In Brief

The fourth annual NYSSCPA–Rosenberg Survey identifies trends from the national 20th Annual Practice Management Survey and provides a comparative qualitative analysis to participating New York CPA firms. The survey contains a wealth of quantitative and qualitative assessments of the current state of New York CPA firms, as compared to CPA firms across the United States. The quantitative portion of the Rosenberg survey provides valuable analysis, actionable guidance, expert insight, and practical recommendations for CPAs. It also presents insights and assessments by some of the leading consultants to accounting firms in the United States.

The national survey provided six takeaways for CPAs in public practice: 1) revenue growth remained solid, although it was slightly less than the year before, continuing a downward three-year trend; 2) merger activity, at 39%, was significantly up from the previous year; 3) income per equity partner was up by a modest amount overall (3%), but was zero to negative in medium-sized firms (net fees between $2 and $20 million); 4) the average age of partners continued a slow decline, as did the percentage of partners over 50, with the exception of the largest firms; 5) core audit, review, compilation, and write-up services faced continued pricing pressures; and 6) the percentage of female equity partners grew at firms of all sizes, though it still lags behind the percentage of female staff. This year, as in the past, the survey continued to discover quantifiable differences between some national trends and trends in New York.

This article will discuss those differences, present selected quantitative results, and excerpt insights from the experts.

* * *

The results of the 20th Annual NYSSCPA–Rosenberg Practice Management Survey are in. For the fourth year in a row, the NYSSCPA has partnered with the Growth Partnership and Rosenberg Associates Ltd. to provide results that are customized for New York CPA firms. The 20th annual survey, conducted in mid-2018, is based on firm results for calendar year 2017. The following are the national survey’s main take-aways, including a discussion of the differences in the New York survey:

