2 min read June 2022 — Accounting firms have been focused on bolstering their service offerings beyond audits and tax returns. David Stonesifer, managing partner at Herbein + Company, Inc., spoke with Invest: and shared his insights on his company’s nontraditional CPA services, strategies to hire in a tightened talent pool and the advantages of doing business in the Philadelphia area.
What have been some highlights over the past year?
We’re coming out of the pandemic and getting people back into the office. Our firm is still 100% hybrid, based on our team’s choice, and we were perfectly functional at home, but the collaboration and team camaraderie are not quite the same. I’m personally happy to see more people coming in. It’s healthier for team spirit and the vibe and culture of our firm by creating meaning and a sense of belonging. We’ve been thriving as a firm – growing like gangbusters. We’ve done four acquisitions in the past six months, including three CPA firms, and we’re starting to strategize and have more interaction between our offices. Even more exciting, we’ve added a nontraditional service offering by adding an HR consulting firm, which consists of about 25 people who do anything, soup to nuts, from a human resources standpoint that a potential client might need. Our strategy is to be a solutions provider for our clients – for problems that may be broader than just audit and tax.
What trends are you seeing regarding the expansion of nontraditional CPA services?
The bigger firms are taking this very seriously. A lot of traditional CPA firms are getting commoditized — only doing an audit or a tax return is a type of commodity product. We need to be a value-added partner for our clients. What we offer needs to be more than commodities and, frankly, things that may be automated, so you need to get ahead of these things. We want to serve more as a consultancy than just compliance and that’s certainly what the large CPA firms are doing. So in that regard, we’re no different from them. I would like to label most of my team members as consultants because you need to be broader than just spreadsheets and tax returns.
How competitive is the Philadelphia market for accounting firms?
We have a fair number of competitors out there, but one thing that positions us a bit better is that we’re one of the largest Pennsylvania-headquartered CPA firms. There are a lot of firms that have offices in the region but I think that plays to our advantage since you can get answers from decision-makers in our firm locally as opposed to running it through Dallas or Charlotte or elsewhere. It’s a strategic advantage for us as one of the more dominant firms in the region.
We’re always looking for new geographies to add talent we don’t have and, obviously, to add profitable ventures to our portfolio – what I call the “Herbein Universe.” There’s no geography that I wouldn’t consider. As a Pennsylvania-based mid-Atlantic firm, we have clients all over the country, just like large CPA firms. No geography is off the table.
What are the benefits of doing business in Philadelphia?
Pennsylvania is a great place to do business, with a talented labor market. There is a great network of schools here that you can draw on for labor in any industry, though I know the accounting industry better than other sectors. It’s competitive now but there is a great pipeline of people coming into the schools in this area. From a tax standpoint, it’s a low individual-income tax state, so Pennsylvania is a great place to live, with a lot of great cities that are drivable from any place in the state.
What are the main challenges in Philadelphia moving forward?
It’s labor, but that’s a national problem in having people who want to work. Land prices are also rough in this part of the country and finding good land to develop is expensive. We have a lot of real estate companies and it’s hard to get through the hoops of bureaucracy sometimes to develop land to bring in a factory or warehouse to employ people. We should be trying to encourage people to develop and put businesses in place to create jobs.
What strategies is the firm using to retain and hire workers?
We’re hiring at the college level, and today’s hires will be our managers seven years from now. I want to be at the market rate or better in my various geographies, so we’re paying close attention to that. We’re trying to do some creative things to respond to the flexibility our team members want. It’s a different challenge to manage but the flexibility is certainly there. It’s trying to be a little more strategic and transparent about their career paths, demonstrating the opportunity to be better accountants.
What is your near-term outlook for the company?
We will continue to pursue non-CPA-type service offerings including a wealth management division starting this summer, and we may add an IT company in that space in the next three to five years as well. And again, just a lot of non-CPA things are front and center for us to best serve our clients. There are a lot of different demographics in the CPA world and a lot of baby-boomer-led firms are getting to the age where it’s time to think about the next chapter. Maybe they don’t have the team depth, or they didn’t invest to be in a strong growth the type of position that we are. I’d be shocked if we don’t continue to have a strong appeal relative to acquisition opportunities. I don’t say that menacingly; it supplements and augments everybody when you find a good acquisition partner. We’re in full growth mode and in a good position as a firm. We’ve had tremendous growth over the last couple of years and I don’t see that stopping.
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