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The graying of America: an older population will mean changes in clients, employees, physical facilities and services.

America's aging population is a reality that could have a major impact on the way CPA firms do business. There are now more than 30 million Americans over 65 (over 12% of the population). Every decade this group increases by close to 6 million people. "In the last two decades, the over-65 age group has grown more than twice as fast as the rest of the population," according to Age Wave, by Ken Dychtwald and Joe Flower. And, the authors add, with "continuing improvements in life style and medical technology, the over-65 population in 2000 is likely to be close to 40 or 45 million, representing as much as one-fifth of the total population."

At the same time, one-third of all Americans, the baby boomers, were born between 1946 and 1964. This large segment of the population now approaching its middle years guarantees issues of importance to older people will command attention well into the next century. This article discusses this social inevitability and the challenges and opportunities it offers to CPA firms. EFFECTS ON PRACTICE

The services practitioners offer must be adapted to the needs and desires of older and aging clients. Here are some of the issues that will take on greater importance as their numbers increase.

Estate planning. Already an important practice area, estate planning will become more significant for CPAS. Longer lives and increased wealth will lead to larger estates, more time spent in retirement, more needs to address and greater opportunities to do effective planning. CPAs also will be able to offer related professional services to older clients. For example, while discussing the preservation of capital the accountant could talk to the client about creating a living will. This might lead to recommendations on issues such as guardianship and powers of attorney - Succession planning. Transferring a closely held business to the next generation involves much more than "passing the baton" to a specific family member. The process can be fraught with uncertainty and emotional responses.

As current and prospective clients near retirement or seek ways to stay involved while providing more authority and responsibility to the next generation, they will look for assistance in their succession planning. When they do, they are likely to turn to a trusted ally or reputable source for help with it.

Some CPA firms already have put together succession planning teams and, if successor cannot be found, look for potential buyers. Succession planning requires a variety of technical and human skills. The CPA firm that carries out this difficult task effectively and professionally will satisfy current clients and cultivate contacts with prospective ones. This area will provide rewarding opportunities and rigorous challenges to practitioners.

Educational-environmental planning. The education of firm personnel and the environment of the firm facility may have to be altered in response to an aging clientele. For example, training programs may include sessions that focus on being sensitive to the disabled. Offices and other work areas may have to become more accessible and functional for older clients.

People who use wheelchairs, have hearing impairments or are otherwise disabled are much more mobile now as a result of recent legislation, technology and assertive attitudes. The CPA firm that recognizes and responds to the needs of such people is likely to keep or capture a client.

Strategic planning consulting. As CPAs help clients assess the future, an understanding of the aging population could create some interesting engagements. Thus, the CPA might discuss and report on the challenges and opportunities presented to a client by the aging of its employees, management and customer or client base. For example:

* A restaurant may want to reconsider not only its menu, but also its lighting and overall ambience.

* A warehouse operation could become more mechanized.

* A retailer might examine its aisle width, merchandise, services and packaging.

* A not-for-profit organization could consider a special campaign designed to promote a greater level of planned giving by current and potential donors. * Retail and wholesale grocery operations could consider the dietary needs of an older population.

Of course, specific industries can look to increased growth as the population ages. CPA firms working with healthcare organizations, leisure time companies and those in education and recreation will find themselves able to offer an array of services to these and other growth industries. The lifecare industry, which combines retirement living with 24-hour healthcare, is an emerging area that could see explosive growth in the future. "In 1979 there were only 100 lifecare centers in America; by 1988 there were more than 800," according to Age Wave. "Across the country, more lifecare residences report high occupancy and long waiting lists. Developers such as Marriott Corporation ... are scrambling to build fast enough to meet growing marketplace needs."

Otherplanning. There are numerous opportunities for CPAs to expand on services already being offered; other activities are entirely new endeavors. Included are

* Family financial planning. This area should continue to grow in stature and importance. Complexity will increase as the definition of "family" changes. * House calls. Going to the client's place of business is common practice. CPAs may find themselves discussing personal matters at not only the client's office but also more and more at his or her home or at an extended care center if physical problems hinder or prevent client travel.

* Medicare and other health benefit claims. CPAs are good with detail. Complex claim forms that mystify a client might be handled ably by a CPA or a paraprofessional on staff.

Creative responses to the needs of an aging population can be very rewarding, based on the relatively high discretionary income of people over 65 and their seasoned consumer approach to quality and service. A recent survey showed that those over 50 are willing to pay more for better quality products and services. CPAs could target these people with a marketing program that urges them to drop their "do-it-yourself' approach to some accounting functions and hire a professional.


CPA firm clients and their needs will change with the aging population, but that's not the only challenge firms face. The profession also must adapt to the pressures and examine the possibilities presented by an aging population. Clearly the way practices are managed will be affected.

