The warning stems from Prime's industry white paper titled The Power of Insight, issued in partnership with research house Bstar, which indicated that 69 per cent of accountants do not have a formal succession plan in place.
Commenting on the report, Grant Bloxham, Bstar CEO, said, “Succession planning has moved from a strategic concern to a high-need-to-act operational concern”.
The white paper noted that issues generally arise when partners do not proactively discuss future plans for the business, in the form of valuations or succession planning.
“While discussions of this nature may be uncomfortable, most people realise they are necessary and form a key consideration in the firm’s business and growth plan,” the report stated.
Mr Bloxham also noted the uncertainty among accountants regarding the proceeds of the sale of their firm and how it might impact their retirement funding, with the white paper identifying the sale of equity in a firm as the most common means of funding a retirement.
“Sixty-five per cent of accountants believe the proceeds from the sale of their practice or practice interest won’t be enough to fund their next business venture or desired retirement”, Mr Bloxham stated.
“Many baby boomer accountants don’t believe they can afford to retire."
The paper also highlighted a shift away, on the part of younger accountants, from wanting to become a partner.
“People aged 25-35 years of age don’t necessarily see their life as being an accountant at one firm for the next 30 years, and they don’t necessarily have the capital to buy in,” said Mr Bloxham.
“There are fewer practitioner buyers, so if you don’t get the culture, clarity, vision and alignment right for the next group of buyers, they may not come along for the ride with you when they don’t believe in the future you’re planning.”