TurboTax Losing Customers Over Price, Thomson Reuters Builds Own AI

0:03Blake Oliver: I want dumb AI, like AI that only knows accounting, right? I don't want it to know the history of the world and every possible thing because the odds of it hallucinating or trying to outsmart itself are just way higher. But if it only knows this tax law and case law and tax code, it's likely to hallucinate less. Coming to you weekly from the OnPay Recording Studio.

0:29David Leary: Hello, everyone, and welcome back to the Accounting Podcast, your weekly roundup of news in the profession. I'm Blake Oliver. And I'm David Leary. And David, today we are welcoming Hector Garcia to the show as our co-host to talk about the Intuit earnings call. TurboTax looks like it's in trouble. They're losing customers to cheaper alternatives. And the market did not like that. Wall Street did not like that. We're going to dig into it with him. We've also got a story here about Thomson Reuters building its own AI model from its own proprietary data. Really interesting implications from that for Thomson Reuters and the future of tax.

1:14David Leary: We've also got an interview with Britton Ratcliffe, the youngest person to ever sit on a board of accountancy. He's on the New Mexico board of accountancy, and he got there as a teenager, and he's still in school. We're going to talk with him toward the end of the show. And first, let's thank our sponsors.

1:35Blake Oliver: Our sponsors this week, we have Cloud Accountant Staffing, Thomson Reuters, OnPay, and Savant Labs.

1:41David Leary: Are you tired of the endless search for qualified accounting talent? You're not alone. Growing accounting firms are struggling to find available and affordable team members when they need them most. Cloud Accountant Staffing has the solution with their revolutionary candidate portal. Unlike traditional staffing agencies that waste your time with sales calls, paperwork, and deposits, the Cloud Accountant Staffing candidate portal gives you instant access to highly vetted, qualified accounting professionals. No waiting, no hassle, just top talent right now. What makes this different? Speed and simplicity.

2:11David Leary: While other firms make you wait weeks or months, with Cloud Accountant Staffing, you could interview someone as soon as tomorrow. Their boutique support ensures you're getting quality talent that's both available and affordable, exactly what growing firms need. The Candidate Portal puts you in control. Browse live candidates, make selections on your timeline, and build your offshore team without the traditional headaches. To find, review, and book interviews with potential team members, all in less than 10 minutes, head over to accountingpodcast.promo.com. That's accountingpodcast.promo.com.

2:47Blake Oliver: Will you add Hector here to the show? I'll just kind of cover the high level Intuit fourth quarter earnings. So their full year revenue was$21.4 billion. That's 14 % growth, with Q4 being$4.4 billion, the first time breaking$20 billion annually. So Intuit's numbers, revenue-wise, are way up, right? TurboTax live revenue surged 37 % and now represents 53 % of all TurboTax revenue. So that's the live service where you get the software and the human doing the taxes with you. But where the street freaked out, I think, is their fiscal 2027 guidance calls for about 23 to 23.5 billion in revenue, only 9 % to 10 % growth versus this year's 14 % growth.

3:33Blake Oliver: And the street's freaking out a little bit. I think there's lots of opinions, right? You have people like AI is killing Intuit over here on one hand. You have those people. And then the other weird thing is Intuit's reacting to that on the other hand where they're saying, oh, look at all this AI we have. That's why our numbers are so good. So bringing Hector on, let's get some perspective and chat this out.

3:52David Leary: Thank you, Hector, for joining us. Welcome to the show. Great to have you here. If you don't know Hector, you should. He is one of the biggest QuickBooks and accounting YouTubers. He's got one of the largest QuickBooks channels on YouTube. He has been the host of the unofficial QuickBooks Accountants podcast in the past, and he runs a conference called Reframe, which I am eager to get to at some point soon. And he's basically an expert on all things Intuit and QuickBooks. So Hector, great to have you here. We'd love to get your take on Intuit's earnings call and what's the future of QuickBooks and TurboTax and all this stuff.

4:31Awesome. Well, thanks for inviting me. I'll take away the expert, being an expert in all things Intuit to being highly opinionated in all things Intuit, let's just say that. So what is interesting about what's happening with Intuit is that if you go back to like July of 2025, and I know this very, very intimately because every year that I've been in practice for the past 18 years, I buy a percentage of my earnings in Intuit stock. and there's a specific philosophy on why I do that, is because my brand as an educator in accounting and user of the product and a reseller of the product is very tied to Intuit.

5:12And when I see the sales go up, because I see my sales go up as a reseller, I'm seeing, I'm bullish about it, right? So I'm buying into a stock every single year and I have bought stock at$30 when it first started and I have bought stock at$700 last year. So I've had the lows and highs of Intuit stock going up and down. So right now, Intuit stock is trading in the mid 300s. At its peak, it was close to or at 800 in July of 2025. So the story is that Intuit's revenue is not going down. Their profits are not going down. Intuit is an extremely profitable company. Their margins are crazy. So we're talking about$21 billion in revenue,$4.5 billion in profit.

5:58It's a profitable company.

6:00David Leary: 14%, fiscal 2026 revenue growth. That's not bad for a massive public company. That's pretty darn great. Massive public company in business for 40 plus years. I mean, you got to take that into consideration. The sister company, not sister company, but I would say the company that the market uses to compare into it a lot is Adobe, because Adobe has a very similar story. It was born in the 80s. They're a software, mostly application business. they felt AI can threaten, you know, graphic design and all the stuff that they did. And Intuit came a little bit later just because I guess people hadn't noticed, you know, whether or not AI could disrupt accounting until maybe three years later.

6:41They're around$100 billion in market cap. They're somewhere in the 20s in the billion dollar annual revenue. So they're very similar companies. And you look at the two companies and the two companies have had very similar faiths. When Adobe was at its peak, it was trading at 60 times its earnings. That's the PE ratio. When Intuit was at its peak, this is July of 2025, it was trading at 56 times its PE earnings. And now both companies are in the teens and the 20s, and they go back and forth. So there's a broader story here, which is the market is reacting to the impact that AI has on SaaS. But most accountants, I don't think, look at it that way.

7:28I think most accountants look at the Intuit stock and they have more like personal grievances and they're saying, see, this is what's happening. And I think I can also tell you that story from my perspective and what the community is saying. But I think the market really, really, really is reacting, in my opinion, to just the impact of AI on companies that only do apps that are not platforms or hardware makers. because Microsoft and Apple don't have the same fate.

7:57David Leary: So I want to talk to you, Hector, first about this TurboTax question because TurboTax has always been a huge revenue driver and growth driver for Intuit. And Intuit acknowledged in this earnings call that they are losing DIY tax customers to cheaper competitors and that price is now the number one reason that customers leave TurboTax. They are expecting only 2 % to 3 % TurboTax revenue growth in 2027. And that's because they are having to lower their entry level pricing in order to acquire and retain those DIY users. So I want to get your take on that and you, David, as well. Is TurboTax done?

8:40David Leary: Is AI going to automate the DIY tax prep so that Intuit can't charge$100 to$200 for a return?

8:50Blake Oliver: I don't think so. If you think about how many returns into it does versus how many returns detector as a firm, you do a portion of your firm does tax work, right? Factor, right? You probably charge a lot more than what I'm paying for TurboTax more than I'm paying for TurboTax live. I think AI is going to disrupt that layer, not so much into it. There's always been cheaper and free alternatives to TurboTax. They've been around for 20 years. They've always been there. This option to use something cheaper has always been there. Just because now it's what in a chat bot format and a text box that's supposed to completely blow up into it.

