To niche or not to niche? That is the question. While you may have heard us espouse the value of specialty accounting, it turns out there’s still room for debate.
Hosts Caleb Newquist, Gusto’s Editor-at-Large, and Will Lopez, Gusto’s Head of the Accounting Community, dove into the debate between specializing and generalizing in a thought-provoking edition of On the Margins: LIVE. For the full discussion, check out the episode, which aired on February 2, 2021, and don’t forget to subscribe to our channel!
In Caleb and Will’s humorous segment “Adverse Opinions,” they laid out the case for being a generalist. Sometimes not choosing a specialty can be the better choice, depending on the types of clients you serve and how much flexibility you want in the industry.
Specializing vs. generalizing
First, let’s break down why specializing (also known as verticalizing) is appealing. If you’re a tax whiz and see there’s a high demand for tax prep, choosing a specialty in tax could be a wise choice. You might narrow that down even further by taking advantage of growth in specific industries. For example, CPAs who specialize in cannabis tax law are capitalizing on the rise of the cannabis industry.
On the other hand, maybe you’ll choose a tech platform to become an expert in. Whether you’re learning Quickbooks or Gusto’s Platform, developing expertise in a specific technology can help you serve clients in a number of ways. You might help them set up their systems, operate them in accordance with their goals and the context of their business, and be their go-to expert on it.
Finally, if you’re immersed in a specific industry, you might specialize in that industry in order to meet the needs of your community. For example, CPAs based in Los Angeles might choose to work for filmmakers, production crews, TV stations, or other entertainers. If there’s enough demand, this can be a most lucrative accounting specialty.
So what about all the other cases where people need your services? Does the average business owner or individual need someone with industry-specific knowledge or expertise in Quickbooks? Caleb argues that the majority of clients will need much more generalized advice. He used the analogy of a doctor:
“It’s the old generalist-versus-specialist debate, and doctors are used to illustrate the concept. The common one that you hear a lot is, ‘Well, if you need brain surgery, you don’t want to go to a general practitioner.’ That’s good advice, right? So if you need complex work done, you’ll want to go to someone who specializes in that complex work. But I guess the question then is, ‘But how often do you need brain surgery?’”– Caleb Newquist
Rare skills and rare knowledge have their place, but not for the average client. If being a specialist comes at the expense of having more well-rounded knowledge, it can actually cost you. You might have to refer your clients to another specialist (say, for their bookkeeping or auditing needs), or they may leave you altogether.
“I think the same kind of thinking can be applied to many, many businesses. Many of them just need this capable advisor to check them out on routine matters, answer their questions, [and] just give them solid general advice. In other words, this advisor doesn’t specialize in anything. [They] specialize in nothing.”– Caleb Newquist
Determining which route is best for you is really a matter of considering your clients or desired clients. Who do you serve or want to serve? Do you have a variety of clients with a variety of needs, or are most of the people coming to you from a specific industry or with a specific need? Can you boost revenue by providing a wider, broader spectrum of services?
The bottom line is that you don’t need to specialize to be successful in accounting. You can choose to be an expert or a generalist based on your needs and those of the clients you hope to serve.
Why accountants have been afraid to generalize
There’s been an ongoing trend of pushing CPAs to develop a highly specific domain of knowledge. Will and Caleb observed that some of this trend is a result of misguided industry imperatives.
One reason small firms are pushing specialization is that they’re emulating larger companies, which have separate tax, auditing, and consulting departments. Many firms view this hierarchical structure as an ideal to aspire to. Will argues that they do this at the expense of seeing what their clients actually need.
“I feel like what has happened is [that] a lot of accounting firms—small, mid[-sized], and large—look up to big brother and sister, the big four, and they look at the hierarchy that’s happening inside the big four, [which is] very complicated. … They try to emulate [those] … I feel like the industry has fallen prey to that hierarchy and [is] not really listening to the broad demands of the client base.”– Will Lopez
Will himself has always seen the value of being a generalist. He argues that it goes hand-in-hand with an entrepreneurial mentality because it offers flexibility and autonomy. By being a generalist, he’s not at the mercy of so many external forces. He can pivot more easily, either between clients, between services, or between firms.
“I’ve always touted myself as … an expert at being a generalist. … I felt like for the most part, that’s what the majority of business owners need.”– Will Lopez
He noted that, prior to choosing this approach, he did have a specialist job at a firm. An interaction he had with a client turned him off to this style of work.
“I used to be in the field doing audit work, and the CFO would come up to me, and he would say, ‘What’s the status of my tax return?’ And I would say, ‘I have no idea, I’m your auditor.’ He was just looking for general support [and] general feedback. … It [ended up with me] looking really weird by saying, ‘I’m your auditor.’ And he [was] like, ‘Well, you work at the same firm, don’t you?’ That was his literal response.”– Will Lopez
Most business owners expect the CPAs working for them to have a general awareness of all of their financial processes. They don’t want to go to different people to ask different questions about their business. They see it as a whole. You can risk pushing clients away by not having a global view of their business.
As a generalist, you might not be exceptional in every area, but you can be good at everything. Being a generalist is especially advantageous during lean economic times when clients you normally serve can no longer afford you, when your best business owners are going out of business, or when you simply hit a dry patch. In these cases, your flexibility will be your greatest asset.
“I think a lot of the profession … generally takes the specialist approach. They like to be very specific about their offerings. Only recently are we seeing a little bit of a broadening of the skillset and a huge push by the pandemic to broaden your skillset [to be] as wide as possible in order to respond [to the pandemic.] … The generalist mentality is almost like an entrepreneurial mentality. … [You’re] always wading the pool in either direction to see what clients need so you can speak into it.”– Will Lopez
At the end of the day, every CPA and firm is unique. No one can tell you whether you should opt for specialization or not. But it can pay to keep an open mind and make the best choice for your business.
Learn more about being a generalist
While specialization has been the industry standard for a while, it’s not for everyone. Much like a brain surgeon is in less demand than a family doctor, highly specialized CPAs may get less work than a generalist. Generalists appeal to a broader range of clients precisely because they can assist with so many different requests.
Most business owners and individuals don’t need an expert in one particular area and are looking for one person to help with financial advisory, tax prep, bookkeeping, and more. Being a generalist is more akin to being an entrepreneur in that you have more autonomy and the ability to pivot, which can help during lean times.
To learn more about how the industry is changing, check out our other article based on the same episode, “Settling the Generalist vs. Specialist Accountant Debate with CPA Matt Skinner.”
Becoming a Gusto Partner can make your life easier. Get payroll and HR support for your team and our new advisory revenue stream for your practice through our people advisory platform. As a Gusto partner, you’ll also get tools to help you expand your accounting practice and offer your clients new insights, plus a free payroll subscription for your own accounting firm. Sign up today!