology. This proactive approach helps firms stay efficient and competitive, ensuring they can continue to meet investor expectations and regulatory requirements. Selecting the right strategic response is challenging and unique to each firm. Partnering with an independent, trusted consultant is highly recommended, as they can thoroughly analyze your firm’s current state and prescribe the appropriate strategic response.

SS&C Concierge can help the investment management community navigate through these complex challenges and develop strategies that leverage SS&C’s extensive range of services and solutions. Download our "SS&C Concierge: Consultants Who Deliver" brochure to learn more about how SS&C Concierge can address the operational challenges related to the accountant shortage.