9:24Blake Oliver: I just don't completely buy it. Like it just doesn't, I don't buy that. And I don't buy also the fear of like AI is going to disrupt QuickBooks entirely. Like the, so the street has this opinion that that's going to happen. But historically speaking, like 40, what, 45 million people use TurboTax for their taxes now. Like how many are really going to walk away? Like how many are going to be like, I'm going to use AI to do my taxes this year. That's a pretty, like, think about that. You go to your spouse, be like, hey, I'm not going to, I'm going to use AI to do our taxes this year, even though we've used quick TurboTax for the last 20 years.

9:56Blake Oliver: It's not going to go over very well. Like, it seems risky.

10:00David Leary: Well, Intuit's obviously decided that they have to lower their prices in order to retain those customers so they don't go elsewhere. And something interesting, an interesting tidbit that ties into this pricing question is what does it cost to actually do a tax return with AI? And I'm estimating that it costs about a quarter, 25 cents to do a tax return with an AI agent in tokens. Most of these returns are really simple, the ones that are being done on DIY on TurboTax. So if that's the cost, right, how can you possibly support these prices that people have been paying? And that's why Intuit is having to bring the price down and it looks like they might retain customers, but they're going to get punished in terms of their margins that they've always enjoyed.

10:50Blake Oliver: But in theory, they're going to benefit from this efficiency, right? They're going to get some percentage of cost savings by using this AI.

11:00David Leary: But I mean, what does it cost them to do a return now with the software they've built, right? The issue is the competitors. So I can spin up a new tax prep company and I can just plug a bunch of AI agents in And instead of having all this rules-based logic that Intuit spent all these years developing and TurboTax, it's really hard to replicate. And the agent can just do it without me having to program that. So that's why you've got all these small competitors popping up doing these returns. It's an interesting question as to whether or not Intuit will be able to continue to add value so that people want to stick around.

11:32I have some opinions. Okay. So you mentioned my firm, David. So I find it for my firm to be a healthy thing to lose the lower end customers and gain the higher end customers. Okay. Obviously, I'm a small firm. I'm not into it. Intuit is losing TurboTax units. They said it went down by 2 % units. So total number of social security numbers that process their tax returns via TurboTax. but their TurboTax live revenue went up 37 % and it's over half of their total tax revenue. Could TurboTax be in a better position by repositioning themselves, not at the lowest end of the market but somewhere in the middle of the market?

12:20That could be. I think Intuit needs to go back to the free TurboTax offerings and expand the free TurboTax offerings, right? So because you cannot beat free and then figure out how to maybe cross sell to those customers in some other way. Right. Like Intuit has credit karma. You know, I would say I would just venture to say if Intuit were to be OK with lowering the price and going after these lower echelon of the taxpayers. and you were to look at every single Schedule C filer that Intuit does for free or close to free and convert those to QuickBooks, that could be their winning formula. Because look, QuickBooks is$12 billion of the revenue and TurboTax is$5 billion of the revenue.

13:08I do not see those numbers flipping. I see QuickBooks and the QuickBooks ecosystem and all the small business cross-selling, payments, payroll, all that stuff to be double or triple of what TurboTax will ever be. So I don't think Intuit should somehow try to be everything to everyone, having products all the way from really tiny people to all the biggest people. Maybe they could find positioning in that, let's call it mid-market, but that higher echelon of taxpayers.

13:42Blake Oliver: It's a good point. So is this more of a, hey, we have 40 years of experience doing taxes on the cheap with the cheapest clients and the cheapest customers. and we've done some math and like, we're not going to let you take them. So we're going to lower our price and try to be competitive on that front. But if you want to beat us and take, you know, a million customers that aren't paying much money anyways, in the meantime, we're going to maximize the other 39 million that stay with us and get them to pay three times as much because of TurboTax live, et cetera. It's almost, it reminds me of the Quicken argument, right?

14:13Blake Oliver: I remember going, you know, before they, when they bought Mint, going to like uh, FinTech conferences and seeing, you know, 200 pitches for these personal finance apps. They're going to be the next quick and killer, right? They're going to disrupt quick. And but what none of them understood is there's no growth for quick and for 25 years. So that's why intuitive eventually just so quick and fine. You guys want this market. That's not very profitable. Take it. Cause at the end of the day, personal finance is a hobby. No, nobody has to do personal finance and that are they just letting the, are they letting the low margin stuff go so they can sell more.

14:48David Leary: I've got a follow-up question on that as well. First, let's thank our next sponsor, and that is Thomson Reuters. If your tax workflow still feels like a grind every busy season, you're not alone. We hear from firm owners every week who are buried under disconnected systems, manual data entry, and staff stretched way past their limits. But it doesn't have to be that way. Thomson Reuters built the tax automation suite to solve exactly this headache. It connects SafeSend, SurePrep, and UltraTax CS into a single ecosystem that covers every step with true end-to-end automation, from gathering a client's documents to final delivery.

15:23David Leary: We're talking up to 65 % fewer clicks per return, AI-powered data extraction that saves 90 minutes per return, a 58 % increase in capacity with current headcount, and a 55 % improvement in profitability because those time savings go straight to your bottom line. This isn't some patchwork of tools bolted together. It's a purpose-built suite where data flows automatically between every stage. That means no rekeying, no bottlenecks, and no back and forth with clients. Firms using it aren't having to bring on additional staff during peak season while still growing revenue. That's the power of real automation.

16:00David Leary: To see why tax professionals across the country are making the switch to Thomson Reuters, head over to accountingpodcast.promo.com. That's accountingpodcast.promo.com. And now my follow-up question to Hector. So like David said, it seems that the strategy for Intuit is to retain those lower-end customers, lower the prices, keep them around, avoid losing them to competitors, and then to make up the difference with growth in upper, you know, customers who are willing to pay more. And that would be TurboTax Live, it seems like. So if Intuit pushes into TurboTax Live more, are they going to be competing more with firms like yours at a price point?

16:48David Leary: Okay. So, yeah, what does that mean for tax? This is the weird, this is the strange dance that Intuit needs to do, which is the only way to survive in this tax business is the TurboTax stuff. The reality, there was an attendee that came to my conference last year, and she told me that she worked full time for TurboTax during high season. And then afterwards, she did her own clients. And I kind of like just picked her brain for like an hour and a half. And like, what does your day look like? How much they pay you? And how much time you spend with her? And I was doing some of the back of the napkin calculations.

17:21The amount of hours that they spent on the phone giving just general support to some of these clients and what they get paid. I'm not sure how profitable the lower echelon of tax preparation is when there's a human in the loop. Like to charge$100 for a tax return, which in today's world, for a person that has two W-2s, right, a simple tax return,$100 seems already high, right, because of the lower price competitors or the AI alternative or whatever. But to charge$100 but then spend an hour and a half answering questions that really don't need to be answered for that amount of money with technical support, I don't see where the value is.

18:03And I don't think it's a numbers game. I think that when someone goes to Intuit or TurboTax or any big company for tax, they don't do it because they think the tech is better. They do it because they know they can call 1-800-whatever and ask questions to a human. So I'm having a tough time understanding how profitable that lower echelon of the business is with the amount of human labor. Because finding a talented CPA or enrolled agent that will work full time answering the phone until 9 o 'clock at night, Saturday, Sundays during high season, answering random tax questions to people that are not paying enough for that, I'm not sure how good of a business that would be.