  • Partners have gotten slightly younger, both in terms of average age and the percentage of partners over 50. Between 2005 and 2015, the number of partners over 50 continued to increase; however, from 2016 on, the average age of equity partners has decreased slightly. In the most recent survey, the average age of partners is 53.2 years (all firms over $2 million). In New York, the average age is only slightly higher at about 54.4, approximately the same as in 2016 but a full year younger than in 2015. One aberration is that, on the national level, at firms with greater than $20 million in net fees, the average age of partners increased slightly. In fact, in the New York survey, the highest percentages of partners over 60 were found in the largest firms surveyed.
  • Fees grew for the third consecutive year, but the rate of net fee growth dropped. Revenue growth nationally was up a solid 7.0%, although this was a bit less than 2016’s 7.8% and 2015’s 8.1%. Regarding future growth, however, national projections for 2018 are even lower, at 5.8%. For New York–specific respondents, the projected growth for 2018 is also lower, at approximately 3.9%; this is also a decrease from 2015, when it was projected at 5.3%. According to the Rosenberg Survey, the decline in growth rate is due to significant pricing pressure on audit, write-up, compilation, and review services, among other factors. This trend also affects the organic growth rate, which dropped in every category of firm size in the national survey. Other reasons for the decrease in organic growth rates may include a highly competitive market and heavy pressure to lower fees in compliance-related areas, lack of accountability at the partner and manager levels to engage in growth activities, staff shortages, and absence of formal marketing plans in firms, especially in firms over $2 million in size.
  • Profits—as measured by income per equity partner—were, at $441,000 nationally, up by 3%. This represents half the increase from the previous year. Drilling down, profits rose higher (9.2%) at firms larger than $20 million and were lower and even negative at smaller firms (–0.5% at firms between $2–10 million). Explanations included the possibility that larger firms were more aggressive in managing the bottom line and investing in areas such as people, technology, and marketing, which over time has led to a more sustainable and profitable revenue stream. Other factors include the higher level of profitability on nontax, nonattest clients and the increased ratio of consulting and advisory services in the largest firms. In New York, income per equity partner, at $596,914, was significantly above the national average but showed minimal growth of 3.8% year over year, significantly lower than the 7.1% growth during 2015–2016.
  • Staff-to-partner ratios (leverage), and therefore organic growth, continue to increase, particularly at larger firms. There also appears to be a correlation between increased leverage and increased turnover, which is concerning given that many firms consider employee retention to be their biggest challenge. Rosenberg plans to look into this issue in future surveys.
  • Mergers continue to have a huge impact on revenue growth. At 39%, revenue increases as a result of mergers were significantly higher than the prior year (26%). In the national survey, merger growth reversed a downward three-year trend, and merger activity was present at firms of all sizes. According to the Rosenberg Survey, however, a buyers’ market has emerged, as the hectic pace of mergers over the past 10 years has resulted in a crop that has already been picked over. The environment is very different in New York. Merger activity remained flat compared to the prior year at 3.8%, and organic revenue growth (excluding mergers) was only 3.6%, also approximately the same as the prior year. The percentage of firm growth attributable to merger activity was also very different from the national survey, showing significant declines from 2016 in New York.
  • Turnover rates are down, both nationally and in New York. The accounting profession still has the highest turnover rate in the country, however, and, as stated above, there appears to be a correlation between high staff-to-partner ratios and high turnover.
  • The percentage of female equity partners in firms over $2 million increased from 18.4% to 19.8%. Rosenberg noted a steady increase between 2011 and 2017 of female equity partners in firms of all sizes; however, firms over $20 million had the lowest percentage of female partners, at 16.9%. At any size, the percentage of female partners lagged far behind that of female staff, which stood at 57% for all multipartner firms (same as 2016). In New York, average growth of female equity partners was 7% year over year, to approximately 15% of partners, but still below the national average.
  • While many predict that the application of blockchain and artificial intelligence will drastically change the profession, the results of this year’s survey do not suggest that this change is already underway. Trends that are affecting firms now include outsourcing processes to the cloud, workflow optimization, and security. Additional trends include workflow tools that rethink and redesign current processes.
  • Nationally, there was an increase in the number of large firms offering financial advisory services. This trend was not mirrored in the New York results.
  • Firms are also seeing an avalanche of new managing partners, many of whom are younger and more management-oriented than their predecessors. This comes as the current generation of retiring partners, having failed to prepare their firms for their eventual absence, faces push-back against their expectations of generous buyout payments. Firms are also continuing to step up their efforts to liberalize their work policies and be more staff-friendly. New York firms are no exception; 73% offer their staff the ability to work virtually or remotely. As the Rosenberg survey points out, however, partners continue to give mentoring little more than lip service.

Exhibit 1

The 2018 Rosenberg Survey: Results at a Glance (Based on 2017 Data)

