Recent findings indicate that accountants don’t need to shift entirely to advisory work, as firms that balance both advisory and compliance services tend to be highly successful.
This conclusion stems from a study by the Center for Accounting Transformation, CPA Trendlines, Avalara, and Brigham Young University, which analyzed responses from 213 accountants across various firm sizes. The report reveals that firms can thrive without specializing strictly in advisory services or any specific niche.
Survey participants were asked to rate their firm’s success on a scale of 1 to 10, and also to indicate where their firm stood between compliance and advisory work, with 1 representing full compliance focus and 10 being solely advisory. The most successful firms displayed a slight preference for advisory work, but the balance between the two was crucial.
Among the top-performing firms, the average score was 5.67, suggesting a relatively even mix of compliance and advisory work. Less successful firms showed a similar distribution, implying that while advisory-focused firms may outperform compliance-heavy ones, the gap isn’t as wide as one might expect.
Donny Shimamoto, the head of the Center for Accounting Transformation and one of the report’s authors, emphasized that firms don’t need to choose between advisory or compliance but can excel by integrating both. In fact, the two areas often complement one another. Shimamoto noted that advisory services rely on accurate compliance work to provide sound recommendations.
When looking at specialization, the survey also found that while some degree of industry or service specialization can benefit firms, hyper-specialization isn’t a prerequisite for success. Both generalist and specialized firms performed well, with only a modest difference in success ratings.
However, one area where specialization significantly impacted results was employee satisfaction. Firms that specialized to some degree saw higher levels of staff satisfaction, while those that were highly specialized often experienced lower levels of employee happiness.
Shimamoto also pointed out that even if firms don’t immediately embrace advisory work, it’s likely to become more prevalent in the future. Automation is streamlining compliance tasks, and firms that want to remain competitive may need to either integrate advisory services or fully adopt automation tools to manage compliance efficiently.
While profitability is one measure of success, the study found that firms value other metrics, including continuous improvement, technology adoption, client satisfaction, and fostering a strong team culture. Though profit is critical, it’s not the only indicator of success in the accounting field.
Anecdotally, Shimamoto noted that advisory services tend to command higher fees, and thus are more profitable for many firms, particularly those with specialized knowledge.
