Decide or be outpaced: AI, advisory, and private equity for tax firm leaders

Racing forward: Tax firm leadership strategies for the era of AI, advisory & private equity

The turn has arrived. Consolidation, private equity, AI, and new workforce expectations have moved tax, audit & accounting from slow change to a full shift in how firms grow and operate.

The firms that pull ahead won't win by working more hours. They'll win by targeting the right clients, pricing to value, scaling advisory, and converting capacity into impact.

Key takeaways

• Strategy pays: Firms with a clear, written strategy and marketing plan are out-earning peers. Vagueness is a tax on results.
• Advisory is the growth flywheel: Blend recurring compliance with scalable advisory (investment advisory, proactive tax planning) to stabilize revenue and deepen relationships.
• Tech and leadership decide outcomes: Use AI, automation, and disciplined capital (including PE) to drive margin and free teams for higher-value work. Professionalize leadership and culture for durability.

What the numbers are really saying

Market growth has cooled to high single digits, with a larger share driven by M&A. Profit trails revenue as costs and partner counts rise.

Standout firms combine scale, leverage, and premium pricing. They focus on revenue per FTE and cycle time, not raw hours. In short: the model beats the grind.

For a broader view of firm performance patterns, see the Rosenberg Survey's public materials here.

Talent: retention is up, productivity isn't

Turnover is down, which is good. But many teams log under 1,400 billable hours, and revenue per FTE slipped for the first time in years.

Adding bodies without redesign is blunt and expensive. Offshoring and outsourcing help, but only when fully integrated into standard processes with clear ownership and quality control.

Strategy is no longer optional

Top-performing firms write down where they will play, how they will win, and what they will stop. That clarity compounds: investments align, pricing reflects value, and teams know what moves the needle.

Precision beats ambition. Put the plan on paper, socialize it, and allocate capital accordingly.

Advisory is the growth flywheel

Investment advisory and proactive tax planning are growing faster than compliance. The resilient model blends recurring compliance with scalable advisory for steadier cash flow and stickier client ties.

AI compresses the cost of compliance. Winning firms turn freed capacity into proactive reviews, education, and planning conversations clients are glad to buy.

Private equity and technology: use the tailwinds with discipline

PE is accelerating M&A, governance upgrades, and tech investment. Whether you partner or compete, operate with PE-grade rigor: sharper KPIs, faster decisions, clearer capital allocation.

AI and automation are removing 50%-80% of manual steps in defined tasks like prep, workpapers, and research. The upside only materializes if leaders redeploy hours into advisory and client outcomes.

For AI guardrails and governance, review the NIST AI Risk Management Framework guidance.

Leadership and succession: redesign for durability

Younger partners, more women advancing, and more paths to leadership are now standard. Non-equity roles and flexible buy-ins support smoother transitions.

Compensation, buyouts, and retirement are moving from opaque to transparent. Professionalize leadership the same way you professionalize client service.

What to stop doing

• Managing to utilization alone - shift to revenue per FTE, realization, and cycle time.
• Treating offshore resources as plug-and-play - fully integrate with ownership and QA.
• Waiting for "post-tax-season" to improve systems - schedule improvements year-round like client work.

What to double down on

• Client segmentation and ideal-client fit - politely exit misaligned work and reinvest time into high-potential relationships.
• Manager leverage - equip managers to scope, price, and coach so partners can focus on market growth.
• Culture by design - flexibility is table stakes; differentiate on mission clarity, feedback cadence, and recognition systems.

The 2026 pivot: a practical plan for firm leaders

1) Publish the strategy

• Define target industries, ideal client profile, and the advisory mix you will scale.
• Set pricing rules, packaging, and a marketing calendar. Assign owners and dates.

2) Measure what matters

• Core KPIs: revenue per FTE, realization, cycle time to bill, advisory share of revenue, average price lift accepted, NPS/retention.
• Run weekly operating reviews. Remove bottlenecks fast.

3) Systematize advisory

• Productize planning offers (tiered reviews, quarterly check-ins, annual tax strategy).
• Build playbooks, scoping questions, and fixed-fee menus. Train managers to lead the sale.

4) Operationalize AI

• Choose 3-5 use cases with clear ROI (prep, workpapers, research, document intake). Track time saved and error rates.
• Reinvest recovered hours into scheduled advisory touchpoints and client education.

5) Upgrade leadership systems

• Move to transparent comp/buyout formulas. Clarify roles for equity and non-equity tracks.
• Stand up a cross-functional improvement council with quarterly goals tied to KPIs.

6) Capital and M&A discipline

• Adopt an investment thesis: where the firm will acquire, build, or partner - and where it won't.
• Use hurdle rates and post-investment reviews. Treat tech and talent like assets, not expenses.

Bottom line

The profession's fundamentals are strong, but the rulebook has changed. Growth will come from strategy, advisory impact, and leadership systems - not extra hours and heroics.

Treat 2026 as your pivot. Publish the plan, price to value, deploy AI with intent, and turn freed capacity into advice your clients rely on.

For more on the state of tax, audit & accounting firms, see the recent 2025 State of Tax Professionals Report from the Thomson Reuters Institute.

If you're building firm-wide AI skills and playbooks, explore practical programs for tax and finance teams here.