A new survey from the AICPA and CPA.com shows that client advisory services (CAS) practices reported a median growth rate of 20%, demonstrating significantly stronger performance than other practice areas. CAS practices are also profitable, according to the survey, with median profit margins of 34% for all firms and 47% for top performers, compared to margins of 28% to 34% for all firm service categories, as reported by other benchmark surveys for the profession.
Polling a cross-section of 111 U.S. firms with CAS offerings and utilizing data from fiscal year 2019 and the early part of 2020, the Client Advisory Services Benchmark Survey shows CAS to be among the fastest-growing areas of consulting in public accounting. When the survey was last conducted in 2018, CAS practices grew 12%, a growth trajectory that appears likely to continue. The survey defines CAS as a practice where firms advise clients across a spectrum of financial and accounting-related decisions, with common offerings including financial statement preparation, CFO/controller advisory services, accounts payable and forecasting/budgeting.
“Client advisory services have become an increasingly strategic component of CPA firms’ offerings, and this was never clearer than during the pandemic,” says CPA.com president and CEO Erik Asgeirsson. “Looking forward, we see new opportunities in business forecasting, business funding and other categories that will drive growth and provide greater value for clients.”
Among the survey’s other findings:
- CAS practices deepened staff expertise through additional training, with all practices increasing the number of average training hours from 27 to 37 per full-time equivalent (FTE) and top performers from 28 to 44.
- CAS practices made a big shift to fixed-fee and value billing models in the past two years, with a majority (60%) offering these structures to clients.
- Nearly half (46%) of top performers in the survey reported a major barrier to success being internal firm team members who don’t understand the value of CAS, equate it with lower-value bookkeeping or push back on the CAS business model.