A single accounting blunder can have far-reaching consequences. 

Take the recent example of Lyft Inc.’s market-roiling typo, which caused chaos during earnings season. In what seemed like an unfortunate domino effect, several other companies faced the same fate, forcing them to make drastic corrections to their quarterly earnings statements.

A common culprit in these cautionary tales is a shortage of certified public accountants (CPAs), causing headaches for financial services businesses worldwide.

Bloomberg gives us the lowdown on this pressing issue. 

Their research shows that despite being the second-most posted job opening on student placement site Handshake, the share of accounting majors on the platform has only slightly increased — which experts believe won’t be enough to plug the gaping hole in the talent pipeline.

The Numbers Speak for Themselves

• The number of accountants has dropped by 340,000.
• More than 720 companies cited a lack of staffing as a factor in accounting errors, a 30% increase from 2019. 
• In 2023, the median salary for full-time entry-level accountants was roughly $62,500 — a considerable jump from about $50,000 in 2020.

Some experts argue that dropping the 150-hour requirement for becoming a Certified Public Accountant could be a solution, especially since research has shown that the requirement doesn’t necessarily lead to better accountants. Additionally, Handshake data reveals that by emphasizing the positive social impact, accountants can attract an average of 80% more applications.

While these may help, there is no quick-fix solution to the problem. It’s a systemic issue created by a perfect storm of industry challenges: high retirement rates, increasing demand, and a low uptake of enrollees and graduates due to soaring tuition costs.

Indeed, the talent crunch extends its impact across diverse sectors within the financial industry, presenting substantial hurdles for companies in their quest for skilled professionals. Decision-makers across these seven sectors are particularly concerned about the implications on talent acquisition, workforce development, and overall business sustainability.

Navigating the Talent Crunch: 7 Sectors in need of Financial Services Talent

A recent Korn Ferry report revealed that the financial and business services sectors are expected to face the largest workforce shortage by 2030, amounting to 10.7 million workers. 

Finance businesses are feeling the heat, with 65% of institutions anticipating a shortage of essential workers in the next two years. 

It’s a complex and nuanced issue that affects every finance sector differently. Let’s examine it closer.

Asset and Wealth Management (AWM)

The increasing competition for top talent is one of the primary challenges in the asset and wealth management sector.

As the industry becomes more cutthroat, AWM firms find it challenging to attract and retain skilled professionals, from portfolio managers to financial advisors and investment analysts.

There is also a growing demand for specialized expertise in sustainable investing, alternative investments, and wealth planning. To stay ahead of the curve, AWM firms must invest in talent development programs, offer competitive compensation packages, and create a more supportive work environment to attract more talent. 

Banking

The job market in the banking industry is getting tighter, with as much as 61% of senior execs citing retention as their top talent concern. 

Heidrick & Struggles recently reported that nearly 75% of people left their previous jobs to start a new company, showing how talent is willing to take risks in emerging markets like cryptocurrencies. 

With the rise of FinTech, banks are facing competition from other industries and within their own ranks. Traditional job models now seem too rigid to a new generation of professionals, especially with changing work preferences. 

Younger talent are now questioning whether working long hours for low pay is worth it, especially with increased regulation and reduced profits, leading them to explore other career options.

As the talent war intensifies, U.S. banks are pulling out all the stops to retain their best employees — from high wages and flexible work arrangements to speeding up digital transformation efforts.

Insurance

The U.S. is undergoing a significant demographic shift, with the 65-and-older population projected to nearly double over the next 30 years or 88 million by 2050. This trend reshapes workforces across all industries, but the insurance sector is particularly affected.

The U.S. Bureau of Labor Statistics estimates that nearly 400,000 employees will retire from the insurance workforce in the coming years, leaving a significant talent gap. One major challenge exacerbating this issue is the younger generation’s lack of interest in insurance careers. 

Surveys have found that eight out of 10 millennials have limited knowledge of the employment opportunities within the insurance industry. Many millennials are delaying milestones like homeownership and car purchases, which are typically associated with the need for insurance coverage. 

That lack of experience with insurance products means that younger generations may not fully grasp the insurance industry’s evolving landscape, which is increasingly adopting advanced technology and social media strategies.

As the insurance industry grapples with these challenges, it faces talent shortages in specialized areas such as actuarial science, underwriting, and claims management. With the retirement of experienced professionals, there is a growing need to attract younger talent with the necessary skills and expertise.

