Building a competitive advisory service structure

In an effort to drive greater profitability, better serve clients, and remain competitive, many forward-looking accounting firms are rethinking their business models and shifting their focus to providing advisory service offerings. If your firm is in the midst of this transition, the question becomes: how do you build and deliver the most successful service structure?

To help you along this path, we’ve created this white paper that delves into the profitable opportunity of advisory services, the challenges many firms face when making this shift, and step-by-step instructions on executing a competitive service structure for your firm. 

The rise of advisory services

It is no secret that a growing number of firms are shifting away from compliance-based business models in favor of higher-margin advisory services. In fact, research by the Thomson Reuters Institute found that 95% of those surveyed replied that their clients are now looking for some form of advisory services, and 66% said this desire was strong.

In response, accounting firms of all sizes are now offering advisory services of one sort or another, and many are planning to provide other frequently requested services, such as financial planning and decision support. According to the survey, this shift is driven by the growing number of clients in search of those services and the fact that more firms are recognizing the need to evolve their business models in response.

The costly challenge accounting firms face

While it’s clear that clients want an accounting professional who will provide them with proactive advice, many don’t understand the value of the service they are asking for — and the additional cost that comes with it. As such, many firms find themselves giving away tax advice for free. If your firm is experiencing this challenge, the key is setting proper expectations upfront.

“Clients expect that they can get everything with the price of one service, which is the price of a tax return. They get access to your brain, everybody else’s brain in the office, as well as your solutions, strategies, time — everything. And the reason why this happens is because scope is not set up front. We don’t necessarily tell the client what’s included and what’s not included, which is very critical to let the client know, ‘When should I ask for that quick answer?’ versus ‘That’s outside of the scope of our agreement.’ And that’s why we have a lot of scope creep,” said Mo Arbas, Senior Business Advisory Consultant, during the Thomson Reuters Advisory Symposium.

With this shift, many firms are realizing that hourly billing doesn’t fully capture the true value of their services.

According to the Thomson Reuters research mentioned earlier, the pricing model gaining the most traction in 2024 is value-based pricing, in which professionals charge prices based on expertise, guidance, and results rather than time spent performing the work. Almost half (48%) of respondents said their firms already offer value-based pricing on some of their services, and 18% said they plan to start offering it by the end of the year.

Boosting business performance and enhancing client relationships

Defining the scope of services in business is crucial for managing client expectations and ensuring smooth operations. Distinguishing between advisory services, which offer strategic insights and expert guidance, and maintenance services, which handle essential operational tasks, means businesses can clearly communicate the value and purpose of each service.

This clarity not only enhances client relationships by setting accurate expectations but also improves business efficiency by aligning resources with specific service needs. Let’s take a closer look at some critical considerations as you explore updating your firm’s business model.

Optimize service categories for improved business efficiency and client satisfaction

For any business, effectively organizing its services is crucial for enhancing efficiency and client satisfaction. This process involves distinguishing between advisory service offerings that provide strategic insights and expert knowledge, and maintenance services that cover essential operational tasks like tax preparation and bookkeeping. Understanding this distinction allows a business to recognize the unique contributions of each service type and how they bolster client relationships.

The first step in this organizational process is to “get your house in order” by identifying all the services your firm provides and classifying them into these two primary categories: advisory and maintenance. This categorization not only clarifies which services deliver strategic value and ensure daily operational compliance but also helps pinpoint your firm’s strengths.

Knowing where your firm excels and the basic services it provides to maintain client relationships and operational stability can help you manage your resources. Tailoring your service delivery to meet specific client needs and focusing on areas where you can provide the most value are vital strategies for positioning your firm for growth. This structured approach to service management ultimately leads to better client satisfaction and strengthened business performance.

Elevate business offerings through clear service definitions

Clarifying the scope of your services is essential for any business to manage client expectations effectively and ensure smooth service delivery. This process involves detailing exactly what each service includes and excludes. For example, if your firm offers tax preparation, it is important to specify whether this covers one tax return or multiple returns. Similarly, defining the number of transactions or the hours dedicated per month is crucial for bookkeeping services.

Clarity helps prevent misunderstandings and also boosts operational efficiency and scalability. Both your team and your clients have a better understanding of what each service entails and the value it provides when you set clear expectations upfront.

Services can be broadly categorized into two types: advisory and maintenance. Advisory services are strategic, requiring specialized knowledge to provide unique insights and expert guidance tailored to each client’s specific challenges and goals. Clearly defining these services positions your firm as a thought leader and strategic partner.

On the other hand, maintenance services include essential routine tasks, such as tax preparation, payroll, and bookkeeping. These are critical for the smooth operation of your clients’ businesses and compliance with various regulations. Defining these as maintenance services helps clients understand that these tasks are ongoing and necessary for their day-to-day operations.

Precisely outlining the scope of these service categories allows your firm to efficiently communicate the purpose and benefits of its offerings. Doing so not only aids in resource allocation and improves service delivery but also strengthens client relationships by consistently meeting expectations. Additionally, clear service definitions help with marketing efforts by allowing your firm to highlight specific areas of expertise and attract clients looking for those particular services.

