IPA Profile: Richard Schenkel, Sobul Primes & Schenkel

IPA Profile: Richard Schenkel, Sobul Primes & Schenkel

Years in Business: 40

Main Office: Los Angeles

Staff Size: 40

What is the single biggest challenge facing your firm right now? The biggest challenge for as long as I can remember has been finding and keeping good people. That is the top concern, although we’ve had a miraculous period over the last couple of years – particularly this last year – where we’ve added some amazing people. At our size, we’re a little bit of the last man standing because we’re in the process of retiring some senior partners and we have a strong group of 30-somethings and 40-somethings who are really ready to take over the firm. There’s a plan for that. Unlike most of our similarly sized peers that we know about, we’re not merging into a big firm to ensure an exit plan for the old folks.

Where do you expect to be focusing most of your attention in the next two to three years? Besides the traditional issues that we have to focus on – keeping up with technology and professional standards – I think the big issue for us and everybody else is going to be dealing with the new normal. Out of 40 people, we have six or seven who don’t live anywhere close to our two Los Angeles-area offices. We just hired an amazing 10-year tax person out of one of the big national firms in Chicago. He wanted to find a firm that would happily accommodate remote work, so he started for us recently and he’s just phenomenal. We have a young 3-year accountant that we just hired in St. Augustine, Florida. And we have two people who worked for us here in Los Angeles who wanted to move to Austin, Texas, and work remotely, and we’re good with that. Even most of our people here don’t want to be in the office 100% of the time.

So we’re already seeing the preference for some remote work, and I think eventually it’s going to skew toward even more people looking for that. We generally think the younger people might want to come in and have the social interaction of the office, but at the same time I think a lot of people are taking advantage of the ability to work remotely and they’re moving farther away from the office. On the one hand, we consider ourselves very forward-thinking – we embrace change and try to figure out how to make it work for us. But the challenge is going to be to create a place where people feel that they are in fact one firm, where they know each other and have a good understanding of the culture and what we’re all about. That’s not so easy.

It will be interesting to see how it all plays out. A lot of firms are taking the old-school approach of really wanting people to come back into the office, but that remote 10-year person that I talked about maybe creates a Chicago presence for us. Maybe things grow and we catch a few breaks and we have the start of a Chicago office. That’s kind of exciting to me.

For decades, the profession has encouraged a move toward partners delivering advisory services beyond compliance. What has been your biggest success in this endeavor? We’re unusual in the big picture of public accounting because about half of our practice is work we refer to as business management, family office outsourcing and accounting outsourcing. We can take over the entire financial world of our individual clients in the entertainment industry and we become their office – we handle their books, we arrange for all of their bill-paying electronically, we oversee their investments, estate planning, insurance and much more. It’s a very comprehensive service, and not one that’s particularly easy to get into. We do that with entertainers, which is the traditional use of that service – think of a young actor who suddenly has a great deal of money but no financial experience and needs someone to help in that area. But we also have clients who have nothing to do with the entertainment industry – they have significant assets and they’re sophisticated, but they don’t have a lot of time, so we sell a service that creates time for them.

This type of work we do for clients both in the entertainment industry and those outside of it is essentially the same service, but the term “business management” has been used for decades within the entertainment industry, so that’s how we refer to it for the entertainers. When providing this service for those outside of the entertainment industry we refer to it as “family office outsourcing.” We also provide “accounting outsourcing” services to business clients, allowing them to outsource everything from bookkeeping through the CFO function to our firm, or just some of those areas if they want to keep some of it in-house.

These areas represent close to half of our practice. There’s some tax work there as well, but it’s more of a consulting function than a compliance role.

How has your role as a leader changed over the past five years? I’ve always been a delegator, but within the past five years I’ve really taken it to another level. I gave up direct involvement in the mechanical aspect of the compliance work because it wasn’t really the best use of my time, and we have very strong senior leadership below me that can handle it. That has freed me up to spend more time on the business of the business – running the firm, along with providing consulting services to clients.

The role has really become more complicated and time-consuming over the years. In the past two years, our top-line revenue went up 35%, we added a tremendous number of people, the business management department nearly doubled in size and we added a second office. A lot of change has taken place and managing all of that has been my focus.

What advice would you offer to someone entering the accounting profession today? It’s a great time to be in this profession, both in terms of the economics and the many different opportunities that exist today. We’ve had people come in as tax pros who have ended up in areas that have nothing to do with tax.

The challenge for those new to the profession is that this is a business based on relationships. How do you create and nurture those in an era where so much of the work and communication is done electronically? People don’t even get on the phone that much these days, let alone physically go to where the client is. Back in the dark ages when I came into the profession, it was exciting to go out and meet with clients and work through their issues. We’d go to lunch and you’d learn so much about the business and the people – everything really starts with that relationship. That’s how I would be able to build on a client and that’s where referrals would come from. Now people come in and they stare at a computer screen all day, so I try to explain to the younger people how important it is to still try and develop those relationships. Not everyone is comfortable doing that though.

How do you stay on top of the profession? A lot of it comes from being part of CPAmerica, and just reading a lot. But I’m also slightly obsessed with running the firm, so I am constantly engaging in conversations with friends who are partners at firms across the country on the issues of the day.

Where do you see the accounting profession in five years? How do you see it changing/developing and/or how would you like it to change? Every consultant and every article talks about how the compliance business is going to gradually fade away, so firms are going to have to figure out how to build a practice in a world where compliance is shrinking. I think that’s clearly the trend we’re going to continue to see, and the key is to embrace the changes that come along and look for ways to build revenue streams through other types of services.

But I think the biggest change circles back to the personnel issue – how we’re going to be staffed, where those people are going to be and how we’re going to make the most of that. I was in favor of remote work long before the pandemic – I was working mornings and Fridays at home for a long time in order to avoid some of the traffic in Los Angeles. The question is whether firms are going to embrace this shift or be afraid and try to resist it.

What is your proudest achievement? Overall, it’s what the firm has grown to become. We started small in 1981 and grew slowly, but within the last six or seven years we’ve really taken off. Our numbers wouldn’t seem like a big deal to some of the larger firms, but for us they’re significant.

More importantly, though, the goal for me has always been to have an accounting firm where we’re economically successful but we do it without having to kill ourselves with the crazy hours the profession has always been known for. When I look at the metrics associated with both profitability and the hours people are working, we tend to be among the top performers. We’ve been able to accomplish the goal of being successful financially, but not at the expense of our people’s happiness.

 

 

The IPA community wants to get to know you better! If you’d like to share your thoughts and insights in a future edition of the IPA Profile, let us know at mloehrke@plattgroupllc.com.