18:42That's why I was saying, like, I am not 100 % sure if my strategy would be try to figure out how to serve the lower end of the market in my own firm. I would try to figure out how to serve the ones that pay enough that it makes sense for us to answer the phone. So if Intuit keeps going after the smaller client, the less complex tax client, they almost have to remove the customer service piece out of it. Like it has to be sold almost like an AI plus type of engagement where it goes, look, it's$20, it's$25 free, whatever, some low number. All your interactions will be with a chatbot. Don't worry.

19:18Our experts look at the chatbot in the back end and make sure the chatbot didn't give any negative advice. don't worry before it gets e-filed a human looks at it and sends it back like if they find some way of saying yes there will be talented people looking at the return looking at the chat but not on call getting those phone calls it's possible that it makes sense for them to go after that business but like for Intuit to sell$50 tax returns and spend an hour on the phone with a client asking answering questions there's no money there so you're saying this business model they've been touting for a lot since Hassan got in there, which is the AI-powered human or experts,

19:56Blake Oliver: AI-powered expert model. That's not from a scalability, the cost. You can't do both. What's the point of doing the AI if you're going to have all this human expense? I honestly think it's a bridge. I don't think that's a strategy. I think it's a bridge. It's the bridge between when AI hallucinates and AI only hallucinates 1 % of the time. that bridge requires training and that training requires inside information about how to deal with these things. And I think that the AI plus HI thing is just a bridge until it's all AI. I mean, at the end of the day, just looking at numbers and spreadsheets, I don't think it's a long-term gain.

20:40Even Intuit Experts and TurboTax Live, all these things that accountants hate because it feels like a competitor in the bookkeeping space, I have a feeling that Intuit will divest in that, whether they announced it or not. They'll divest because there's no money there. It's just way too expensive. This is just a bridge to understand the profession and the service of customers in this profession enough to train the software and the AI on how to automate all this.

21:09Blake Oliver: Yeah, because we have proof in the market of, who was it? Who went under a bench, right? A buskeeper, yeah. Yeah, all this proof of this technology with a bunch of humans just doesn't work. And Tuit obviously has$20 billion war chest. They bring in a year to stretch this out. But your bet is eventually it's going to have to tip, or the humans just got to get pulled out of this. It'll just be QuickBooks Live AI, TurboTax Live AI. There won't be this human interface anymore. I think there will be a human interface, but it will be cleanly delineated. I'm just going to say five years from now, there will be a TurboTax product for$20.

21:46And that's the most people will be willing to pay for an AI-only app, let's say. And then it will jump all the way to like$300 to get a professional involved. And then again, the market will cycle back and someone wants to figure out how to serve that middle because that's how the market always does that. But I don't see the gap in which you can add a little bit of human only for$10 more. I just don't see it. Got it. Should we pivot to QuickBooks and some other QuickBooks announcements?

22:18David Leary: Yeah, let's hear it. What's new?

22:19Blake Oliver: I mean, well, a lot of it is a lot of bragging about all the time savings everybody has from AI and QuickBooks. But the thing that caught my eye, and this is what I want to have Hector on, as I saw the word QuickBooks free, like as a product, like, but I haven't seen that anymore. I don't have any articles about it. I feel like I saw it go by. Like, do you know anything about this, Hector? What is QuickBooks free? I actually made a video about it a couple of months ago. So they released, they kind of like did this beta, you know, sort of silent release of QuickBooks Free and QuickBooks Lite. So the current QuickBooks offering, for those who are not QuickBooks nerds like I am, there's QuickBooks Simple Start at$38.

22:57Then there's the QuickBooks Essentials somewhere around the 60s. I don't remember the exact number. There's QuickBooks Plus somewhere around$120,$125. And there's QuickBooks Online Advance over$300, right? It's a weird scale. There's nothing in that, you know, zero to$38 range, right? And that's where Intuit is losing a lot of clients. Like the startups, startups, and accountants say, like, you guys don't care about startups anymore. They don't see going out and spending$38 a month as something that, it's just like the$20 a month range, I think is really what startups. I think Claude and ChatGPT, I think most software companies, that$20 a month is kind of that sweet spot for, hey, 20 bucks you can afford.

23:40Once it gets over 30, people feel they can't afford it anymore, especially startups. So there's nothing in that middle. So what Intuit did is they developed two products, QuickBooks Free, which basically allows you to do like two or three invoices a month. And that's all you can do. Like if you can't do like accounting or banking, it's just to do the invoices. And of course you can enable payments because merchant services, getting a percentage of that money movement is a big piece of the business. And then there's QuickBooks Lite that allows you to do a couple of more and start doing some accounting.

24:12And those are going to be stepping stones into what we know right now as the QuickBooks Online ecosystem, which is simple start at$38. One thing that's very curious is they just did a price increase like a month ago. And that price increase included all SKUs except for simple start. So that leads me to believe that that$38 a month product is the one where people are mostly price sensitive and not on the other ones. All right.

24:40David Leary: I want to thank our next sponsor. And then after that, I want to get into the Thomson Reuters new AI model. Are you tired of payroll headaches getting in the way of the client experience you want to deliver? Manual workflows creating bottlenecks, compliance nightmares, and endless support calls that go nowhere? There's a better way for your team and your clients. OnPay. is the payroll partner that accountants and bookkeepers actually love. Why? Because it's easy to use, packed with value, and backed by support that actually supports you. Their team gets rave reviews for being fast, expert, and actually reachable when you need them.

25:13David Leary: OnPay handles the heavy lifting. You get a dedicated onboarding coordinator who sets up worker profiles and transfers year-to-date data from previous providers, all at no extra cost. Their seamless QuickBooks and Xero integrations eliminate manual journal entries, and they support any type of business you serve farms restaurants nonprofits you name it on pay can handle unique requirements without adding complexity and on pay keeps pricing simple too everything your clients expect from multi-state filing to off-cycle pay runs is included no hidden fees no surprises to book a demo head over to accountingpodcast.promo slash on pay that's accountingpodcast.promo forward slash o n p a y So Thomson Reuters has built their own AI model.

25:58David Leary: This is the alternative to renting one from OpenAI or Anthropic, plugging in. And how they did it is interesting. They say that they brought in 175 years of authoritative content from Westlaw, Practical Law, Checkpoint, and Reuters, together with thousands of subject matter experts. This all originated with their acquisition of SafeSign Technologies in 2024.

26:23Blake Oliver: And historically speaking, right, if I understand how their business model was, you'd have to subscribe. You just can't get to that data through the Internet, right? It's all firewalled off. You've got to pay big money to get access to this data.

26:36David Leary: It's behind a paywall. It's expensive. And it's really valuable because the analysis has been done by subject matter experts, the top people in the field, tax experts and accounting experts, right, GAAP experts. And so that is what makes this model powerful because other models like OpenAIs and Anthropics and Googles, they're trained on the open internet, not on this material that's behind the paywall. At least that's how it's supposed to be, right? They're not supposed to steal content to train the AI models. And so the results are striking. they benchmarked their model, which by the way is called Thompson, against the other frontier models.

27:25And they found that Thompson scored a 0.914 on instruction following, which is way ahead of

27:37David Leary: CLAW, Gemini, and GPT, which they didn't actually specify what it got, but it's way ahead on instruction, following instructions. In terms of deep research, Thompson using Westlaw and practical law scored a 0.83 on factuality versus 0.65 and 0.68 for two leading frontier models that use the open web. So by using this library of analysis to train the model, you get much better, more accurate answers. And that factuality metric is checking whether each assertion is supported by its cited source. So does it hallucinate or does it cite a source that is correct, accurate? Completeness was reportedly similar across the three systems, but the accuracy was the big difference.