Payment Services Providers

Payment services providers, including processors, fintech companies, and digital wallet providers, suffer. With the rise of mobile payments, e-commerce, and digital wallets, there is a growing demand for professionals with expertise in cybersecurity, data privacy, and digital payments technology.

Payment service providers must also navigate regulatory complexities, compliance requirements, and risk management challenges. This requires skilled professionals to ensure regulatory compliance while driving innovation and growth in the payments industry.

Real Estate

The real estate industry has been experiencing a talent shortage for several years. The next generation of workers has different expectations and demands from their employers, and if the industry fails to adjust, the shortage will persist. 

Younger generations no longer find careers in real estate as appealing as they once did. The industry needs to acknowledge this shift and adapt accordingly. This includes providing clear career paths, flexible working hours, embracing technology, and offering competitive salaries.

Companies must position a career in real estate as an attractive proposition by highlighting opportunities for above-average earnings and work flexibility. Industry leaders and companies must invest in ensuring their brand is appealing to potential employees and then deliver on their promises.

Credit Unions

The primary factor fueling talent shortages in the credit union sector is their limited resources.

Smaller credit unions, particularly those with less than $50 million in assets, struggle even more with talent acquisition and retention. Due to a lack of funding, these firms may find it challenging to offer competitive salary packages compared to larger financial institutions like banks.

Additionally, credit unions often require specific skills and expertise in areas such as financial services, customer service, and compliance. Finding qualified people with the right combination of skills and experience can be difficult, especially in niche markets where talent may be scarce.

Despite these challenges, credit unions are experiencing membership growth. However, this growth can backfire and strain resources and staffing, exacerbating the talent gap.

Moreover, the finance sector, including credit unions, is among the sectors most targeted by data breaches and cyber-attacks. This heightened risk deters potential employees from considering roles within credit unions, especially if they perceive that the institution may not have robust cybersecurity measures.

FinTech Startups

FinTech is at the forefront of innovation, reshaping the financial landscape with cutting-edge technology and disruptive solutions. However, despite the promising opportunities, FinTech startups face unique talent challenges that require strategic solutions to navigate effectively.

Companies have been pressured to rethink overhiring, improve efficiency, reduce costs, and increase automation. These factors have contributed to layoffs within the tech industry, creating additional talent acquisition and retention challenges.

In a Deloitte survey of technology industry leaders, workforce issues emerged as a top challenge and opportunity. Recruiting and retaining talent were identified as significant challenges, with nearly 90% of leaders expressing concern. Meeting workers’ broader needs, addressing shifting preferences, and helping the younger demographic thrive in an evolving workplace were also identified as significant challenges.

Top Solutions to Address Talent Shortages in the Finance Industry

With the finance industry facing a crippling talent shortage, many organizations are now exploring various solutions aimed at reinvigorating their workforce and ensuring they have the right talent to meet their needs.

Upskilling and Retraining

One of the most effective ways to address talent shortages is by investing in retraining and upskilling existing employees. 

Upskilling is becoming a crucial strategy in addressing skills shortages in the finance sector. This means providing training programs and development opportunities to expand employees’ abilities and minimize skill gaps. 

Meanwhile, retraining refers to updating existing skills to meet the changing demands of the job market or to transition into a different career or role. It typically involves formal education, on-the-job training, or skill development programs designed to equip individuals with the knowledge and abilities required for new or evolving job roles.

Continuous learning is at the core of workplace trends, ensuring employees stay abreast of evolving industry trends and technologies. Through upskilling and retraining, workers can continuously expand their knowledge and skill sets, enhancing their current role performance and positioning themselves for career advancement.

As technology continues to evolve, creating new opportunities and job positions within the finance sector, it becomes increasingly essential for companies to fill these roles with candidates possessing relevant, specialized skills. Upskilling enables organizations to close the digital talent gap by providing employees with the skills to fill these open positions. 

Strengthening Education Pipeline

Strengthening the education pipeline is another strategic solution to address labor shortages. The collaboration between businesses and educational institutions plays a crucial role in achieving this alignment.

One key aspect of this approach is the development of customized training programs. Through business partnerships, academic institutions can design programs that directly address the skill gaps in specific industries. 