Retirement. Accounting is a people-intensive business. With fewer people graduating from college and a growing number of older people willing and able to work well beyond current retirement ages, it is time to reexamine the mandatory retirement policies found at many public accounting firms. It's true that lowering the mandatory or optional early retirement age for partners does create openings at this level, which helps to retain the best young accountants and allows partners to pursue other career interests. However, the need for the irreplaceable experience of senior partners may mean at least some of them will be asked to remain past normal retirement age. This will happen more often at firms that recognize that mandatory retirement disposes of invaluable human skills. A number of public accounting firms now offer nonequity partner alternatives for desirable specialists past the mandatory retirement age.

Physical facilities. As mentioned above, physical facilities should not be a barrier to older people's participation and productivity. The effect of the aging population will be seen in many areas of workplace design, such as lighting, door handle design, furniture and building accessibility.

Training and development. Firm training courses already reflect a different set of business and personal needs. Microcomputer training for senior level people as well as new hires is one example. Changing or refreshing skills may have to be emphasized as an experienced partner shifts back to direct client responsibility and drops administrative duties. Some movement of professional or staff people to new functions within the organization also may occur. A career tax professional might move into a completely new area or become part of a succession planning team.

Reentry is another possibility that will call for specialized training. People maY turn to accounting as a second or third career. Moving in and out of different careers may become more common as life expectancy and general health increase and the college age population decreases. organizational policies. The profession already has begun to adapt flextime, job sharing and other responses to employee needs. These policies enable many professionals to continue their careers while tending to other demands. Studies of older people show most would prefer to continue working at challenging but perhaps less demanding jobs. Thus, they may use existing alternative work schedules or new ones created for them.

Other policy changes could include job shifts, mentoring modules, lending employees to not-for-profit organizations and planned sabbaticals. It is especially important these activities be supported and affirmed within the profession. For example, the somewhat negative connotation of a "part-time professional" could be avoided through the use of "professional, available part-time." Mentoring activities would be built into the job responsibility. Educational, personal and community involvement sabbaticals have been part of the corporate structure. Isn't it time the profession offered this opportunity to its greatest asset, the human resource?

Insurance and other benefits. Healthcare and life insurance packages will have to be reevaluated in light of a work force that is growing older and desiring to work longer. Plans that provide for nursing care, extended care facilities and other benefits will be costly embellishments that must be examined and evaluated. The costs of these programs, coupled with retirement pay for partners and employees as well as higher starting and continued salaries will create a tremendous cost burden for the fewer who are working. This burden will mean higher fees, efforts to find less expensive labor (such as paraprofessionals) and even more competitive pressures. Efficiencies of scale factors will favor larger firms and may mean more mergers of smaller firms into large ones to pool resources and handle retirement payments as well as the cost of liability insurance.

Innovative approaches. As employees near retirement, the accounting profession can borrow an idea from corporations that provide "retirement rehearsals." Basically, the employee is allowed to ease slowly into retirement. Polaroid Co. permits employees to reduce their number of hours per day or days per week. Varian Associates lets employees nearing retirement work a four-day week for one year and three days for another year before leaving.

At the same time, there will be people looking to return to the profession. A retired employee can be extremely useful during peak periods. And somebody returning to the profession after trying other endeavors is likely to be a strong advocate for the firm and the profession.

Deployment issues already have caused firms to look for ways to balance work load and available personnel. Concepts such as "area" offices should increase effectiveness and will be driven as much by economic considerations as by the availability of personnel. Both voluntary and firm-requested transfers are on the increase, balancing talent, experience and need. Computer networks, already important systems, could grow as those who want to do all or a majority of their work at home begin to advocate this option.

Other issues will continue to become more important as the firms and society as a whole react to the new demographics. Employment-at-will is sure to see more legislative controls, affirmative action laws will redefine the meaning of "minority" and employment contracts will protect firms as much as employees.


People and personal relationships are a vital part of the accounting profession. The blending of the energy and ambition of youth with the vision and seasoned experience of age provides CPAs with a challenge and an opportunity. The profession can provide a worthwhile contribution to society by responding positively and productively to the aging of America. n EXECUTIVE SUMMARY

* THE AVERAGE AMERICAN is growing older and CPA firms will be among those that feel the effects of this phenomenon, which will include changes in clients, employees, physical facilities and services.

* PROFESSIONAL SERVICES and issues that will take on increased importance include estate planning, succession planning and strategic planning consulting for businesses that must adapt to the needs of older people.

* NEW SERVICES and traditional ones with a different emphasis will be carried out in offices designed to facilitate client mobility and professional productivity. Services may be offered in a variety of places, including the client's home or the professional's home office.

* FIRMS MAY HAVE to reevaluate how they create and fund increasingly costly employee retirement and healthcare plans. Mandatory retirement policies may end or be replaced by flextime programs for older professionals. Firm members may change specialties, while others may enter the profession after another career.
COPYRIGHT 1991 American Institute of CPA's
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Copyright 1991, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Author:Egan, Michael (American bishop)
Publication:Journal of Accountancy
Date:Feb 1, 1991
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