28:29David Leary: So they're calling this approach fiduciary grade AI that's been engineered into the model so that if you as a professional are relying on it, you know it's not making stuff up. And it's entering production this month in co-counsel for skills, including high volume structured document review and broader legal and tax integration is planned.

28:50Blake Oliver: I mean, it makes sense. I think we this bill went off for me, whatever. Two years ago, we were at Sage Intax conference and I'm like, I want dumb AI, like AI that only knows accounting. I don't want it to know the history of the world and every possible thing because the odds of it hallucinating are trying to outsmart itself. are just way higher. But if it only knows this tax law and case law and tax code, it's likely to hallucinate less.

29:16David Leary: Maybe instead of calling it dumb, right? We call it a specialist, right? Because it's really smart on this one area, right? It's not a general purpose expert.

29:27Blake Oliver: And then in theory, it would say, you can't do this. Sorry. Sorry, I wanted to ask you, did they build the whole engine or are they using OpenAI or Anthropic as their engine? Because it looks like there's two things here. One is the knowledge base. So they own that knowledge base. They have a tight knowledge base, specialized knowledge base. And the other thing is the actual engine itself. And I just wonder, did they build their own model or did they say whether they're using Cloud or ChatGPT to actually process it?

30:02David Leary: So they built it with a starting point, not open AI or Anthropic. It's called the Snowden model. The Imperial College of London built this. It's an open-weight Snowden model. Got it. Open-weight. And so then they take this model, this free model, right? It's like something you can just take, like open source software. And then they trained it on their proprietary data. The reason why I mentioned this is because as a firm owner, there are two challenges that I have when it comes to choosing an application, an AI application to help my work. Challenge number one is, do I trust that company? Like, or do I trust that my data will be safe?

30:45My client's data will be safe. Challenge number one. And then challenge number two, like David said, do I trust that the source of the data is going to be, you know, the truth or is it going to always use authoritative content, et cetera, et cetera. So there's two challenges here. So I think that if they say they use ChatGPT or Cloud and people don't trust these companies for whatever reason, right, then they're not going to use the engine. So if they build something, I think the winners are going to be the ones that build their own thing, which basically signals that your data is staying in their ecosystem, that they're not using an outside engine, an outside processor, or an outside data center.

31:22I think all these things are going to play in together is, is my provider of AI or my intelligence provider control the source of the data? Do they control it and own it? Of course. I mean, you can't own tax law, but what I'm saying is they're not ripping it from someone else. Do they control their engine, like the flow of information from my computer to their center? And do they also control their data centers, their servers? And like the companies haven't gone this route because most of the software companies are outsourcing data centers or processing or AI engines. So I think the companies that do that are the ones that are going to win.

32:01Because I predicted a couple of years ago that the local LLMs, like accounting firms, buying their own servers, spending$20 ,000,$30 ,000 for like this super amazing server so they can keep all their data in their physical office within their control was going to be the next thing. And I completely failed. By the way, if you want to gain in the stock market, trade the opposite of what I trade and you'll make a lot of money. So I'm just not really good at predicting. But I'm saying I just thought as a firm owner, I'm like, look, I'm spending$200,$300 a month just on my account plus another 50 or whatever on the accounts for every one of my team members.

32:37Electricity is cheap. I don't mind spending 20 grand, 30 grand front loaded for a computer that can run all the the intelligence locally and my data never leaves my office. That to me, I thought was going to be the big thing, but either people are apprehensive towards buying hardware or maybe the hardware is not available or maybe it's too technically difficult. But I think that those companies that can encompass and control the entire thing are the ones that are going to win the accounting market.

33:05Blake Oliver: And so they're saying it's their own AI frontier model, which implies it's not really running everybody else's stuff, but they built it. They spent$40 million to build it still, but they used open source software too. So like you said, they used an open source model, right?

33:22David Leary: Then they trained it further on their own stuff. And then the other thing I didn't mention that they did is they brought in partner level practitioners who spent months building rubrics for different research tasks. And so then they tested the model's outputs against those rubrics and had itself improve based on the feedback from the humans so that the humans were in the loop of this training cycle, giving it feedback and it got better. They had lawyers contribute thousands of hours to compare the model outputs as well and rate them and review them. They've got 1500 attorney editors. And so that is the big difference too is that they can spot where the model misses things, those humans, and then improve it, teach it.

34:16Blake Oliver: And this also feels a little of like the disruptor is getting disrupted now. So everybody – this is what started the SaaS collapse, right? The SaaSpocalypse is there was that legal demo of ChatGPT or Anthropic doing some sort of legal task. And people are like, oh, that's going to kill all these apps. Right. And then we went through that period of time and now touche, right? This is, oh, guess what? We just disrupted you chat GPT. Cause we built our own AI model. That's better. And are we going to see this in industries and different verticals where we're going to see better, smaller AI models like this from Thomson Reuters pop up that really disrupts the big models.

34:54Blake Oliver: And this is why the big models are fighting against the China open source AI models. They don't want the open source AI models that have to be in control. They're fighting for government regulation to stop this from happening. But this is obviously probably long-term to better approach for end users, consumers, right? Who need to use this.

35:12David Leary: All right. We got to keep moving on because I want to talk about the RILIT fundraise. But Hector, I'll let you have the last word on this. I was just going to say, if CCH is listening and you want to hear the best possible advice you ever hear from anyone, And of course, I think that's because it's coming from me, but I'm saying if you want to hire me for more advice like this. I've been teaching ChildGPT and Cloud for three years, webinars. Every single week I do a webinar on a different platform. And the question that comes over and over and over and over is, can I do this in co-pilot? Can I do this in co-pilot?

35:42How does this work in co-pilot? And the secondary question is, what about security? What about safety? So people are freaking out of security and safety, but then they're asking how to do it in co-pilot. It turns out that because Copilot is built in into the thing that the firm bought and it's all built in into the ecosystem, they get automatic trust. So CCH, you want to nail this, do a partnership with Microsoft where you have a Microsoft 365 accounting firm edition. You package it all together, give the impression that it's all one ecosystem. You immediately win. You will be in platform. It's like Internet Explorer in Windows computers.

36:19You know, that's how they won. Right. So I think they need to do that.

36:22David Leary: Well, an easy way to do that would be like give people the ability to connect. What is the Microsoft one called? Copilot. Copilot. Connect Copilot to Thompson via an MCP server so that when I ask questions that Thompson is designed to answer, it just goes out and my agent talks to that agent. That's too much work for accountants, Blake. You just package it. You make it$3 more per user or whatever to the Microsoft 365. Every single person in that accounting organization automatically gets it. That's how you win. You win just by selling it bulk, making it available to everybody. You don't make it a whole production to get into it.

37:02You make it built into the system.

37:04Blake Oliver: And you make it as a standalone prompt, an app and website. You don't make it part of Microsoft Copilot because Microsoft Copilot's the old models. It does everything. You don't want to introduce that variable of the everything. All right.

37:16David Leary: Let's thank our final sponsor. And then David, I'm going to come back to you to learn about the Rillit fundraise. And this ties into what we were talking about with Intuit. Intuit is experiencing pretty great growth in the mid-market segment. I think, correct me if I'm wrong, but I think it was like 39 % or something revenue growth in that area. And that's exactly where Rillit lives too. So our next sponsor is Savant Labs. If your finance team is using AI for drafts and research, but still closing the books by hand, you're in the same spot as most enterprise accounting teams. Claude and Copilot handle the easy stuff.