For instance, the collaboration between the Lake Area Technical Institute (LATI) and local businesses in South Dakota demonstrates how tailored programs can equip students with the skills needed for high-demand jobs. By offering courses aligned with industry requirements, such as electronics, welding, and robotics, LATI ensures its graduates are well-prepared to meet employers’ needs.

Furthermore, businesses that engage with educational institutions invest in the future talent pool. By providing funding, resources, and expertise, companies support the development of a skilled workforce that meets industry needs. Initiatives like Google’s support for Khan Academy and AT&T’s funding for Georgia Tech’s analytics program demonstrate how businesses can significantly prepare students for future employment opportunities.

Establishing long-term partnerships between companies and educational institutions is essential for sustaining support for workforce development. These partnerships enable ongoing collaboration on curriculum development, internships, equipment provision, and mentoring programs. 

Restructuring Workforce Composition

Restructuring workforce composition by balancing permanent and contingent staff can enhance organizational agility, access specialized skills, and optimize costs.

One key advantage of restructuring the workforce is flexibility. By incorporating contingent workers, such as contractors, freelancers, or temporary staff, companies can quickly adapt to changing business needs without the long-term commitment associated with permanent hires. 

Contingent workers can be brought in to fill short-term skill gaps or handle temporary increases in workload, providing companies with the flexibility needed to respond to fluctuations in demand.

Additionally, contingent staff can be more cost-effective for companies, particularly for short-term projects or seasonal work. By avoiding the benefits, training, and other overhead expenses typically associated with permanent employees, companies can save significantly while still accessing the necessary skills.

Outsourcing Financial Services

Accounting outsourcing services have emerged as a strategic solution for finance companies grappling with talent shortages. 

One key benefit is access to specialized expertise. Finance companies can tap into a vast pool of talent in areas such as accounting, payroll processing, and data analysis, allowing them to obtain high-quality services without the need to invest in in-house training or recruitment.

Outsourced accounting services also drive down costs for finance companies. For instance, recruiting and retaining top talent can be expensive, especially in talent shortages. By outsourcing non-core activities, companies can reduce overhead costs associated with hiring, training, and retaining employees. 

As a bonus perk, working with providers frees up internal resources and allows companies to concentrate on strategic initiatives, innovation, and client satisfaction. This shift in focus can drive business growth and profitability.

Outsourcing offers scalability and flexibility, which are crucial for companies facing fluctuating demand. BPO providers can adjust their services according to the company’s needs, whether it involves scaling up during peak seasons or downsizing during lean periods. 

Furthermore, finance and accounting outsourcing services help mitigate risks associated with talent shortages. Companies experiencing talent shortages commonly face increased workloads on existing employees, reduced productivity, and compliance issues. 

World-Class Accounting Talent: The Philippines as a Top Offshoring Destination

The United States is facing a shortage of accountants, with the average growth of accounting firms in 2020 being just 5.7%, the slowest in eight years.

This talent gap is mainly attributed to a pipeline problem, as evidenced by low numbers of candidates taking the CPA exam, indicating insufficient new talent to meet demand. Additionally, a significant portion of the American Institute of Certified Public Accountants (AICPA) membership, accounting for 47%, comprises baby boomers retiring in large numbers.

Many U.S. firms are outsourcing accounting and bookkeeping services to address this local shortage of accountants. The Philippines has emerged as the top destination for finance outsourcing, boasting a literacy rate of 91.6% and high English proficiency (ranking 18th out of 112 countries on the E.F. English Proficiency Index). 

The Southeast nation also has a deep talent pool of more than 188,000 CPAs from reputable universities. The passing rate for the rigorous licensure exam stands at 22.29%, a testament to the high standards upheld by Filipino CPAs.

The Philippines’ accounting industry is well-established, with the Philippine Institute of Certified Public Accountants (PICPA), founded in 1929, being one of the oldest accountancy institutions in Asia. Furthermore, its accounting standards align with those of Western countries as it adheres to the International Financial Reporting Standards issued by the International Accounting Standards Board (IASB).

In addition to their strong technical skills, Filipinos are also known for their high standards of customer service and work ethics, which have contributed to the rapid growth of the country’s outsourcing sector.

Exploring Outsourced Financial Services: Key Roles to Consider

Outsourcing accounting services has become increasingly prevalent among companies looking to streamline operations, reduce costs, and access specialized expertise. With the help of outsourced accountants, businesses strategically manage financial tasks while focusing on core operations. 

