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

Key takeaways:

• • • Strategic focus is crucial — Firms with a clear, written strategy and marketing plan are out-earning peers, and vague ambition is no longer sufficient in today’s competitive tax industry landscape.

    • Advisory services drive growth — Advisory service lines, particularly investment advisory and proactive tax planning, are expanding faster than traditional compliance work, and firms must blend recurring compliance jobs with scalable advisory to smooth revenue cyclicality and deepen client relationships.

    • Technology and leadership are keys to success — Firms must harness the power of AI, automation, and private equity to drive growth, and prioritize leadership systems, professionalization of leadership, and culture by design to endure the next decade.

If the last few years felt like standing at a crossroads for tax, audit & accounting firms, 2025 is the turn itself. Consolidation, private equity, AI, and evolving workforce expectations have tipped the profession from gradual change into a full paradigm shift. The recently released Rosenberg Report illuminates the state of the profession. The annual report on the tax industry shows that those firms that win from here won’t simply be competent — they’ll be intentional, strategically focused, and relentless about converting capacity into higher-value client impact. For tax firm leaders, the mandate is clear: Make bold, data-informed choices now or wait and watch competitors outpaced you.

What the numbers are really saying

While revenue growth has cooled from the post-pandemic highs, settling near high single digits across the market, a striking share of that growth now is being powered by mergers and acquisitions, while organic expansion is proving harder to sustain. Meanwhile, income per equity partner has still edged upward, although profit growth lags revenue as costs, partner counts, and investment outlays rise.

The standout tax firms — especially those with higher billing rates and strong staff-to-partner ratios — are combing scale, leverage, and premium pricing to widen the gap between them and competitors. The message is clear: Profitable growth now depends less on squeezing more hours and more on getting the business model right.

Indeed, the report noted several areas in which tax firms leaders need to pay special attention.

Talent: Retention is better — but capacity isn’t the same as productivity

The report reveals turnover among tax professionals has fallen to its lowest level in years, which is a positive development. Yet billable hours per professional have declined, and many teams are logging less than 1,400 hours annually.

In response, some firms are hiring to build capacity, but revenue per full-time equivalent (FTE) employees slipped for the first time in five years — a signal that headcount without redesign is a blunt instrument. Offshoring and outsourcing remain in the toolkit, especially for larger firms, but as retention improves, the hiring mix is shifting from emergency capacity to structured, strategic resourcing. The imperative is smarter workload orchestration, not more bodies.

Strategy is no longer optional

Firms with a clear, written strategy and marketing plan are out-earning their peers, the report showed. That’s not correlation by accident — it’s the compounding effect of decisive prioritization. When leaders articulate where the firm will play and how it will win, then firm investments align with strategy, pricing reflects value, and teams understand how to move the needle. Having vague ambitions is expensive, precision pays much better.

Advisory is the growth flywheel

Advisory service lines — particularly investment advisory and proactive tax planning — are expanding faster than traditional compliance. The most resilient firms are shaping portfolios that blend recurring compliance jobs with scalable advisory roles, thus smoothing revenue cyclicality and deepening client relationships. Technology is central here because it doesn’t just compress the cost of compliance work, it liberates capacity that can be redeployed into offering advice for which clients will happily pay a premium.

Private equity & technology: Forces to harness, not fear

Private equity (PE) is no longer an outlier, it’s reshaping governance, accelerating M&A, and boosting tech investment across the top end of the market. Whether you choose to partner with PE firms or compete against PE-backed platforms, you must operate with PE-grade rigor — and that means sharper KPIs, faster decision cycles, and a clearer capital allocation model.

On the tech front, AI and automation clearly are transforming tax preparation, workpaper assembly, and research — often eliminating 50% to 80% of the manual steps in defined use cases. And the top performing firms don’t just use AI just to cut costs, they turn their teams’ freed-up hours into advisory projects, client education, and proactive planning conversations that can fortify loyalty and margins.

Leadership & succession: Redesigned for durability

Today, partner demographics are shifting quickly. There are more younger partners, more women advancing, and more diverse paths into leadership. Non‑equity roles and flexible buy‑in models are becoming standard, while mandatory retirement policies are moderating to support smoother succession.

Compensation and buyout systems are maturing as committees and transparent formulas replacing opaque, personality‑driven decisions. The firms that will thrive over the next decade already are professionalizing leadership the same way they professionalize client service.

The bottom line

Finally, there are several actions that smart tax firm leaders are already abandoning and others that they are strongly focusing on.

What to stop doing

• • • Managing to utilization alone — Leaders need to shift their thinking to revenue per FTE, realization, and cycle time to reflect true performance.
    • Treating offshore resources as a plug‑and‑play fix — Integrate these resources into your firm’s standard processes with clear ownership and quality assurance.
    • Waiting for “post‑tax‑season” to improve systems —Improvement is a year‑round muscle that needs to be exercised. Schedule and track system improvement it like any client deliverable.

What to double down on

• • • Focusing on client segmentation and ideal‑client fit — Politely winnow misaligned work or burdensome clients and reinvest those hours into high‑potential relationships.
    • Promoting manager leverage — Equip managers with the ability to own scoping, pricing, and coaching so partners can drive market‑facing growth.
    • Encouraging culture by design — Flexible work is table stakes in today’s environment. Promote what differentiates your firm, especially its clarity of mission, feedback cadence, and recognition systems.

The tax, audit & accounting profession’s fundamentals remain strong, but the rulebook has been rewritten, as the Rosenberg Report illustrates. Firm growth will increasingly come from strategy, not inertia; from advisory impact, not additional hours; and from leadership systems, not individual heroics.

Smart tax firm leaders need to treat 2026 as a pivot year for their firms. Publish the plan, price to value, operationalize AI, and convert freed-up capacity into advice offerings your clients can’t imagine running their businesses without.

Those tax firms that move first, while measuring what matters, will define the next decade of tax leadership.

For more on the current state of tax, audit & accounting firms, check out the recent 2025 State of Tax Professionals Report from the Thomson Reuters Institute here