The Two ‘A’s Underpinning Advisory Services

Very few firms cite advisory services as their biggest revenue earner today. Why does this gap exist and how can firms use the two ‘A’s to close it?

Accounting technology has advanced rapidly in recent years. Calculators and manually updated spreadsheets are being replaced by cloud-based, automation-heavy tools, with artificial intelligence and machine learning on the horizon. Instead of spending hours manually compiling working papers, accountants can now rely on tools to do this instantly.

Some initially viewed this technological leap as a threat to the profession. However, most quickly realised that technology is opening the door to a better future—accountants are not becoming obsolete, but evolving.

Professionals no longer need to spend their days ensuring the right numbers are in the right place. With this process automated, they can focus on interpreting the numbers: identifying where clients are performing well or poorly, forecasting the future, and advising on how to maximise success.

This is liberating, high-value work. Accountants can leverage their expertise to become trusted business advisors.

Firms of the future will use technology to deliver powerful advisory services. They’ll go beyond automation to support real-time activation and predictive intelligence, positioning themselves to help clients grow their businesses effectively. According to the report ‘Technology Trends in Accounting 2021’, 55% of firms expect advisory services to be their biggest revenue earner in five years.

Despite this ambition, only 14% say that advisory services are currently their biggest revenue earner. Why does this gap exist, and how can firms use the two ‘A’s—access and automation—to close it?

It’s all about access to data

Accountants need comprehensive knowledge of their clients’ performance to provide advisory services. Access to crucial financial data—both historic and real-time—is essential. This data forms the foundation for insights and reveals what’s happening behind the scenes.

54% of respondents in a recent survey stated they have “access to data and insights that enable me to deliver advisory services for my clients.” However, there’s a significant difference between providing generic advisory services and deeply analysing a client’s business to identify necessary changes. This also means that 46% lack the data they need.

Compiling annual accounts or working papers reveals broad trends, but true value comes from diving into the details. Accountants need access to all financial data, including data from other systems clients use for business management. Yet only 35% of respondents can access such data.

For example, if a firm notices a client’s wage bill is higher than industry competitors with similar headcounts, the initial advice might be to reduce headcount. However, a deeper look at salary and bonus structures could reveal that a loyalty program is leading to higher costs without corresponding productivity. The solution might be to adjust the loyalty program rather than simply reduce staff.

These next-level insights are only possible with full access to financial data.

Automation has its own role to play in advisory

The discussion around compliance versus advisory work often separates accountants into two buckets and limits the perceived benefits of automation. Traditionally, automation has focused on compliance—handling data-heavy, repetitive tasks accurately and efficiently. Advisors, on the other hand, are seen as experienced professionals providing insights.

However, there is significant crossover. Automation not only streamlines compliance work, allowing firms to manage more clients faster, but also frees up time for advisory work. This benefit extends beyond senior staff to anyone working with clients.

Accountants cannot focus on everything at once. If they are busy with one client, they may miss important developments with another. While accountants are well-placed to provide key financial advice, they cannot monitor everything manually.

Advisory services are still largely manual and ad hoc. Accountants must be vigilant to spot key insights and provide timely advice. However, not all insights are noticed, meaning some clients miss out on crucial guidance.

Automated notifications can help. Imagine being automatically alerted when a client’s finances change significantly—such as going into the red, making a large investment, reaching a development threshold, or experiencing cash flow issues.

With such alerts, accountants can provide maximum value to all clients, demonstrating constant oversight and readiness to advise. Unfortunately, only 25% of respondents can create automated alerts or reports from client data—a modest 3% increase from the previous year.

Recognising the value of automation for compliance and reporting, but ignoring its potential for advisory work, is a missed opportunity. Clients increasingly seek firms that use technology for proactive business intelligence. Automated alerts ensure no key insights are missed.

The clock is ticking

If, like 55% of firms, you expect advisory services to be your main revenue driver in five years, action is required.

You cannot be an indispensable financial advisor without access to real-time data across your client portfolio. Relying solely on year-end data is insufficient; you need visibility into your clients’ organisations at all times.

Once you have suitable access, the next step is automation. Use automated alerts to ensure no key insights go unnoticed. Stay informed and provide critical advice as soon as it’s needed.

By doing so, you’ll be on your way to becoming an advisory-led firm, with compliance work strengthening the quality of your advice.