Preparing your tax practice for the future isn’t only a matter of updating technology and compliance protocols. It’s important to anticipate how the people involved with your firm will change as well.
Generation Z hasn’t made much of a footprint in the tax and accounting industry yet, but recruiting them in the coming years will be paramount. People born between 1997 and 2012 are projected to make up 30% of the U.S. workforce by 2030, according to a May 2022 story from Fortune. Firms that want to remain competitive in the future will have to welcome Gen Z employees—and clients.
So, let’s get better acquainted with the next generation of the tax and accounting industry. Here are some Gen Z characteristics and how your firm can appeal to them.
What defines Generation Z?
Technology
Gen Z is the first generation of “digital natives.” While many millennials witnessed the growth of the internet, personal computers, and mobile devices during their adolescent years, the majority of Gen Z grew up with digitization from day one. As a result, they’re savvy with modern technology and depend on it daily. On the flip side, they’re accustomed to the smooth user interfaces of modern apps and may struggle with software design that falls outside this gestural language (e.g., swipe left for no.).
Diversity
According to the Pew Research Center’s analysis of Census Bureau data, Gen Z is the most racially and ethnically diverse generation in the United States to date. Beneath the surface, diversity is not just statistical fact, but a value. Gen Z is more likely to value diversity in the workplace, including what Deloitte calls “cognitive diversity.” That is, a diversity of viewpoints—not just inalterable traits.
Education
Gen Z is on track to become the most highly educated generation yet. The Pew Research Center reports lower high school dropout rates and a 14% bump in college enrollment compared to Gen Xers.
On the other hand, Gen Z will have less workplace experience once they graduate. Since they’re more likely to be in school, employment rates for Gen Z teenagers and college-age adults are lower than previous generations. Entry-level workers may need more support adjusting to workplace norms.
Activism
Social issues like climate change and human rights are especially important to Gen Z. HubSpot’s 2022 U.S. Consumer Trends Report found that Gen Z is more willing to boycott companies and seek an ethical alternative. Their proclivity for online shopping makes it easier to research where they shop.
In Ernst & Young’s 2021 Gen Z Segmentation Study, two-thirds of Gen Z respondents also felt it was extremely important to work for an employer that shares their values.
Independence
Your firm probably won’t win over any Gen Z employees by associating work with family. Gen Z wants flexibility, respect for personal boundaries, and a clearly defined life outside of work, according to analysis by Business Insider. If these needs aren’t met, they’ll be more likely to seek employment elsewhere.
A report from ADP Research Institute also found that 71% of 18- to 24-year-olds working remotely would consider looking for a new job if they were asked to return to the office.
Financial woes
The pandemic had a harsher impact on Gen Z’s finances than any other generation, according to analysis by Boston Consulting Group. 75% of respondents in a 2022 Bank of America survey indicated they’re taking or considering steps to earn additional income.
The same study showed that Gen Zers feel equipped to handle day-to-day financial tasks like budgeting, paying bills, and building credit. However, they feel less confident in long-term goals like saving and investing.
How to attract and retain Gen Z tax professionals
Automate manual work
Many of your Gen Z hires will be fresh out of college. Unlike entry-level workers in past generations, they will not see manual work as a rite of passage, but as a technology gap. If you load their days with data entry, they will think, “Did I just spend five years and tens of thousands of dollars to key in numbers? Can’t a computer do this?”
The “digital native” generation is well aware that OCR and AI can cover data entry. Many modern smartphones even come with OCR built into the camera app. If your firm has not yet made the switch, it’s time. Here are a few options from different vendors→
Offer hybrid flexibility
Even in a post-lockdown environment, remote work has continued to gain traction. 2022 data from Ladders shows that 24% of all professional jobs in the U.S. and Canada are now hiring remotely.
Gen Z is the first generation to enter a workforce where remote and hybrid work are conventional. As a result, they have a fundamentally different perspective on “office work.” Hybrid options are not a temporary adaptation to Gen Z—they are part of the total benefit package they will evaluate when considering a position at your firm, alongside things like salary and benefits.
The trendline shows no signs of dipping. More and more qualified young tax professionals will seek remote and hybrid opportunities going forward. Firms that are unwilling to accommodate them will be limited to a smaller pool of candidates.
How to appeal to Gen Z taxpayers
Build a trusted brand
Not all Gen Z taxpayers have the spending power to seek accounting services just yet. However, their disillusionment with the stock market presents plenty of opportunities for future engagement.
Positioning yourself as an ethical, inclusive source of financial guidance may be a strong branding approach for Gen Z. Web and video content that provides sound saving and investment advice could spark the beginning of several long-term relationships.
Offer crypto guidance
Cryptocurrency and non-fungible tokens (NFTs) are extremely popular with Gen Z, but they’re also highly volatile and subject to evolving taxation guidelines. Advertising services for crypto tax guidance could be an effective way to attract a younger pool of taxpayers.
Embrace mobile taxpayer collaboration
Your firm’s taxpayer collaboration methods might not be compatible with Gen Z’s technology habits. Pew Research tells us what we already intuit: 96% of people ages 18-29 own a smartphone. But that’s only half the picture. According to a 2017 report by IBM, a whopping 75% of Gen Zers preferred smartphones as their primary device—almost twice the distant second, laptop computers.
Clients who already use their phones to shop, bank, and invest won’t want to manage their taxes through a desktop portal or paper organizer. To serve Gen Z, you’ll need an app.
What cloud-based collaboration platforms are available on the market? How do they compare?
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How to prepare your firm for the future
A significant number of longtime tax professionals are reaching retirement age. In order to fill their roles and bring in younger clients, your firm will need to adapt.
SurePrep solutions make that transformation possible with 1040 tax automation, remote work infrastructure, and mobile taxpayer collaboration. Equipping your firm for the future may be easier than you think. Download our e-book to learn more.