37:51David Leary: But what about the close, the reconciliations, and the tax provisions? Still manual, still spreadsheets, still eating up days every cycle. The real issue isn't effort, it's trust. General purpose AI gives you a different answer every time, and an auditor can't follow the trail. That's why Savant exists. You describe a finance task in plain language and Savant turns it into a governed agent. It pulls, cleans, and reconciles your data across ERPs, spreadsheets, and PDFs with over 500 connectors. Every workflow runs the same way every time. Same inputs, same output, every cycle. Data lineage approvals and SOX reports are built in automatically.

38:33David Leary: The result is up to 70 % less manual work and 80 % fewer errors. And here's the best part. Bring Savant a complex use case that's eating 20 plus hours a month, and they'll build you a custom agent for free with a 30 day trial. To learn more about Savant and start building your first agent, head over to accountingpodcast.promo slash S-A-V-A-N-T. That's accountingpodcast.promo forward slash S-A-V-A-N-T. All right.

39:02Blake Oliver: So let's talk about Reallet. So Reallet is one of these new disruptive AI ERPs on the market. There's a lot of them popping up, right? Well, they just hit unicorn status. They raised$100 million in their Series C for a$1 billion valuation. And that's great, right? Like rah-rah, cheer, all this investment, the money you're getting. But in the meantime, and this is why I think the story is important to talk about, the same week this is announced, right somebody decided they're going to pay 51 billion dollars to buy workday the old traditional erp right that in theory these new ones like realit are going to disrupt so if you think workday is one of those stocks that got hit by the sas apocalypse right they were down 15 percent year to date and more more than 40 since its peak in 2024 but my question is like if you think about this silver lake you know they want to buy it for 51 billion dollars so real it has 600 customers 100 million dollar investment right and then 1 billion if you take the 1 billion dollar valuation divide it by their 600 customers that's 1.6 million dollars per customer the valuation right but you take the 51 billion dollar valuation that's being spent to purchase workday divided by Workday's 11 ,500 customers, that's about 4.4 million a customer.

40:22Blake Oliver: So this is where the market's weird, right? When real money gets involved, not a hundred million dollar investment here, when it's$51 billion, the money went to the established player in the market, not the AI disruptive startup. If you really think all these new startups are going to disrupt the existing SaaS players, why would somebody spend$51 billion on Workday unless you really believe that's who's going to win, not the ERP startups. It's an amazing amount of money.

40:51David Leary: Maybe it's because once you're on an ERP, just like once you're on a GL, it's really sticky. Yeah. It takes a lot to get somebody to switch off QuickBooks. We've seen this story with Xero. And so the growth for Rillit is probably not going to come from switching off Workday, which, by the way, is for, I think, much more massive companies than what Rillit's going after. Rillit's going after NetSuite.

41:19Blake Oliver: Yeah, this is going to be like Netflix, U.S. Bank. Yeah, it's almost SAP area, right? Way up market.

41:26David Leary: And Rillit, their customers include Neuralink, Elon Musk's brain implant startup, Skilled AI, Mercore. they've got public companies though and non-technology businesses so it's not just startups but yeah definitely not like the scale of some of these massive companies they say their annual recurring revenue is is doubling every quarter and it doubled again during the three months before the round so wow I mean that's not independently verified but that's impressive if true a billion guys a billion dollars for you said 600 customers so they've got 600 customers now and they raised a hundred million at a 1 billion valuation.

42:11Oh, I see. Yeah. Okay. But still, I mean, I think if you're that successful at raising money, but not that successful at raising customers, there's a challenge there. Um, I don't know what the average ticket per customer is, right? Like if these customers are paying a million dollars a pop, I guess, you know, that then I'm, then I'm talking crap, but like seriously, like 600 customers. I mean, I, again, you're right. It's very, very, very challenging to get people to change ERPs, but the numbers just don't make any sense to me. Well, think about it this way. There's, in the mid-market, probably tens of thousands of potential customers for this software, at least, right?

42:52David Leary: Like NetSuite, for instance. I don't remember their number of customers, but I think it's in like the -

42:55Blake Oliver: They have like 25 ,000. Sage Intech has like 45 ,000. It's not a lot when you think about how many QuickBooks has.

43:01David Leary: But they're big annual fees, right? You know, NetSuite starts at tens of thousands a year, just starting, right? And then goes up into the six figures.

43:09Blake Oliver: Easily you could hit 100 ,000 like nothing.

43:11David Leary: Yeah. This is where I think we were talking about Intuit earlier. Yeah. This is where I think Intuit kind of has it right somehow, which is, of course, to the detriment of the smaller clients, they focused a lot on mid-market. And they said it in the investor call that says, oh, because we refocused on mid-market, we think we lost some of the smaller startup clients. but Intuit in two years that they've had the Intuit Enterprise suite out, it's only been two years, September of 2024, it came out. Today, they have$145 million in revenue from that business, a brand new platform, a brand new name.

43:47And if you take$3 ,000,$4 ,000,$5 ,000 per customer average, that's about 25 ,000 companies. So Intuit has been able to put 25 ,000 companies in there without having to raise additional capital. So I don't see how somehow really raising a lot of money, they're going to be able to beat into it at this game. I just don't see it.

44:09David Leary: So they're rebuilding the GL from scratch, right? They're not layering on top of NetSuite to do AI automation. And I don't think that's where the value is, right? Sure, you can make a better GL, but people aren't going to switch off what they're on just to get a slightly better GL. It's the automation and the AI and the potential for automation when you have it integrated into a modern GL and everything is available for the AI to work with because it's not ancient code. And this is the problem that Intuit has with its code base, given that it's built up over decades, is I'm sure it's a challenge to be able to build the endpoints so that the AI can go in and retrieve information and then analyze it and push changes back.

44:58It might be a topic for a different podcast, Blake, but me as a developer that I developed for Intuit with my app called WriteTool, I could tell you the modernization of the endpoints, it's happening. And I just don't think that, I don't think Relit can win in tech. I think the same way that Thomson Rotors will win because they have the legacy data, I think Intuit can still win because they have the legacy data, the training data, the market data, that sort of thing.

45:27David Leary: So regardless of how they do it, here's how I think Rillit can win. Here's how they can win. And it is going to be by making these accounting and finance teams at these market companies super efficient so that they aren't adding headcount. Because then paying six figures or more for an ERP makes a lot of sense when you don't have to hire somebody who costs six figures. Or maybe you don't have to hire five people who costs six figures. Now, that may not be great news for accountants, although I don't worry about it too much because we already have a shortage. But here's an example, right? So Mercor is one of the customers featured in their fundraising announcement, M-E-R-C-O-R.

46:08David Leary: They generate more than$2 billion in ARR. And their finance team, the headcount, three people. Three people managing finance for a company with$2 billion in annual recurring revenue. PostScript has more than$100 million in ARR. They close their books in three days. There's an AI coding company called Windsurf that handles finance with just two people. So that's the opportunity. If they can build into the GL and all the systems, the ability to automate all of this financial close work and reporting and all that effectively, which is really a user experience question. It's like a product design thing.

46:52David Leary: If they can do that faster than Intuit can with Enterprise Suite, or that NetSuite can, or that any of their competitors can, then they're going to win. Because I, as a CFO of a mid-market company, would much rather pay for something like Rillit than hire a team of 12, if I can do it with three.

47:15Blake Oliver: Yeah, because they're developing on the bet that you'll want to hire less people, which ultimately labor is always going to be your most expensive thing. And that bell kind of went off me when we were, I think we were at the Oracle NetSuite conference that time. And every module is$75 ,000,$45 ,000 to get a module, get a module. But then you start talking to the people, the way they think about it is, I could hire somebody for$110 ,000 a year to do this work, or I could buy this module from Oracle that makes me only have to hire a quarter of a person. And the enterprises at that level think about how many bodies do I have to hire?