Multi-Partner Firms Over $20 M in Net Fees (33 Firms); $10–$20 M in Net Fees (70 Firms); Under $2–10 M in Net Fees (210 Firms); Under $2 M in Net Fees (21 Firms); Income per equity partner; 634,949; 473,230; 382,092; 208,251 Fee growth: 2017—including mergers; 9.8%; 8.1%; 6.5%; 0.0% Fee growth: 2017—excluding mergers; 6.4%; 5.5%; 3.7%; 0.0% Fee growth projected for 2018; 6.1%; 5.9%; 5.4%; 6.0% Fees per equity partner; 2,123,735; 1,773,257; 1,287,695; 634,883 Fees per professional; 243,182; 215,984; 214,119; 180,302 Fees per person; 199,390; 176,069; 175,998; 151,926 Realization; 83.1%; 85.1%; 87.9%; 89.9% Average equity partner billing rate; 403; 339; 301; 248 Overall net firm billing rate; 177.61; 152.99; 151.18; 135.35 Average equity partner charge hours; 1,056; 1,022; 1,154; 1,121 Average staff charge hours; 1,469; 1,480; 1,474; 1,480 Staff to equity partner ratio; 7.9; 7.5; 5.3; 2.7 Admin to total headcount percentage; 17.3%; 18.2%; 17.6%; 15.3% Professional staff turnover; 15.8%; 15.0%; 17.0%; 25.2% Utilization %; 51.8%; 52.4%; 53.1%; 55.3% Months of A/R + WIP; 2.7; 2.5; 2.9; 2.1 Staff salaries/benefits as % of fees; 47.0%; 48.7%; 43.6%; 38.4% Overhead expenses per person; 42,387; 37,475; 39,835; 41,214 Audit/review as % of total fees; 33.0%; 32.4%; 22.9%; 17.6% Average fee per 1040 return; 2,109; 1,305; 909; 705 % of firms offering investment advisory; 51.5%; 34.3%; 28.2%; 23.8% Formal written marketing plans; 66.7%; 58.6%; 28.2%; 9.5% Offer virtual (remote) work; 93.9%; 95.7%; 90.9%; 76.2% Typical new partner buy-in; 155,280; 144,897; 164,829; 186,278 Non-equity partner position at firms; 81.8%; 72.9%; 46.7%; 4.8% Male/Female professional staff breakdown; 47%/53%; 45%/55%; 42%/58%; 32%/68% % female partners; 16.9%; 20.7%; 21.9%; 23.0% Expected acquisition in 3 years; 58.1%; 49.3%; 35.9%; 28.6% Average age of partners; 52.7; 52.9; 53.2; 55.3 % of partners over age; 50/60; 61%/20%; 61%/22%; 63%/25%; 63%/32% Comp. committee for allocating partner income; 72.8%; 51.4%; 19.7%; 0.0% Formula used for allocating partner income; 9.1%; 22.9%; 34.6%; 19.0% Closed compensation system—% usage; 54.5%; 49.3%; 12.2%; 0% Buyout method—multiple of compensation; 54.8%; 56.7%; 44.1%; 8.3% Average valuation of goodwill; 66.9%; 76.9%; 79.4%; 89.2%; % of firms making partner buyout payments; 90.6%; 77.1%; 55.2%; 14.3%

The analysis below focuses on overall national trends that all CPAs in public practice need to be aware of in the areas of revenue growth, merger and acquisition activity, leverage (partner-to-staff ratios), and demographics. Significant differences between the national and New York survey are also highlighted. Keep in mind that, given the small New York sample size, many of the below observations are qualitative in nature and directionally correct, rather than statistically pure. Finally, shared observations from some of the leading expert consultants for CPA firms are excerpted in the sidebar, Opinions from the Experts.

Exhibit 2

Annual Growth: 2008 to 2017 (Firms Over $2 Million)

Managing the Transition between an Aging Partner Base and a New Generation

For the past three years, both the number of partners over 50 and the average age of partners has decreased slightly. The Rosenberg Survey believes this is due to the continued retirement of partners in their 60s and 70s and the succession of new partners in their 40s. According to the survey, 67–70 is the “new 65,” although many retirement agreements still take effect at 65. Among the equity partners in the national survey over 50, approximately one-third are over 60; the results are similar in New York.

The mandatory age of retirement appears to be increasing slightly; 60-something partners are staying on board for a longer period of time, although the nature of their employment is being redefined. In the New York data, the retirement age remains 66 on average, although one firm’s mandatory retirement age is now 72. Regardless of age, retirement issues include difficulty in finding the next partner group and managing partner, inability to find the next generation of leaders (which forces mergers and acquisitions), and difficulty transitioning clients and other responsibilities from retiring partners. This last issue is due to the fact that many older partners are continuing to work, but are transitioning to nonequity positions so that the firm does not lose their former clients. At the same time, firms are having a hard time finding new partners to replace older individuals, and younger professionals are waiting longer to become equity partners.

Revenue Growth

Nationally, the reported revenue growth of 7.0% was down slightly from last year’s 7.8%. Mergers accounted for 39% of total growth, compared against 26% for the prior year. Revenue growth for New York firms did not follow this trend. Revenue growth including mergers was 3.8%, whereas growth excluding mergers was slightly lower at 3.6%. In prior years, lack of merger activity was a key factor in lower revenue growth among surveyed firms in New York; this year, it was less of a factor.

