Advisory services are rapidly evolving from a nice-to-have differentiator into the primary growth driver for tax firms, with leading practices achieving dramatically stronger results, according to a new report
Key insights:
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Advisory is becoming the strategic core of tax practices — Tax firms are no longer treating advisory services as an add-on to compliance work but rather as a fundamental driver of business strategy, client relationships, and sustainable revenue growth.
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Frequent client engagement drives measurably better outcomes — Professionals from firms that meet with clients quarterly or more frequently report significantly higher satisfaction across every dimension.
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Technology and capacity are the keys to breaking through barriers — Firms are rapidly adopting automation to free up their professionals for advisory work, while addressing staff skills gaps through training and strategic hires.
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For decades, tax firms built their practices around the predictable calendar of the annual compliance cycle, punctuated by occasional client requests for advice. Over the past five or more years, however, there’s been a seismic shift. Tax advisory services are emerging as the defining strategic function within successful firms, and it’s being driven mostly by an unprecedented convergence of regulatory complexity, technology capabilities, and evolving client expectations.
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2026 Tax Firm Advisory Services Report
As a result, many firm leaders are fundamentally rethinking their business models, reimagining what a tax practice can be as they move from being transactional service providers to becoming more strategic advisors that can guide clients through complex financial decisions year-round.
To delve into this deeper, the Thomson Reuters Institute has published the 2026 Tax Firm Advisory Services Report, that clearly shows that as regulatory complexity and client expectations mount, firms that systematically invest in building advisory capabilities are outperforming their peers by significant margins — and the performance gap is widening.
From compliance shop to strategic advisor
For tax firm leaders, this transformation represents both validation and opportunity. The numbers tell a compelling story, especially for firms that are proactively leading the strategic elevation of their advisory capabilities. Among surveyed respondents from firms experiencing revenue growth, 88% report that advisory revenue is growing faster than compliance revenue and that advisory services now represent an average of 31% of total firm revenue.
Not surprisingly, many forward-thinking firms are backing this shift with concrete plans. Nearly 9-in-10 respondents say their firms are planning to expand their advisory services within the next year.
The engagement advantage
What’s driving this transformation? According to the report, the quality and frequency of client relationships have fundamentally recast what’s possible in tax advisory services. Firms that meet with clients quarterly or more frequently see dramatically different outcomes than those meeting clients just once or twice a year.
Tax professionals from firms with quarterly touchpoints rated their own satisfaction significantly higher across every dimension measured, such as knowledge of the client’s business, understanding the client’s industry sector, the overall strength of the client relationship, and the range of services the client uses. Even more compelling, almost 90% of respondents from firms with more frequent client engagement report that advisory revenue growth is outpacing compliance growth compared to just 65% of respondents from firms with less frequent client contact.
As the report underscores: This message is unmistakable — relationship depth directly drives revenue growth. Firms that use quarterly or more touchpoints with clients are more successfully converting compliance-only relationships into comprehensive advisory partnerships at substantially higher rates than their less-engaged competitors.
The challenging landscape
Despite the opportunities that abound in advisory services, many firms face real obstacles in expansion, the report shows. More than half (52%) of respondents cite staff skills gaps among their colleagues as their biggest challenge, followed closely by client resistance to paying for advice (47%).
These challenges create a reinforcement loop that can trap firms in their current state: Staff lack advisory skills, so they focus on compliance work, leaving no time to develop advisory capabilities or engage clients proactively. Then, clients don’t see the value of advisory services because they haven’t experienced them, and the cycle continues.
Breaking this loop requires intentional strategy and systematic execution — which is exactly what leading firms are doing differently, the report shows.
How strategic priorities are reshaping the profession
The ripple effects from this advisory transformation have dramatically reshaped strategic priorities for tax firms beyond routine concerns about service expansion. These new priorities represent fundamental shifts in how firm leadership view the purpose of their firm, its client relationships, and competitive positioning.
Interestingly, while revenue objectives dominate the top priorities, 13% of firm leaders cite developing more intellectually stimulating work for their teams as a key objective, the report shows. This speaks to a deeper strategic consideration — that advisory work itself offers the kind of challenging, engaging work that attracts and retains top talent in an increasingly competitive labor market.
Today, the opportunity is here for tax firms to capitalize on this momentum and operationalize their advisory services offerings through formalized processes, systematic client engagement, technology leverage, and value-based pricing that creates enduring competitive advantages.
As the report shows, tax advisory today is moving beyond simply offering occasional consulting services alongside compliance work. And with the strategic elevation of tax advisory services already underway, it’s those firms that move quickly enough to capture the opportunity that will flourish.
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