A report on global advisory trends issued by Spotlight Reporting, which offers cloud reporting and forecasting software, found that nearly 80 percent of accounting firms are working on advisory services and that roughly 60 percent of firms earn between 10 and 50 percent of their revenue from advisory work. 

The company collected 600 responses from accounting professionals in New Zealand, Australia, Asia, the United Kingdom, the United States, Canada and South Africa. Respondents were asked how their firms were operating and what they were going to focus on doing differently in the next 12 months. Spotlight Reporting collected data from July 2021 to August 2021. 

The report’s key takeaways are that attitudes towards advisory are changing, but accounting firms are struggling to deploy at pace; diversification is happening and new services are offering choice; and the war for talent continues—and some practices may be better placed to win. 

Specifically, the report found that 79.8 percent of the respondents are already working on advisory services right now, and 8.2 percent plan to offer advisory services in the future. Nearly 56 percent of respondents described their firms as hybrid—offering 50/50 advisory and compliance services; while 25.3 percent focused mainly on tax and compliance services; 16.6 percent offer mainly advisory services; and 2.2 percent weren’t sure. 

Nearly 71 percent of the respondents’ firms provide management reporting, mentoring forecasting or similar work but say they could do much more; 20.8 percent say that such work makes up a significant portion of their fees. 

Asked how much of their current revenue comes from advisory work, 42 percent of the respondents said 10-30 percent; 28.3 said 31-50 percent; 12.5 percent said 51-70 percent; 12.3 said less than 10 percent; 2.9 percent said 71-90 percent; and 2 percent said nearly 100 percent.  

But the responding firms are seeking more revenue from advisory services in the future. Fully 37.2 percent would like 51-70 percent of their revenue to come from advisory work; 33.3 percent said 31-50 percent; 13.4 percent said 71-90 percent; 9.6 percent said 10-30 percent; 6 percent said nearly 100 percent and 0.5 said less than 10 percent. Asked in what areas they would like to increase their fees, more than half of the firms mentioned six advisory practices: 68.7 percent said cash flow forecasting; 65.1 percent said strategic planning and coaching, 62.5 percent said virtual CFO and adviser work; 58.3 percent said ongoing accounting and assistance; 55.3 percent said cash flow management/debt reduction; and 51.3 percent said tech stack assistance. 

The report also asked about what’s happening inside accounting firms. More than three quarters, 75.6 percent, said that they offer value-added services, such as management reporting and advisory meetings; 74.4 percent have flexible working options; 74 percent use new technology and tools with great enthusiasm; 38.1 percent hire employees with broad skills outside of accounting; 37.9 want to introduce value-added services but it time-poor; 14. 2 percent have a history of unsuccessful advisory implementation; 13.2 percent struggle to implement advisory services due to internal resistance; and 11.6 percent mainly focus on compliance work and probably always will. 

Finally, 50.1 of the respondents said that hiring staff was among their biggest challenges in the next 12 months; 45.1 percent mentioned work-life balance, 35.9 percent said economic impacts; 28.9 percent said retaining staff; 24.1 percent said government regulations; 16.6 percent said company culture; 16 percent said flexible working arrangements; 15.2 percent said mental health support; and 7 percent said diversity.