The Learning Curve for Advisory Services

By Kathleen Hoffelder, content editor, NJCPA – July 3, 2019
The Learning Curve for Advisory Services

From fraud investigation and financial services to government consulting — you name it and accounting advisories offer it. 

Almost daily a CPA practice that once only provided accounting and tax now boasts a myriad of client services, has updat­ed branding and has altered its website accordingly. In a recent Accounting Today “Secrets of the Top 100 Firms” report, “moving more into advisory services” was cited as one of the most important strate­gies of the top 100 accounting firms.   

Indeed, while many firms already have a strategy or best practices in place for ad­visory expansion, others may simply jump on a niche when they see an opportunity. Regardless of the method, enhancing client satisfaction and revenue growth, for both the firm and the client, is the desired out­come. Scott Derco, CPA, partner at Citrin Cooperman, cautions accounting adviso­ries not to cast their net too wide and try to be all things to all people. “Focus on an industry that makes the most sense and be the go-to advisor,” he says.   

So how does a firm become “launch ready” to offer new services but not offer something they can’t fully support? The answer varies. Some say it’s best to merge with or acquire other firms that already provide those services since the expertise is there and so are future clients, but others say hiring new employees and building out also works. 

As Charles Ott, CPA, MBA, co-manag­ing member of Levine, Jacobs & Company, LLC, notes, “it may be less expensive to grow organically, but it is faster to grow through the M&A route. There is no better way. It depends on the firm’s approach.”  Either way takes time to realize results. “There needs to be an expectation that no significant revenues will be generated with­in the first two or three years,” he adds. 

Hiring specific experts can help. As Sarah Krom, CPA, managing partner, SKC & Co. CPAs and immediate past president of the NJCPA, explains, “if you have never worked in this space before, it will be longer and more challenging to build this from the bottom up.” She suggests hiring a retired partner as a consultant or bringing someone in laterally who works in this space to create this niche.  

Service Specialties

Some service areas simply lend themselves more easily to CPA firms, while others involve more complicated procedures. With advisory services and consultancies on the rise, what niche areas work and why? Some of the most common areas for expansion include: 

Data and Analytics

There’s no question that data collection — and a lot of it — is needed for success­ful firm and practice management but also for advising clients on revenue growth and operating efficiently. According to The CPA Journal article, “State of the Profes­sion 2018: Views on Practice Manage­ment,” CPA firms are using technology to better service clients. For example, it points out that software-as-a-service (SaaS) accounting programs have grown in importance, particularly for small businesses. CPAs using SaaS programs, it says, are spending less time providing tra­ditional transactional services and more time delivering advisory services like tax planning, business insights, big data analysis and regulatory compliance.

And with increasing client demands, firms are using data in more non-tradition­al ways. Levine, Jacobs & Company, for example, has offered valuation and litigation support for years, but they are expanding their advisory services into data and analytics. “This niche reaches into a broad array of services including business devel­opment, regulatory reporting and other analytics customizable to a client’s needs,” says Michael Karu, CPA, CFF, member at Levine, Jacobs & Company. 


Cyber services are particularly on the rise. KPMG, for one, purchased Cyber, Inc., a Sil­icon Valley-based company that provides cy­bersecurity solutions globally, in January of 2018. “Acquisitions such as this enhance our existing capabilities as a leading provider of consulting services, expand our ability to de­liver newer and more agile solutions to our clients, and bolster our talent and resources in rapidly growing areas,” explains Jennifer Shimek, a partner/principal at KPMG and advisory office leader of its Short Hills office. KPMG continues to expand its offer­ings in regulatory, enterprise security, data and analytics, automation, internal audit outsourcing, contract compliance audits, blockchain and up-and-coming contingent workforce platforms. 

Bookkeeping/CFO Services

Bookkeeping is increasingly being offered as a service to clients. As Krom explains, “CPA practices are diversifying in areas such as outsourced CFO services, financial advisory services and consulting.” Accord­ing to Krom, these services are booming because there is a need in the business community, and they are coming to CPAs because of the trust and respect that their certification holds.

According to Deirdre Hartmann, CPA, who spearheads the bookkeeping and outsourced accounting services at Nisivoccia LLP, demand is high for these services since it’s less expensive than hiring staff. “By offering these services to our clients, they can now focus on gen­erating revenue, improving their internal operations and growing their business without having to spend the cost and time associated with managing their own accounting department.”

Internal Structure

Before any final decision on providing advisory services, the right mindset, staffing and support need to be in place. “First and foremost, you need to identify the right internal leadership team who has the passion and drive to build a new advisory practice area. Next, you need to understand market needs and buyer behaviors surrounding a service area. Once these items are addressed, you then bring in the talent,” explains Bill Hagaman, CPA, CGMA, managing partner and CEO of WithumSmith+Brown, which changed its company tagline in 2018 to list “advisory” ahead of tax and audit services. 

Derco recommends setting up an infrastructure that “allows you to be nimble.” His firm employs a team strategy to identify and find solutions that impact clients’ specific situations and add substance and value.

Regardless of which advisory services are offered, CPA practices must find a balance between adapting and responding to competition and remaining relevant to their clients. 

This article appeared in the July/August 2019 issue of New Jersey CPA magazine. Read the full issue.