Growth in client advisory services set to continue rapid increase

Firms offering client advisory services (CAS) project their CAS-related revenue to double over the next three years, according to a biennial CPA.com report.

Collectively, the 206 U.S. firms taking part in 2024 CPA.com & AICPA PCPS Client Advisory Services Benchmark Survey report projected a median growth rate of 99% over the next three years. The firms reported a 17% median revenue growth rate for 2023 over 2022 and projected a 15% growth rate for 2024.

Median annual CAS revenue rose 61% since the last CAS Benchmark survey in 2022.

“Firms are continuing to double down on client advisory services (CAS) as a key growth area, but there’s still so much more potential for those that take an intentional and strategic approach to building and scaling their CAS practices,” Kim Blascoe, CPA, senior director of CAS professional services for CPA.com, the AICPA’s technology subsidiary, said in a news release.

The report highlighted seven data-driven insights that point to the vast potential of CAS and can guide firms looking to offer or increase their investment.

1. CAS growth continues to be significant and outpaces the profession’s overall growth. While firms reported a 30% increase in median net client revenue compared with the 2022 CAS Benchmark survey, the 2023 National Management of an Accounting Practice survey reported a median increase in overall firm net client fees of 9.1% in 2022 compared with 2021.
2. Firms can increase revenue by expanding their higher-level service offerings. Firms that generate significant revenue from CFO or higher-level business insights advisory services earned more than 30% higher monthly recurring revenue.
3. Defined strategy and planning are key to a successful and profitable CAS practice. Practices with a formal written CAS business plan report $27,761 in median average annual client revenue — nearly $10,000 more than all respondents.
4. Defined client niches are key to promoting standardization and efficiency and, ultimately, increasing profitability. Firms in which more than half of their revenue comes from industry niches report 38% higher median CAS revenue and 51% higher median CAS services net revenue per client than all respondents. The top niche areas served are construction, professional services, not-for-profit, and retail.
5. Adaptability and agility are key to staffing in CAS. Seventy-eight percent of those surveyed have staff members who are fully dedicated to CAS. Top performers in the survey — defined as firms in the top quarter of median net client fees per professional — show a greater commitment to upskilling employees.
6. Better strategy and investment around technology means better productivity, efficiency, and staff satisfaction. Going hand-in-hand with attitudes toward staffing, firms that strongly agree that they’re committed to continuous investment in technology report higher median net client fees per professional and are able to serve a median of 100 clients compared with 67.
7. Pricing in the CAS space has shifted away from pure time and materials billing. CAS practices continue to lead the way in rethinking billing, with only 10% of respondents still employing hourly billing as their primary pricing method. In 2018, the first year of the survey, 53% primarily employed hourly billing.

Blascoe will co-host a free webinar on Jan. 30 that will highlight key takeaways from the survey and how survey data can drive next steps for firms.

— To comment on this article or to suggest an idea for another article, contact Bryan Strickland at Bryan.Strickland@aicpa-cima.com.