Streamline client solutions: The benefits of service bundling

Bundling services is a strategic approach for firms aiming to enhance efficiency and profitability. Firms can offer greater value and simplify the client experience when they combine multiple services into comprehensive packages. This method helps prevent scope creep — where the range of a project continuously expands — by specifying what clients receive at different service levels. It also facilitates easier management of expectations and resources, fostering greater client satisfaction and trust.

5 strategies for effective service bundling:

1. Combine advisory and maintenance services. Integrating services like tax preparation — a maintenance offering — with financial planning and strategy consultation — an advisory service — ensures firms can provide holistic support that showcases their full capabilities. This strategy addresses all aspects of a client’s needs and enhances the perceived value of the firm’s offerings.
2. Tailor client packages. Assessing individual client needs allows firms to customize bundles properly. This personalization ensures clients receive the most relevant and impactful solutions, enhancing satisfaction and effectiveness.
3. Create attractive value propositions. Bundling packages can differentiate a firm from its competitors by combining routine and specialized services in a compelling and convenient manner. This method can make service offerings more attractive and easier to market.
4. Optimize resource allocation. Knowing which services are frequently combined and understanding demand trends help firms manage their workload and staff allocation more efficiently. This optimization leads to better overall resource management within the firm.
5. Enhance marketing and client acquisition. Marketing a bundled service is easier since it provides a clear, comprehensive solution to potential clients, contrasting with piecemeal offerings. This clarity can attract clients looking for streamlined solutions that address a broad range of business needs.

Effectively bundling services according to advisory and maintenance categories streamlines firm operations and significantly improves the client experience. This strategy supports business growth and client retention by demonstrating the comprehensive value and breadth of the firm’s services.

Improve profitability with value-based pricing in specialized services

Setting the right pricing is crucial for any business, particularly when offering specialized services. Many firms are shifting from traditional pricing methods to value-based pricing, which sets prices based on the perceived value to the client rather than solely on the cost of services provided.

Value-based pricing is effective because it acknowledges that different clients value different aspects of a service. For instance, some clients might value strategic advice more highly than basic bookkeeping and are willing to pay a premium for it. This pricing strategy can enhance client satisfaction and potentially increase profits since it aligns the price with the value delivered.

To implement value-based pricing successfully, it is essential to clearly define what each service includes and the specific benefits it offers. This clarity allows for setting price levels that accurately reflect the value provided to the client. Regular reviews of these pricing arrangements ensure that the firm remains fairly compensated for the value it delivers and can adjust prices as necessary to reflect any changes in the services or their value to the client.

In the context of advisory and maintenance services, value-based pricing is particularly relevant. Advisory services, which provide specialized knowledge and strategic guidance, may command higher prices due to the expertise and tailored solutions they offer. These services are ideally suited to value-based pricing because they deliver significant, perceivable value to clients.

Conversely, maintenance services, essential for daily operations and compliance, might be more suited to a straightforward or fixed pricing model due to their routine nature and regular demand.

Ultimately, setting appropriate pricing for these services requires a deep understanding of the market, client needs, and the intrinsic value of the firm's specialized knowledge or routine support. This strategic approach not only ensures fair compensation but also strengthens client relationships by clearly communicating the value of the services offered.

Refine service delivery through consistent internal practices

Establishing strong internal practices is essential for professional firms to support effective service delivery. This setup involves implementing systems and processes that ensure smooth operations and high-quality service provision. Here’s how firms can optimize their internal practices to enhance service delivery:

Clear definition of services. It is crucial for a firm to clearly define each service it offers, distinguishing between advisory and maintenance services. This clarity helps set accurate client expectations and ensures team members understand their roles and responsibilities.

Efficient process implementation. Having detailed checklists and workflows for various services, such as tax returns or payroll, is vital. This implementation helps manage tasks efficiently and ensures that all team members can follow these processes effectively.

Resource allocation. Different services require varying levels of expertise and resources. For instance, advisory services may need specialized skills and strategic thinking, while maintenance services might demand consistent attention to detail. Appropriately allocating resources, including workforce, technology, and time, is crucial to delivering these services efficiently.

Training and development. Ongoing training and development are imperative, especially for advisory services that benefit from the latest knowledge and skills. Regular training sessions ensure that staff are up to date with current regulations, technologies, and market trends, maintaining a competitive edge.

Client relationship management. Efficient communication and robust relationship management are crucial for understanding and meeting client needs. Regular interactions and feedback mechanisms help align services with client expectations and facilitate timely adjustments.

Quality control and compliance. Particularly for maintenance services, compliance with relevant regulations is essential. Establishing stringent quality control processes and conducting regular audits are necessary to uphold standards and maintain client trust.

Integrated solutions. Adopting integrated solutions that provide relevant resources, coaching, and collaboration opportunities can significantly enhance a firm’s capability to deliver high-quality services. These tools support both the operational and strategic aspects of service delivery.

