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TLDR:

Key points:

• Rapid changes in the accounting profession require firms to evolve
• “Advisory as a replacement strategy” involves replacing existing services with a focus on advisory services

Article:

The accounting profession is rapidly changing, with bookkeeping, tax, and compliance work becoming commoditized at an unsustainable rate for practice owners to make money or scale their practice. One solution that practice owners are turning to is the “advisory as a replacement strategy.” This business model involves completely replacing existing services with a focus solely on advisory services. Unlike other business models based on advisory services, “advisory as a replacement” requires practice owners to take a drastic leap in changing the way they do business.

Advisory services, at their core, are essentially consulting services offered by trusted financial professionals to guide their clients towards having a successful business. Practice owners who adopt the “advisory as a replacement” model typically spend half their time servicing clients and half their time finding new clients. Their revenue comes solely from offering advisory services, and any tax or bookkeeping needs are referred to a network of service providers.

By adopting the “advisory as a replacement” model, practice owners can position themselves as highly sought-after advisors, offering clients specialized and high-quality services. Focusing exclusively on advisory services allows firms to niche further into specific industries, becoming the go-to firm for certain sectors. The ultimate goal is for clients to seek out the firm, eliminating the need for constant marketing and client acquisition.

While “advisory as a replacement” requires significant changes for both the firm and the owner, it also offers substantial rewards and potential for growth. Despite the challenges involved, many firms may eventually transition to this model after initially enhancing or upselling with advisory services. However, “advisory as a replacement” should be the ultimate goal for firm owners due to the significant benefits and rewards it offers.

Overall, the shift to the “advisory as a replacement” model represents a transformative approach for accounting practices looking to scale, differentiate themselves, and provide higher-value services to clients.