47:50Blake Oliver: And so, yeah, there could be upside for real it here, but the reason I think is market confusion. Over here, the money's shorting all these established playing stocks. In the meantime, what will be the biggest software acquisition ever is one of the, the most of the money now is gonna be moved into an old SaaS player, not the new AI company. The market's so confused. And maybe that's what this is. It has to shake out still. Nobody knows what to pick. Yeah. And one thing I'll add is I think the mid-market players that will win, the mid-market ERP players that will win, are the ones that will be able to erase from the P &L this brand new expenditure that didn't exist three years ago.

48:32So three years ago, no company had a budget for chat GPT or CLOT. All of a sudden, they not just have a budget for ChatGPT and Cloud. Every single company is thinking, how do I increase that budget to get a direct correlation on decrease on cost of labor? So the ERPs that give you a reason to get rid of ChatGPT or Cloud are the ones that will win. Because even if you raise the price, but you go, yeah, but we really, or whatever, whatever the app is, with this, you don't have to have any Cloud subscriptions or any a chat GPT subscription because this will do the same thing that it will do and arguably better.

49:10I think that might be the best positioning for these ERP companies.

49:13Blake Oliver: Can you restate that? You said on the profit and loss, you're going to have this. So three years ago, you guys have been in business for five years. In your budget, having a chat bot as part of your budget to operate your business and for every single staff member wasn't there. Now you have to have it because you use your chatbots to organize content, notes, whatever, right? So every single company has now all of a sudden have a new line in the P &L or in the budget that never existed, which is AI expenditure. And that number is going up and up and up. And it's not just going up. The C-suites are actively looking for ways to increase that because they see a direct or a negative correlation between increasing my AI and my staffing costs, right?

50:01Because I can get less people to do the same thing, or I don't have to hire an additional person to open up a new competency inside my business. So they're seeing, like when they budget for going out and buying software in general, they see a parallel expense, which is ChatGPT or CoPilot. If the ERP company comes in and goes, by buying our ERP, Relit, IES, or whatever, you no longer have to pay those companies because this ERP is all-encompassing. It cannot just do what Cloud and Chat GPT can do. It can do it better. Now, I would argue that for coding, that might not be the solution, but not every company is coding.

50:41And you would argue that, well, maybe companies are dabbling into coding. Well, companies like Intuit, they should create an environment for specialized coding that only has to do with coding things that interact with the ERP, not random coding. So I think that the companies that will win are the ones that their platform is the source of truth. And they allow people to do all sorts of crazy things that they do in chat, GPT, and cloud now inside the platform to modify and code their own experience inside of that ERP. I think those are going to be the winners.

51:15Blake Oliver: So you said something that really, this is burning up my brain because it ties to another article I bring up, is AI spend, token spend is going to become so significant that it's now going to show up on the pnls which previously maybe it just rolled up under software like people are going to start breaking out because it's so significant which makes a lot of sense why stripe who is a huge payments processor bought ai router open router so are you familiar with the open routers what they do yeah they decide based

51:43David Leary: on your prompt which model to use to maximize your effectiveness while minimizing your token spend

51:48Blake Oliver: Exactly. Right. And so Stripe's getting ahead. Obviously, Stripe has the same thinking you just said, Hector, which is a whole line item. I mean, they're going after a whole line item on the profit and loss. Stripe already has the income line for a lot of businesses on the profit and loss. And they get a piece of that. Now they're going to go for the expense line on the profit. And they're paying$8 billion for this. And it makes perfect sense because it's just at some level, the token spend is just transactional. And that's what Stripe is. It's just lots of thousands of transactions. And now they're going to do it with the tokens.

52:20And to add more to that, I want to add more accounting nerdom to this, is software has always been a fixed cost, an indirect cost. There's going to be a point in the very near future that token costs are going to be variable costs. That means that they're going to be moving from expenses to cost of goods sold, because companies are going to be able to run a direct correlation between their growth and their sales to their token spend. And that's going to be super interesting because all of a sudden, we have a brand new direct cost that never existed. And if you're incurring that, that means you're not growing and you're not selling.

53:00David Leary: We're going to have to invent some new cost accounting methods to handle this. It's going to be interesting for the future of accounting theory. The new P &Ls are going to be income, cost of goods sold, token expense, expenses. It might be a whole category in the P &L. Yeah, we'll have to think about that. Hector, thank you so much for joining us. I want to give you a chance to talk about your Reframe conference. This is a really exciting event. It's, what is it, second year, third year you've been doing this? It's a fourth year. Fourth year. All right. So like, yeah, what is it? tell us about it like why should our listeners consider sure so reframe is the brand of our events company we put together an annual event in Miami and Miami because it's my hometown and it's great in November we can own that November Miami space I would say in the accounting profession so it's gonna be in in Miami November 5th to the 7th and it's called reframe because I strongly believe that my my personal goal in life is to help the accounting profession rebrand themselves, rebrand themselves to be sought after as the most creative, innovative, and transformative of all professions.

54:14That's a really tall order, very difficult to all of a sudden have people look at accountants as creative and that somehow be a positive thing. But I think being creative myself, and you guys are amazingly creative people, being creative myself is what's opened up the doors to create new lines of business, new forms of serving clients, new forms of becoming different. But I cannot change accounting. Accounting is a beautiful science. Gap is amazing. Debits and credits are amazing. So how am I going to change the profession without changing what it does? So that's where the word reframe comes in.

54:48So it's changing the thing without changing the thing. It's changing how you look at the thing. My favorite quote from Wayne Dyer is, if you change the way you look at things, the things you look at change. So we are trying to change the profession by changing the way we look at it. And most importantly, changing it from a branding perspective, the way our customers look at us. So this year is called

55:13Refrain 2026 Innovative Advisory, and that's IA, because the subtitle is Flipping the AI Narrative. We believe that the narrative that AI is going to do what we do, it's only narrative. I believe that the narrative is winning. There's a lot of BS. There's a lot of money in the stock market. There's a lot of money in marketing, making it look like AI can do what we can do. And if we allow the narrative to win, the narrative wins. So it's time for us to take back the narrative and get customers to seeing us as their trusted advisor again.

55:46David Leary: If you want to learn more and get your ticket, go to reframeaccounting.com. Hector, thanks so much for joining us. We're going to bring on Britton Ratcliffe now, but please stick around and we'll see you at the end.

56:01Blake Oliver: Blake, before you play on that, I want to talk about one example that's the opposite of Britton if you're not to do. I don't know if you saw this about Pablo Pledscobar. Have you seen this? Saw the story? Essentially, there was a, at Penn State, there's a huge cocaine trafficking ring out of two fraternity houses between 23 and 24. 24-year-old Agostino Atabello apparently made regular drug runs to New York and Philadelphia and then had the fraternity pledges cut and distribute the cocaine. But here's why it's on the show. He is an accounting major who used his accounting skills kind of for bad, if he makes any sense.

56:43Blake Oliver: So an accounting major, and he was on the dean's list as well. So he's on the dean's list, and he's running a cocaine trafficking ring at Penn State. He got busted. 14 people have been charged. It's a pretty big deal. But it caught my eye because he's an accounting major, an accounting student that did this. And so I think Britton's going to be the opposite story.

