Are you trying to make sense of the automation revolution and how it will affect your future?
Gusto is here to help you thrive now and in the future. We partnered with CPA Academy to talk about robo-advisor performance, the benefits of a robo advisor vs. a financial advisor, and the role that an AI tax advisor now has. The webinar “How to Survive (Career-Wise) as the Robots Take Over” featured accounting experts Greg Kyte and Caleb Newquist.
Greg Kyte is a comedian and CPE who made Accounting Today’s list of the Top 100 Most Influential People in the industry. He brings a fresh, funny, and insightful perspective on all things accounting. Caleb Newquist is the Editor-at-Large at Gusto and the founding editor of Going Concern, a leading accounting news publication featuring breaking news, developing stories, and industry insights in the field.
In this episode, Caleb and Greg discussed the effects of automation on tax prep work and investment advisory. They also discussed what you can do to bring more empathy into your accounting practices and offer advisory to your clients.
How is automation affecting tax prep work?
Greg and Caleb were hopeful about the ability for people to survive changes in the industry, but did share a few specializations that are particularly vulnerable, beginning with tax preparation. AI tax advisors are becoming increasingly prevalent for a number of reasons. First, machines can replace processes that don’t require a human touch, and this is especially true in areas where having speed and perfect accuracy are paramount. Simple tax preparation is straightforward and doesn’t require much context, yet making mistakes can be costly. AI tax prep is also incredibly easy to use, saving people time and money.
“I use Intuit Tax Online. … All I have to do is enter my client’s social security number and enter their employer’s EIN, and Intuit Tax Online will go out and see if that employer uploaded all the data and then they’ll take care of putting it all into the tax return appropriately.”
– Greg Kyte
Tax prep has an attribute that’s one of the most significant predictors of automation takeover. Processes that have a low risk are more likely to be replaced by machines. Tax prep isn’t necessarily the riskiest accounting procedure, as machines have access to significant amounts of historical data to base their calculations on. As a result, there’s a growing number of AI tax advisor services out there.
“Receipt Bank [allows] you [to take] a picture of a W2 and then upload it to the tax software and it automatically populates your tax return that way as well. So there’s tons of stuff like that that’s already happening.”
– Greg Kyte
It’s clear that tax prep will be one of the first jobs to go for CPAs. If you’re pursuing a future in tax prep, look at alternatives. If you’re currently doing this work, you’ve probably already gotten the message that your days with this specialization are numbered. The good news is that you have time to pivot. This can be an exciting time where you can reevaluate your goals, assess your best skills, and move in a new direction.
“[If you do] traditional tax prep work … you really need to be looking at [alternative] strategies because your job is going to be one of the next ones to go in our profession. … I think that’s undeniable. I would say that within the next one to five years, most tax prep work is going to be gone.”
– Greg Kyte
While tax prep positions are likely to disappear, other specializations will evolve.
How is automation affecting investment advisory?
The investment industry has already been swept up in the automation revolution. This is partially a result of the trends in which investment styles are most desirable. The difference between passive investment vs. active investing is that passive investment is a hands-off approach. It’s a long-term strategy that involves less trading and therefore needs less risk assessment and complex analysis. As a result, automation can replace many advisors in simple cases. Since robo advisor performance tends to be consistently high, people are putting their trust in them.
Does this mean that robo advisors can take the place of all skilled, experienced investment advisors? Robo advisor returns are unlikely to match that of a professional when it comes to complex scenarios. When you consider that machines are best at quantitative analysis but people are better at critical thinking, considering context, and problem-solving, we’re likely to see a combination of automation and people-powered investment advisors.
There are multiple factors at play. On the one hand, machines are poised to replace people in areas where there is little risk. The everyday investor doesn’t have the high stakes of someone dealing with more capital. In addition to this, investment advisors can be bad at their jobs. It’s likely that the most experienced advisors will be placed with low-risk vs. high-risk accounts. Greg shared his experience with investors at one firm:
“I had a bunch in a couple of years, and they sucked. They gave me the crappiest investments. And finally, my last advisor was like, ‘Really, you should just do this yourself. Use our tools to research the stuff you want to do and do it yourself because we’re obviously failing you.’ And so I just went onto their online portal, and I’d use their robots to do my research for me.”
– Greg Kyte
Greg needed someone to gauge his needs and his wants before he was able to research using automated advisors. He needed to identify and clarify a problem before he turned to the machines. In other words, he needed a human advisor to help him identify the best way to use automation.
This provides a great opportunity for advisors to partner with machines to provide services to their clients. Greg explained that, in times past, investors would meet with a client and then meet with a team of other skilled investment professionals to determine the best course of action. Now, an advisor can talk about high-level things with their clients, then determine which robots can do the quantitative analysis for them.
“It goes back to goal identification. The thing that a human needs to do is talk with the other human and say ‘What are you really trying to do? Are you trying to retire early? Are you trying to not be as stressed out about your investments? What are you trying to do?’ And then you can use the research and the robots that are out there. [You can use] some of those automated tools that are in the financial analysis world and go, ‘Okay, robots, we’re trying to get here with this guy, help me help him get where he’s trying to go.’”
– Greg Kyte
How can accountants use empathy in their services?
Apart from high-level thinking, people have an irreplaceable value that machines don’t. People crave connection, relationship building, and empathy. People want to do business with people.
At the same time, soft skills such as these haven’t always been given high priority among accountants. The profession draws thoughtful, well-meaning people, yet its focus on data and analysis naturally also draws those who are more comfortable with numbers and easily defined objectives. Hard skills are easy to measure, while soft skills are subjective, and that doesn’t always appeal to logical financial professionals.
“Our profession discounts the human side of what we do. We have a client come in, and we go, ‘Why’d you come here?’ They say ‘tax return,’ and you go, ‘Boom, we can do your tax return’. … What we need to start [doing] is [saying] ‘Okay, you need a tax return, [and] there are other ways you can get a tax return. [So] why did you come here, and how are you feeling?’ … Robots are never going to care … not for the foreseeable future. They’re not going to be able to take into account how you’re feeling and do that empathy side of things.”
– Greg Kyte
By not focusing on the human connection with clients, accountants may miss what’s going on behind a client’s concerns. Yet it’s what’s behind their concerns may be what’s most important. By learning to identify people’s motives, accountants can start to take on the role of advisor.
“Take the time to listen to [your clients] and figure out what they’re scared of. … Everybody comes to us because they’re scared. They don’t know what the hell they’re doing. They need a professional to help them know what the hell they’re doing. So the better we communicate and the better we listen to them, the better we’re going to serve them.”
– Greg Kyte
The great thing about developing communication, empathy, and relationship-building skills is that you can benefit from them in areas of your life. Not only are you taking a step up in your career, but you’re gaining a more holistic view of what it means to take on the role of an advisor. This is a change people should embrace.
Learn more about automation in accounting
Automation and AI are changing the accounting industry at a significant rate. While it can be scary, it’s also a great growth opportunity if you have the right mindset. Accountants have the best chance to navigate changes by focusing on the human skills they have to offer. By starting to take on the role of an advisor, they can provide a value that machines can’t. However, some specializations are on track to dissolve completely. Tax prep is likely to disappear within a few years, and investment advisors are already adapting how they provide their services.
Gusto’s mission is to create a world that empowers a better life. It’s our pleasure to empower you with the information, tools, and strategies you need to succeed. For more on accounting automation, check out our other two articles based on the same webinar: “Is Automation Taking Over the Accounting Profession?” and “How to Prevent a Robot from Taking Your Accounting Job.”
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