Client advisory services as a service offering is an increasingly key part of a successful firm’s growth strategy. In the latest survey of this area by CPA.com and the American Institute of CPAs, growth rates exceeded comparative benchmarks for tax and audit practices and the category showed robust profitability and demand for services.
As part of our survey, we broke out top-performing firms — defined as those in the highest 25% cohort for net client fees per professional — to get a sense of what makes them successful. Lessons from these firms provide great context for accounting firms looking to start or expand a CAS practice, which we define as one where firms advise clients across a spectrum of financial and accounting related decisions, with the goal to deliver higher value and deepen the trusted advisor relationship.
Beyond outperformance in revenue, top performers are more profitable than their peers — their median margin is 47% versus 34% for all firms in our survey (although the latter figure still compares well with that of traditional practice areas, as measured in other surveys within the profession).
What are the key differentiating factors for top-performing firms? They fall into four broad areas:
1. Skills
CPAs know better than anyone that expertise counts. Top-performing firms are more likely to have staff dedicated specifically to CAS than other firms (a median 52% versus 32%, according to our survey). This deeper focus allows top performers to have better continuity, engagement efficiency and increased quality in service delivery.
Top-performing firms are also more likely to invest in training — they average 44 hours per full-time equivalent position compared to 37 hours for all firms. The good news is that CAS training has gone up across the board for firms since our 2018 survey, yet top performers are more likely to have staff attend vendor training or certification programs, sit in third-party workshops or conferences, and otherwise invest in outside learning. However, firms are finding out that the CAS practice also requires advanced skills in financial planning and analysis, which means greater creativity in upskilling existing staff or sourcing this talent from industry.
2. Stack (as in tech)
A modern CAS practice must run in the cloud. That’s table stakes. It’s what you build on that platform that matters. Top-performing firms are a little more likely to use workflow tools (87% vs 77% for all CAS firms) and dashboards and alerts (78% vs 66%), and are also more likely to begin employing artificial intelligence and robotic process automation. When we asked about the impact of moving to all-remote work during the pandemic, three-quarters of top-performing firms said the move went surprisingly well, compared to 59% for all CAS firms — that’s due in large part to tech readiness and flexibility.
3. Standardization
The most successful firms concentrate on key industry verticals. Within the firm itself, they doggedly standardize repeatable processes to improve efficiency and free up trusted advisors to provide higher value services.
On the tech side, for example, almost two-thirds of all firms limit their general ledger accounting software to three or fewer programs, and high-performing firms are even more likely to drive for standardization (77%). This simplifies staff training and client onboarding and makes it easier to create custom automations. It does require some finesse with clients who may be partial to a specific solution you may not support, but this underscores the need to package your service in terms of the business insights and value your firm provides, versus anchoring your value simply in the tools you use.
As part of their standardized approach, firms should be setting up regular touchpoints with clients to deliver forecasts, operating plans and other business intelligence that demonstrate their value.
4. Strategy
Launching a successful CAS practice is no different than launching any other successful business. It starts with the tone at the top. Leadership must be fully engaged in the strategy for CAS practice development and demonstrate that buy-in to internal stakeholders and, ultimately, clients.
Tactically, some top-performing firms are performing well by being extremely efficient with service delivery. The key to true success in CAS, however, is to continue moving up the ladder of services. In general, top-performing firms are ahead of their peers in this journey to higher-value advisory services (see chart below for some examples). This may mean reducing your client base to better serve the top of that ladder or altering your business model to better demonstrate your value.
On the latter point, our survey showed a big shift to fixed-fee pricing since 2018. This indicates that CAS practices are leading the profession with well-defined pricing and packaging that permits more control over revenue and cash flow. Firms should be continuously evaluating their mix of services, positioning and client outreach.
Get ready for CAS 2.0
The profession as a whole still hasn’t come close to cracking the code on CAS. The opportunity is significant. CAS is a highly strategic subscription service that should be integrated across all facets of the firm. The market is ready for CAS 2.0 and, as our survey shows, firms are increasingly marching in this direction. If you don’t have a CAS practice today, you should strongly consider it — and your peers can help show you the way.