Here’s a quick rundown of crucial accounting roles you can outsource to enhance your business efficiency.

Accounting Services

Outsourced accounting services encompass various tasks, including financial reporting, budgeting, and general ledger maintenance. It enhances efficiency and productivity. Expert accountants from BPOs are equipped with the latest tools and technologies, enabling them to streamline processes and complete tasks more efficiently. With their expertise and resources, they can often perform accounting functions faster and more accurately than an in-house team.

Bookkeeping

Bookkeeping involves recording financial transactions, reconciling accounts, and producing financial statements. Outsourcing these tasks allows businesses to maintain organized and accurate financial records without needing an in-house team.

One significant advantage is access to specialized expertise. Outsourced bookkeepers are trained professionals who deeply understand accounting principles and practices. They can efficiently manage day-to-day bookkeeping activities, ensuring all transactions are correctly recorded and categorized.

Payroll Specialists

Payroll processing is a critical function for businesses, ensuring timely and accurate employee payments while maintaining compliance with tax regulations. However, managing payroll in-house can be complex and time-consuming. Outsourcing solves these challenges, allowing businesses to streamline operations and focus on their core activities.

Payroll professionals from BPOs are trained professionals who specialize in handling payroll processing, tax filings, and employee benefits administration. By entrusting these tasks to external providers, businesses can ensure that their payroll processes are efficient, accurate, and compliant with regulatory requirements.

Billing Specialists 

Outsourcing billing services can effectively manage overdue payments. 

Specialists from BPO follow up with customers who have outstanding invoices, reminding them of payment due dates and facilitating the resolution of billing disputes. They also handle customer inquiries about billing issues, providing timely and accurate responses. This reduces the burden on internal staff and ensures customer inquiries are promptly addressed, enhancing customer satisfaction.

Additionally, outsourcing provides businesses with flexibility and scalability. As billing needs change, companies can easily adjust the level of the service supplied by outsourced specialists. Whether scaling up during busy periods or adapting to changes in billing requirements, outsourcing offers the flexibility to meet evolving business needs.

Tax Specialists 

Partnering with BPOs is a strategic move that can help businesses maximize tax efficiency, minimize liabilities, and ensure compliance with tax laws. By leveraging the expertise of outsourced tax specialists, companies can focus on their core activities and achieve their financial goals. 

Outsourced tax specialists provide expertise in tax planning, preparation, and compliance. They stay updated on tax regulations and help businesses minimize tax liabilities while ensuring compliance with tax laws.

Collections Specialists 

Outsourced collections specialists assist in recovering outstanding debts and improving cash flow. They communicate with customers to negotiate payment arrangements and resolve billing disputes, helping businesses maintain healthy accounts receivable balances.

Working with them can also significantly improve businesses’ cash flow. They diligently recover overdue payments promptly, allowing businesses to reinvest the recovered funds into their operations or allocate them to other areas of need. 

Additionally, outsourced collections specialists help businesses maintain healthy accounts receivable balances by implementing proactive collections strategies. They conduct regular follow-ups with customers, identify payment patterns, and implement payment plans or arrangements as needed to prevent further delinquency. This helps businesses minimize the risk of bad debt write-offs and maintain a positive cash flow cycle.

Financial Analysts 

Outsourced financial analysts are skilled professionals who specialize in analyzing financial data to support strategic decision-making. They provide valuable insights into a company’s financial health, helping businesses identify opportunities for growth and cost savings.

This can significantly enhance decision-making processes. Financial analysts provide unbiased and objective financial performance assessments, helping businesses identify areas of strength and weakness. Their insights enable companies to capitalize on opportunities, mitigate risks, and optimize financial strategies to achieve their goals.

Financial Data Experts

Outsourced financial data experts handle data management, analysis, and reporting tasks. They ensure the accuracy and integrity of economic data, facilitating informed decision-making and compliance with reporting requirements.

Future-Proof Your Financial Services With SuperStaff Accountants

Accounting is the backbone of any successful business. It provides insights into earnings and financial health, guiding strategic decisions. However, not all companies have the in-house resources or expertise to manage accounting.

SuperStaff offers a solution by combining cutting-edge bookkeeping software with industry expertise to deliver cost-effective financial and tax solutions tailored to your business needs. In addition to traditional accounting services, our dedicated team of CPAs brings top-tier customer service skills to the table, helping to boost revenues and drive business growth.