As the accounting industry consolidates in New Jersey, there are going to be fewer firms — each one doing a whole lot more.
New client demands — and resources inherited from mergers & acquisitions — have prompted firms to start offering as services an entire alphabet of acronyms, including HR, IT, and ESG (that’s human resources, information technology and environmental, social & governance).
Joseph A. Damiano, CEO and managing partner of Sax LLP, said that, while there’s an awareness that accounting firms have gravitated toward more consultative services over time, firms are orienting themselves as one-stop shops more than might be fully appreciated.
“What’s really driving our firm and a lot of those in the industry is that we want to be the No. 1 adviser to a client,” he said. “Firms want to take more of a holistic approach as time goes on.”
Firms such as Sax have cybersecurity risk management, chief technology outsourcing and other services that are far enough afield from traditional accounting that it wouldn’t be a surprise for those in today’s industry to hear, “I didn’t know accounting firms did that.”
And Damiano expects to hear more of that in the future. Because, as it stands, the firm’s organic growth has put it at about a 70%-30% spread between traditional accounting tax, audit and compliance services and its advisory work, respectively.
“But, I’d actually expect that firms like ours might get to more of a 50-50 split at some point,” he said. “There’s always going to be 50+% that remains the legacy side of the firm. But the advisory half is going to continue to grow as we add more resources to the firm.”
The window accountants already had into a client’s business and financial life made the move into advisory services a logical one. Diane Wasser, partner-in-charge of New Jersey at Eisner Advisory Group and the firm’s managing partner of regions, said accountants are just building on that natural transition in unexpected ways.
“One of the things that comes to mind is our ability to counsel boards and family businesses from more of a psychological standpoint,” she said. “We have a center that works with boards to help them be the most effective they can be — in a way that really is not so accounting-related at all. We also have HR consulting; we take care of IT needs. There’s a lot of these consulting and outsourcing services that became really popular with the pandemic.”
Ted Carnevale, partner and co-leader of the New Jersey market at Grassi & Co., said the past few years brought more of a demand for navigating day-to-day changes for individuals and businesses.
That increased the need for advisory services in a range of different areas. And, he added, inflation and the potential of a recession over the next few years is keeping that demand at a high.
“Our business clients have been very successful for the past five years or so, with many even muscling through the pandemic’s changes,” he said. “After that period of flourishing, they’re looking at some pretty significant challenges today between supply chain issues, cost increases and other economic realities.”
Through their growth, Carnevale said firms are amassing experts in industry niches and offering targeted services in those niches as well. An example he gave was his firm’s expertise lending itself to monitoring services during the contracting phase of construction projects.
Neal Rotenberg, office managing partner in Saddle Brook for Marcum LLP, said the world has become more complex. And accounting firms have, too.
“Now, every client needs a specialist in their specific area, even for any simple audit,” he said. “What you could do before with a small team of (more generalized) professionals 30 years ago, when I started, you now need a team of topic specialists for. Otherwise, you’re doing your client a disservice.”