Strategic marketing and positioning. Effectively conveying the unique benefits of each service type allows a firm to market its offerings more efficiently. This strategic positioning helps attract clients seeking services that meet their unique needs.

When they focus on these strategies, firms can improve their service delivery, improve client satisfaction, and support overall growth and development.

Augment accounting services with AI

Integrating artificial intelligence-powered tools is essential for any accounting firm looking to elevate its service offerings. These technologies automate routine tasks — like data entry and compliance checks — and free up professionals to focus on high-value advisory services. Artificial intelligence (AI) also plays a crucial role in analyzing financial data, predicting future trends, and managing risks, which equips clients with the most informed and forward-thinking guidance available.

In the realm of advisory services, leveraging technology like advanced data analytics and AI tools can transform how strategic guidance is delivered. These tools enable a deeper analysis of market trends and business outcomes, and they personalize financial advice, making advisory services more efficient and impactful. This impact allows firms to provide progressive, tailored solutions that meet specific client needs.

AI significantly enhances efficiency for maintenance services by automating essential tasks such as tax preparation, payroll processing, and bookkeeping. Automation reduces errors, saves time, and ensures compliance with regulations, allowing firms to shift their focus and resources toward more strategic activities.

The adoption of AI ensures accounting firms can achieve more effective service delivery, improve client satisfaction, and boost overall operational efficiency. This strategic use of technology positions firms as innovation leaders in the accounting industry, offering client-focused solutions that are advanced and reliable.

Prioritize strategic client selection for optimal service alignment

Choosing the right clients is crucial for any business. Ensuring that clients align with your firm’s services is essential. Not every potential client will be suitable, and it’s acceptable to turn some away if they don’t fit your business model. This approach saves time, reduces stress for your team, and opens opportunities to attract and serve more ideal, profitable clients. Strategic client selection contributes to the overall success and efficiency of your firm.

Understanding the distinction between advisory and maintenance services can assist in identifying suitable clients for a firm. By accurately detailing its service offerings, a firm can better attract clients seeking those specific services. For instance:

Clients for advisory services. These clients seek strategic guidance and expert advice to address complex issues or help them grow and innovate. They might be businesses experiencing rapid growth, facing industry changes, or needing to implement new technologies. Targeting clients who require these high-value, specialized services can attract profitable, intellectually stimulating, and reputation-enhancing engagements.

Clients for maintenance services. These clients need reliable and essential services to keep their operations running smoothly. They might include small businesses, startups, or established companies requiring ongoing support with financial, administrative, or compliance tasks. These clients value efficiency, accuracy, and dependability.

Aligning service offerings with client needs allows a firm to more effectively market its services to the right audience, ensuring a better fit between client expectations and service delivery. This strategic alignment helps build long-term relationships and maintain a stable client base; both are crucial for sustained business growth and success.

Understanding the firm’s service offerings allows for better alignment with client needs and expectations. The following are four ways this understanding might influence client selection:

1. Client needs. Clearly defining which services your firm specializes in allows you to target clients whose needs align with your offerings. For example, a firm focused on advisory services might look for clients who require strategic guidance and expert knowledge, such as startups needing business strategy development or established businesses looking at new market expansion.
2. Client expectations. Clients seeking long-term strategic advice might be a better fit for firms offering robust advisory services. Conversely, those needing ongoing operational support might prefer firms that excel in maintenance services. Understanding these expectations helps you select clients who will value and benefit from your specific services.
3. Resource allocation. Knowing your firm’s strengths in either advisory or maintenance services can guide you in choosing clients for whom you can do the best work. Doing so ensures that you use your resources efficiently, leading to better outcomes for both your firm and your clients.
4. Client relationship development. Different types of services might attract different kinds of client relationships. Advisory services often require deep, consultative relationships and a high level of trust, while maintenance services might emphasize reliability and consistency. Choosing clients based on the type of relationship you can manage and develop can lead to more successful engagements.

Ultimately, understanding and categorizing service offerings provides a foundation for identifying and selecting the right clients. This approach ensures that the services provided align with what the clients truly need, thereby enhancing satisfaction and fostering growth for both parties.

Jumpstart your advisory journey

In order to remain competitive, firms must build a scalable, profitable service structure that delivers the services that clients need. To do so involves identifying your service offerings and determining what is advisory and what is maintenance, specifying scope, bundling services, determining pricing, establishing internal best practices, optimizing technology, and identifying the right clients for your service model.

Keep in mind that you don’t have to do it alone. Turning to a provider like Thomson Reuters can help ensure your firm has the powerful AI tools and best-in-class content for a proven roadmap to succeed.

The time for change is now. What are you waiting for?

Solutions from Thomson Reuters

Practice Forward

Firms that have embarked on their advisory journey with Practice Forward have eagerly shared successes like increased revenue, happier clients, and having more fun at work. As a content and consulting solution, we designed Practice Forward to help firms grow while improving client service. It features an extensive range of resources, including industry-specific content, revolutionary tools, and insightful coaching sessions.