The Client Advisory Services Benchmark Survey from CPA.com and the AICPA Private Companies Practice Section (PCPS) can give firms new insight into running a successful client advisory services (CAS) practice. CAS is a fast-growing area: The survey found that the median growth rate for CAS practices was 20%. The top-performing CAS practices in the survey — the 25% of respondents with the highest net client fees per professional — were found to be more likely to follow certain best practices than other survey respondents.
As a group, the survey's top performers outpaced all respondents on several key indicators. They had median net client fees that were more than twice as high as respondents as a group. They also had nearly 70% more median CAS clients, higher median CAS net client fees, and higher median CAS margins than all respondents.
Firms can learn from these results, Jennifer Wilson, partner and co-founder of Convergence Coaching LLC, said while commenting on the survey during an AICPA Town Hall webcast. "This is the only survey that is measuring CAS" in this degree of depth, she said. "It can help practice leaders know where they should be shifting strategy."
Some of the factors that set top performers apart included:
Investing in talent. Top-performing practices offered staff more training opportunities than all respondents did as a group. At top-performing practices, staff received a median of 44 hours of CPE or other training per year, compared with a median of 37 hours for all respondents.
Elinor Litwack, CPA, partner, outsourced accounting and advisory at GRF CPAs and Advisors in Bethesda, Md., which was one of the survey's top performers, said during an AICPA Town Hall webcast that training is something her firm emphasizes. "We believe in training — not just technical CPE but training for soft skills and leadership skills," she said. Her firm has both practice leaders and "rising stars" in the CAS area attend CAS workshops. "Everyone needs to understand the ins and outs of CAS strategy," she said.
Top performers were also more likely to use certain kinds of recruiting methods than all respondents, particularly internal recruiters (80% vs. 55% of all respondents) and offering staff recruiting bonuses (64% vs. 48%).
Acceptance of remote work. Top performers were more likely than all respondents to say the move to remote work during the COVID-19 pandemic went well and that they expect to see more remote work in the near future. A median of 75% of top performers agreed with that statement, versus 59% of all respondents.
"Top performers were ahead of the curve with cloud technology," said Phil Quimby, product marketing manager for CAS at CPA.com. During the pandemic, they thus had an easier time pivoting to remote work, he said.
He believes that offering remote work options can help firms with staffing. "We believe that practices that remain flexible rather than requiring staff to be in the office will have an advantage in recruiting the best talent," he said. "If you can recruit from the entire country (or around the world), you have a much larger talent pool."
Having dedicated CAS staff. A median of 56% of top performers had staff who worked only on CAS, compared with 43% of all respondents.
Having staff who work solely on CAS can give a practice an advantage, Quimby said. "CAS practices operate differently than other parts of an accounting firm," he pointed out. "If your staff is regularly getting pulled off to support other areas of your business, they will be less focused and not perform at the same level."
Dedicated staff, Quimby said, are more likely to acquire the knowledge needed to deliver CAS more thoroughly. "They will understand the technology, the processes, and the clients better," he said, and so are "able to develop insights and advise clients at a higher level."
Using technology efficiently. Top performers were more likely than all respondents to use technologies that could automate processes and lead to greater efficiencies. For instance, they were more likely to use dashboards and alerts (78% vs. 66%) and track engagements with workflow systems (87% vs. 77%) than all respondents.
A median of 88% of top performers supported three or fewer general ledger (GL) software programs, versus 79% of all respondents. Limiting the number of such programs can help firms deliver streamlined, more efficient services, as they won't need to train staff on as many programs, Quimby observed.
CAS practices need to "focus on fewer technology solutions and not try to support every general ledger," Wilson said. In some cases, that can mean helping some clients transition to different software, rather than adopting their software yourself, she said.
CAS benchmarking survey results: Top performers vs. all respondents
Strategies to grow your CAS practice
CPA.com experts recommend the following steps to improve your CAS practice:
- Continue the innovation and creativity spurred by the COVID-19 pandemic to enhance existing advisory services and develop new ones to meet clients' needs.
- Benchmark the firm's net client fees per professional (NCFPP) and develop a plan to increase them.
- Pilot changes in pricing, billing, and benchmarking. Move away from time-based measures of tracking performance and adopt results-based measures instead.
- Explore nontraditional talent options to build capacity, including remote team members.
- Leverage technologies to automate, drive efficiency, and allow team members to make the best use of their talents.
- Develop ideal target client and engagement profiles and create client acceptance guidelines to ensure that you deliver only the right work to the right clients. Consider whether you should move low-value work out of the practice.
- Ensure firm leadership understands the value of CAS and the CAS business model.
- Secure firm leadership buy-in and sponsorship by clearly communicating the CAS business model and value of the service line.
Register to attend a CPA.com webinar with free CPE on Nov. 30 at 2 p.m. ET to hear from top-performing practices on the opportunities this service line provides, as well as steps to build out your practice.
Get expert insights and practical strategies to take your CAS practice to the next level. Join profession leaders at CPA.com's Digital CPA Conference, Dec. 5–8. Register now to attend virtually.
CPA.com is committed to identifying key CAS trends and barriers so it can invest in the right resources and technology to help firms grow and evolve their practices. Visit cpa.com/cas to access resources including workshops, case studies, white papers, and more.
— Courtney Vien (Courtney.Vien@aicpa-cima.com) is a JofA senior editor.