57:02David Leary: I'm watching Narcos right now for the first time. So I'm so glad you brought that to the show. And now joining the show is Britton Ratcliffe. Here he comes. David, I have a guest for you that is unlike any guest we've ever had on the show. He is the youngest person, I think, ever to be appointed to a board of accountancy while in school. So that means he's like 45? Not going back to school, like in school. In school, okay. In accounting, not yet a CPA, appointed to the New Mexico Public Accountancy Board in February of 2026 by Governor Michelle Grisham. He's the board's public member for a three-year term.

57:48David Leary: And he got that role when he was a sophomore at UNM's accounting program. And he's also a forensic accounting fellow at the New Mexico Department of Justice. And his name's Britton Ratcliffe, and he's here on the program. Hey, Britton.

58:05Blake Oliver: Hi, everyone. Thanks. Thanks for having me on today.

58:09David Leary: Britton, how did this happen? Like, tell us the story because like when I heard about this, like it actually came across my feed reader when I was looking up stories for the show. And I saw that you had gotten appointed and how young you are. And like, I mean.

58:25Blake Oliver: It's hard to wrap my head around it too because my daughter's now going into her junior year at the university. And I'm like, I can't imagine her like being on the state accountancy board. I just can't. I can't fathom this. So make this real. Yeah. Yeah. Well, quite the zinger of an intro, but I hope I can live up to the hype throughout this episode. So funny, I was going to school at UNM. I recently just transferred, but I was going to school at UNM and I have a good friend, Victor Reyes. He's the student regent. So he's the student that sits on the board of regents of the school that makes all the decisions.

59:03Blake Oliver: He was governor appointed for that position as well. And he was telling me about his experience and he was like, it's really just sitting on boards. He was telling me about some of the boards he sits on. He was sitting on an agricultural board. Some of the stuff sounded interesting, some of the fiscal stuff, and then some of it just sounded really boring. And so he was like, there's a state public accountancy board. And I was like, what? No, I mean, that's really cool. I was taking some of the intro accounting classes at the time. And anything past 2110, I was kind of sleeping through. I didn't love the whole technical accounting aspect, but I really was interested in like the principles of accounting and a lot of the regulatory policy side.

59:47Blake Oliver: And so I was like, this is like the perfect, I have to be on it. And at the time this was happening, I was recently finding out about the new pathways from the 150 to 120 switch and then alternative practice structures, private equity. And then of course, AI is just affecting all, I mean, everyone's life, but especially young professionals lives right now. And I was like, we need like a student on the board to, to act like no one, no one has a student perspective. Like we, I feel like there needs to be a student who's kind of able to speak about their experiences and what students need right now.

1:00:20Blake Oliver: And so, um, a couple handshakes later, a couple of emails later, I ended up getting a letter in the mail from the governor and, uh, the appointment happened and yeah. So, uh, do I. And to summarize, So you weren't like some sort of accounting skin in my career since I was a second grader and you were some accounting all star that had this blessing. And then they came and recruited you. You were really just like, I'm kind of interested in accounting. I'm just a student, but young people are not being represented. Yeah, yeah, exactly. I mean, at the accounting program at the school, I was going to, again, I really loved.

1:00:55Blake Oliver: but like you can just tell that like what is being preached about accounting like in the classroom as well as like on the regulatory side like that like there i feel like there's just so much that's so far removed from like how students perceive accounting and kind of what we're like looking for and so um yeah i was yeah i kind of just plugged in and i was like i feel like there needs to be some representation here so um i'm sure to a lot of the listeners they whatever um whenever we get into, I'm sure they're going to know a little bit better than I do. And probably more structured thinking, but I don't know if I'm able, and I feel like what I have been able to offer the board so far is a pretty unique perspective in the position that I'm in.

1:01:37David Leary: So we talk a lot about private equity on the show. It's a big issue in accounting with all this private equity money coming into accounting firms. And you've said, you said to me when we were setting up this interview that that was something being discussed on the board and it was you really had something to say about it so tell us what are the board members worried about in new mexico when it comes to pe and then what are you worried about or not yeah um i i don't want to speak for any of my other

1:02:10Blake Oliver: board members i i definitely there's some like common kind of common concerns that i'm sure you know, both of you have as well, that I'll definitely speak to, but I don't want to speak for any official term on the board. But I think, especially for young professionals, like the incentive when you're a young associate coming into accounting is you want to make partner and you want to be an equity going partner and you want to be able to cash out when you're retired. And, you know, obviously we want, we're passionate about accounting and we want to serve the public, but becoming a partner is really a priority.

1:02:46Blake Oliver: And so when there's a privately owned accounting firm and private equity comes in and buys it out, a lot of that equity is taken out and you now have no incentive to become an equity owning partner. And typically what we see with private equity is private equity buys it for three to five years, they own it and then they give it back. And sometimes it goes back to privately owned ownership or it goes to another private equity firm. And so I think that's kind of my concern is, is how is it changing the incentive structure for young professionals, like interacting with, with, with future careers?

1:03:22Blake Oliver: And I'm curious, I was listening to the kind of podcast episode the other day, and there was some AICPA data approved or data that was provided by AICPA that was kind of talking about some of the midsize firm and like tracking how many people are going to partnerships and then senior managers and stuff like that. And so I'm curious to kind of look at some of that data of how young professionals are being affected in the companies that are being bought out by alternative practice structures. I think that's really interesting. So is this conversation happening among accounting students about the awareness of PE's influence in accounting?

1:04:03Blake Oliver: Is it something that's actively you and your peers when you're sitting around at lunch or whatever chatting about? I mean, it depends who you ask, I guess. Like to my friend group, I would say so definitely. I'm sure there's other unaware, like there's a lot of unawareness as well. And I wouldn't say it's like a COVID burning concern, but definitely like among the students who are maybe those high achieving students who are looking, who are going to be the top performers at some of those accounting firms. Definitely, I would say it's a concern and something that a lot of people are thinking about especially um i've at all the school events i i try to have arguments and conversations with as many young professionals as i can who are at the accounting firms right now and that's also something that is uh is being talked about amongst amongst that demographic as well what are the other

1:04:58David Leary: concerns that you're hearing from students like what do they worry about what interests them like what should we as like old dudes be considering that you know like what do they care about i think accounting is such a uh it's such a technical micro field right it's it's not

1:05:21Blake Oliver: necessarily like i mean there's budgeting and like you can you can look at it in a macro lens but i feel like um a lot of accounting is in this like very highly technical field and so So a lot of the teaching methods of accounting are this very applied learning style. You are like you're memorizing a lot of things. And there's I think there needs to be a bigger emphasis on like large market scales and like understanding what the business's purpose is as a whole before we understand like debits and credits. And so, um, uh, and in educational setting, I would kind of like to remove, like, like I took cost accounting my third semester ever.

1:06:07Blake Oliver: And I, I, it's not the most challenging class, but like, so it's a very technical class in accounting when you've never even been in like a manufacturing plant or you don't like there's, there's like, how does it go from finished good or, you know, within production And so seeing all of that, it was definitely complicated without actually knowing how the full structure of business works. And so I had a professor, we were grabbing lunch the other day, and he asked me, he was like, what is an asset? And I was like, and I described all these examples of what an asset was. And he was like, no, what is the definition of an asset?

1:06:45Blake Oliver: And like I really like didn't I couldn't I didn't know what the theoretical definition of an asset was. And so I think I think we kind of need to take it back and teach it a more larger philosophical scale, almost as you will, to kind of understand like how the application of accounting actually works. So that's kind of what I think it looks like in education. and like for me and you were kind of talking about it but I think as well the role that AI is taking for a lot of those like lower level intro associates and that's not me I this is not from first-hand experience but this is kind of some of the conversations that I've had is when you're coming in to now a alternative practice or a practice that's alternatively backed, you're coming in with a lot of capital when they typically have a lot of AI integrated models that are allowing, that are kind of taking away that first associate analysts work in an accounting firm.

