Paired with the rapid changes many are experiencing in the accounting profession, Client Advisory Services (CAS) has emerged as a pivotal player in ensuring the success of firms. Once confined to a compliance-focused role, CAS has transitioned into a dynamic strategy that fosters business growth and innovation for both the firm and its clients. This transformation is the focus of the AICPA in their “Client Advisory Services Benchmark Survey,” which explores CAS's evolution towards providing higher value, deeper insights, and nurturing trusted advisor relationships.
The top CAS firms have recognized the importance of offering comprehensive services beyond tax and compliance. By adopting best practices for sustainable growth and understanding their client's needs, they equip their clients to survive and thrive. This is achieved through vital services and collaboration with their clients in areas such as cash flow forecasting, sales projections, and scenario modeling, marking CAS as a critical driver shaping the accounting industry's future.
Why You Need to Prioritize CAS
The CPA firms of today are witnessing a remarkable shift in their roles, with CAS taking center stage. The transition of CAS from a compliance-centric approach to a dynamic, proactive strategy is a response to the challenges their clients face, now more than ever. After several years of upheaval, post-pandemic businesses are struggling with fundamental changes in the way they do business and their market, and many are saddled with debt. With increasing interest rates and chaotic supply chains, business owners face difficult daily decisions.
In this new environment, CPA firms no longer consider CAS to be just a means to crunch numbers and prepare financial statements. Instead, it's a paradigm shift towards equipping clients with timely data and delivering business insights. CAS has become synonymous with becoming a strategic partner and a trusted advisor, guiding clients through financial intricacies.
How the Top CAS Performers are Delivering Industry-Leading Services
Their unwavering commitment to offering Client Advisory Services is a crucial factor in distinguishing top performers. Underscoring this commitment, on average, 67% of their staff are entirely dedicated to CAS, emphasizing their importance on this service line and its impact on their clients. Additionally, 90% of these top performers have offered client advisory services for over four years. This commitment contributes to their high-performance levels, which are driven by factors such as an established client base and streamlined CAS practices. CAS is not a quick fix but a long-term commitment that yields substantial benefits.
A substantial portion of the AICPA’s survey's respondents experienced organic growth in their CAS practices by providing services to their existing firm clients. This growth solidifies client relationships and highlights the increasing demand for CAS among clients who value strategic financial guidance.
A closer look at the services offered within CAS reveals the wide-ranging value that progressive firms bring to their clients, including CFO and controller Advisory services, offered by nearly 90% of top firms. Other heavily featured services include financial planning, modeling, forecasting, and budgeting.
The financial impact of CAS on top performers is also evident. The top firms have witnessed substantial growth, with a median CAS Net Client Fees Per Professional (NCFPP) increase of 25%, reaching over $230,000.
Top CAS performers deliver higher value, deeper insights, and a trusted advisory relationship. They offer comprehensive services beyond compliance, and their financial performance underscores their value.
How the Leading CAS Firms Successfully Implement and Offer Their Services
To stay ahead of the curve and meet the increasing demands of clients, top-performing CAS firms have implemented a range of best practices that not only strengthen their position in the market but also pave the way for sustainable growth. These strategies and tactics include:
Raising Prices to Reflect Value
Leading CAS firms understand the importance of aligning their pricing with the value they provide to clients. As suggested by the Thomson Reuters Institute report, efficiency can be improved in various ways, including investments in the latest technology and training employees to make better use of their existing technology. This allows CAS firms to raise their prices confidently, recognizing that their services contribute significantly to their clients' success.
Use Dedicated CAS Staff
The top-performing CAS practices have realized the significance of having a dedicated team focusing solely on CAS. The CAS Benchmarking Survey indicates that CAS staff can be more effective when they do not divide their time between advisory and other areas of the firm. This commitment ensures that CAS services receive the attention and expertise they require.
Standardize Processes and Procedures
Standardization is a cornerstone of CAS success. Firms can consistently deliver high-quality services to their clients by streamlining their processes and procedures. This not only improves efficiency but also enhances client trust and loyalty. Standardization also plays a pivotal role in effective automation, a critical component of modern practices.
Communicate the Value of CAS Services
One of the key challenges facing CAS firms is communicating the value of their services internally and externally. The Thomson Reuters report reveals that many clients are seeking business advisory services and tax planning, but they often lack awareness of CAS's value. To overcome friction, CAS leaders must craft a compelling value proposition and consistently communicate it to clients and internal stakeholders.
Package and Bundle Services
By giving clients options, CAS firms can empower them to tailor their services to their specific needs while demonstrating the value they will receive. Additionally, package pricing enhances transparency and simplifies the billing process.
Cross-Sell CAS Services to Existing Clients
Building client relationships is essential for CAS firms. Cross-selling to existing clients expands the range of services offered and deepens the client-firm relationship. Clients who have experienced the value of CAS in one area are more likely to engage with additional services.
Off-board Low-Value or High-Maintenance Clients
Some clients may not fit the firm's preferred niche, service model, or software systems. Leading CAS firms are transparent with prospects about their services and pricing, ensuring that clients who are not an ideal fit are identified early. This strategic approach allows CAS firms to focus their resources on clients where they can deliver the most value.
Upgrade to a Tech Stack that Promotes Automation and Efficiency
For CAS firms looking to enhance efficiency and deliver value, modern tools, process automation, and artificial intelligence can streamline CAS operations, reduce manual labor, and improve accuracy. CAS firms must continuously evaluate and invest in their technology stack to stay competitive.
Invest in Learning and Development
The commitment to ongoing training and education is a hallmark of top-performing CAS firms. These firms prioritize staff training, deepening their expertise and skill sets. They also explore non-traditional talent options, including remote team members, to bolster their capacity for growth.
Focus on KPIs Other Than Utilization and Realization
Leading firms recognize the need to look beyond traditional Key Performance Indicators (KPIs), such as utilization and realization rates, to measure CAS success accurately. Metrics like revenue per client and net client fees per professional offer a more holistic view of CAS performance and align more closely with the value-driven approach CAS firms aim to deliver.
Making the Shift to Advisory
The evolution of CAS offerings represents an exciting opportunity for firms to thrive and innovate. By following these best practices, CAS firms can elevate their services, contribute significantly to their clients' success, and effectively meet their evolving needs. The future of Client Advisory Services looks bright, with an increasingly prominent role in shaping the success of businesses.
The Dryrun team has been fortunate to talk to many of the leaders offering Client Advisory Services today and wade through the leading resources on CAS.
Tap into the knowledge and best practices with your free copy of “The New Face of CAS: The Blueprint for Thriving Client Advisory Services” to uncover the shortcuts to enhancing your advisory services and offerings.