1:07:49Blake Oliver: And it's kind of, it's sink or swim now that you're coming into the industry, you know, and I don't want to fall because AI is taking on a lot of that weight that the first year analysts were doing and it's private equity. The whole thing is to make it an efficient industry and an efficient corporation. And it kind of takes away some of that learning experience when you're looking at an audit, last year's audit report from the same business or an audit report as you're kind of slowly moving towards that. So that's kind of what I've heard from some of the incoming younger professionals that are going into some of those mid-market firms.

1:08:29David Leary: Is anyone actually doing their homework anymore? Are they all just using AI to do it? Because like...

1:08:33Blake Oliver: Oh, don't get me started on homework. Well, I mean, just to be very honest, like, oh, like this McGraw Hill, Wiley stuff. I just, I can't, it's so, I can't even don't get me started on that. Like, you're not, you're, you're not learning, man. You are like in this mid, like the formatting alone of a balance sheet and like whatever you see on your homework is enough difference that when you see a real life balance sheet, you're like, what am I looking at? Like, I mean, just like the formatting alone. And so I think like we're trying to do this, such a technical real world applicable thing. We're trying to recreate that for students so that universities can measure data against each other and say, well, our students have 37 % growth and their understanding of debits and credits.

1:09:17Blake Oliver: When in reality, we're escaping like what is a debit and a credit. And again, I realize accounting is a very applied, practical, technical industry, but call me old school, but I think we need to bring back some of the more macro conversations. But can you describe what the relationship is with you and the board? Because you were appointed by the governor. I imagine the other, let's just call them the established members of the board, maybe weren't. The old people. The old people. I don't want to let you say that, not me. Like what's the dynamic? Do they go to you like for a fresh view and pull from you a lot?

1:09:57Blake Oliver: Or is there a lot of horn locking? Like what's the relationship like? Yeah. Like I think a lot of, like I've only been to two board meetings. So my sample size of kind of what that looks like is honestly low. And so right now we have a very cordial relationship with all the other board members. Great relationship. There hasn't been any arguments or butting heads so far. I can't speak for myself in six months, but I think, yeah, I think I'm able to introduce like a diverse perspective. And I was surprised of how willing they are to like, let me speak my mind. And I think in my shoes, they find it, they find it as perspective that they weren't aware of or that they like.

1:10:42Blake Oliver: But I think just to kind of set the terms of like what a New Mexico board meeting looks like there's a lot of formalities dealing with like cpe not not meeting cpe requirements listen to earmark you get free cpe from that little plug um i love that such a smart idea um i like so a lot of it is just formality like administrative stuff like a lot of that is kind of what we look at with the board but recently and some of the other board conversations we've discussed like alternative practice structures and private equity and that is and that's that's probably a smaller portion of what the board is dealing with.

1:11:20Blake Oliver: And a lot of those conversations happened at like the recent NASVA conference I just attended and stuff like that. So we haven't actually had a whole lot of like proposals, if you will, of handling some of these issues. And so I guess there hasn't necessarily been the opportunity for me to have some of these conversations where that would be a possibility. But yeah. It's still early. No conflict yet. Yeah. Still early. Yeah. I'm an argumentative fellow. So I don't know what's going to happen.

1:11:54David Leary: Britton, it sounds like you're a natural regulator. And you're going to stick around in this potentially. You're now at Cornell. What are you doing there?

1:12:05Blake Oliver: So I'm doing public policy. Okay. So definitely sticking with regulation.

1:12:11David Leary: All right, sweet. So I want to ask you, you know, what do you feel needs to be done from a regulatory perspective in accounting? What areas should regulators such as boards of accountancy, a board of accountancy be focusing on? And what should they be doing about it?

1:12:34Blake Oliver: um okay so it's a really good question Blake so for example we were talking about a lot of the cpa requirements or cpe requirements that need to be met and as button there's a discussion of if those should be changed if those should be brought down if those should be brought up if the if what happens with cpe requirements and and how that's tracked should should be adjusted and like I'm going to be really honest with you I don't know how much of that matters Um, like I think it's really hard to regulate like naturalistic human behavior. We've always had the majority of people try to, you know, lazy their way out of like administrative processes.

1:13:15Blake Oliver: And so I think increasing, um, I don't want to, I know disclosures is a big word, but increasing the amount of disclosures or the depth of which disclosures need to be. like I don't necessarily know if like heavy regulation and creating more regulation is kind of the answer to that and what we're seeing is there are a lot of state legislatures a lot of state legislatures are also kind of headed towards this like the regulatory kind of kind of mindset and favoring and when bills are proposed we kind of saw that with like the Florida board Um, and so I think that like personally, what I advocate for is like very simple shifts.

1:13:59Blake Oliver: And so for example, with like, and I don't know how in depth we need to go or how much explaining I need to do, but for like alternative practice structures, the, the non-attest side contracting the attest CPAs, like, I don't know how much regulation there needs to be or transparency disclosures, there needs to be regulated upon that interaction. I think it's a more simple answer of like having CPAs tell people if they're a CPA or not, depending on like on all the work that they're doing, not just regulated CPA work and not just not regulated CPA, or if you're a CPA or a CPA. And I think it needs to be more like simple than trying to overstep jurisdictions and regulate an industry that we're not regulators of, you know.

1:14:52David Leary: Britton, I love that approach. And I can't wait to have you back to talk more about this in the future. Thank you for sharing your story and your perspective. David and I have been talking with Britton Ratcliffe, the public member of the New Mexico Public Accountancy Board. Britton, thanks for coming on. That was such a great interview. Great to have Britton on the show. That's all the time we have this week. Don't forget you can earn free CPE for listening to this episode and our back catalog, as well as many other incredible accounting and tax podcasts, such as Oh My Fraud, Federal Tax Updates, Tax In Action, She Counts, and many, many more.

1:15:37David Leary: Go to earmark.app in your web browser or download the free earmark CPE app from the App Store. create a free account and earn one free CPE per week. David, always a pleasure. See you around here next week.

1:16:13Blake Oliver: showing up in six cities, Raleigh, Nashville, Minneapolis, Boulder, Phoenix, and Seattle, September 22nd through October 9th. GA tickets are just$199. The whole day is CPE eligible. And this is an event built for firm leaders and their teams to support them in transitioning to more profitable advisory work. Go to advisoryamplified.com to find your city and get your ticket today.

1:16:41Blake Oliver: Can you defend your client's Shopify margin number? ProfitRoot turns a Shopify orders export into a reconciled margin report. Every figure traces back to the source file, every coverage gap is named, and nothing is estimated to fill a hole. There's no sign up to try it. Walk the preloaded sample store or upload an export and the first report is free. Built for accountants and fractional CFOs, try it at tryprofitroot.com.

1:17:12Blake Oliver: Still chasing clients for receipts? ExpenseBot ends the chase. Each client connects Gmail once, then receipts and income land automatically in a Google Sheet they own. From one free accountant dashboard, review every client and send clean records to QuickBooks. Accountant Laura Ciotti says, it's taken the receipt chasing out of my month. The accountant dashboard is free forever with unlimited clients. visit expensebot.ai slash accountant.

1:17:41Blake Oliver: Want to get the word out about your newsletter, webinar, party, Facebook group, podcast, ebook, job posting, or that fancy Excel macro you just created? Why not let the listeners of the Cloud Accounting Podcast know by running a classified ad? Hit the show notes for the link to get more info.

1:18:06Thank you.