Exhibit 3


2017; 2016; 2015 Over $20 M; 9.8%; 9.8%; 11.8% $10–$20 M; 8.1%; 9.4%; 7.0% $2–$10 M; 6.5%; 6.7%; 7.9% All firms over $2 M; 7.0%; 7.8%; 8.1%

Nationally, revenue growth for the next year is projected at 5.8% for 2018. Growth projections for New York firms for 2018, at 3.9%, are not at the historical >5% levels, but still represent a slight increase over 2017’s 3.8%.

One trend is that firms are continuing to raise the bar on who becomes an equity partner, making better use of the non–equity partner track.

The change in fees for services differed for New York firms from the national results. On a year-to-year basis, New York firms exhibited flat growth in consulting and other advisory service fees, while nationally the rate of growth in consulting services continued to increase. This continues the trend in national firms for the past number of years. In New York, tax services were up 5%–6% year over year, most likely because of tax compliance and planning issues raised by the Tax Cuts and Jobs Act. On the other hand, write-up work and compilations continued their historic decline both in the national survey and among New York practitioners. In New York, the decline was nearly 8%; nationally, however, accounting and auditing services declined less than 2%. One possible reason for the decline in write-up and compilations is that entrepreneurs in new firms and non-CPA firms have begun to offer write-up work (i.e., work not requiring attestation) at a lower cost using new and seamless, remote technologies. Additional explanations include greater accessibility to lower-cost accounting software for small businesses.

Income per Equity Partner and Growth of Nonequity Partners

Profits—as measured by income per equity partner—in the national survey averaged $441,000, a 3% increase from the year before. While New York still has the highest income per partner at $596,914 (California was second at $517,674), growth was a modest 3.7%. Overall income per equity partner growth was significantly greater in last year’s survey, at 6%. In addition, projected growth for New York next year is expected to be at 3.9%, about half the national average.

One of the continuing issues, according to the Rosenberg survey, is how to retain partners who reach the firm’s mandatory retirement age. One trend is that firms are continuing to raise the bar on who becomes an equity partner, making better use of the non–equity partner track. This resists the problematic, old-school tactic of promoting managers directly to equity partners as a retention tactic. Similarly, as hundreds of baby boomer partners retire, firms are finding that they do not always have to replace every retiring equity partner with a new equity partner, although in many cases it is critical to retain the individual, regardless of retirement age, in order to retain clients.


In general, the greater the staff-to-partner ratio (i.e., leverage), the greater the income per partner and profit of the firm. In the national survey, leverage grew substantially over 2016, over 19% in the larger firms. The result is that income per equity partner continued to increase, as did organic growth. As the Rosenberg Survey points out, the quickest way to profitability is high leverage and higher-value work, which carries higher billing rates.

For New York firms, the ratio of professional staff and administration to partners remained relatively flat at approximately 6:1, very similar to the 5.3:1 ratio nationally. One interesting qualitative observation in the New York study, which also tends to show up in the national survey, is that there seems to be a relationship between staff leverage and staff turnover—that is, the higher the ratio of professional and administrative staff to partners, the higher the turnover. Staff turnover ranged as high as 25% in local firms to as low as 13% in national firms with revenue greater than $20 million. Next year’s survey will dive deeper into the reasons for turnover, as there are continual staff shortages and, as a result, increased pressure nationally on wages. On average, in the national survey, professional staff and admin turnover remains in the 13%–16% range, down a couple of percentage points from the prior year and comparable to the results in the New York survey.

Merger Activity

Mergers had a high impact on growth in nationally in the past year. Revenue increased 39% year over year (2017) as a result of mergers. Revenue growth from mergers in the prior year (2016) was 26%, still a significant rate. Merger activity in New York was much lower, continuing a trend over the past few years. In New York, growth including mergers remained flat at 3.8% of revenue. According to the Rosenberg Survey, the abating of the merger frenzy is due to buyers becoming more selective, those same buyers needing time to digest the hundreds of acquisitions they made in recent years, and the logical supposition that the frenetic pace of mergers over the past decade has resulted in the crop of sellers being somewhat picked over.

The nature of mergers and acquisitions continues to change as well. It has become less common for all of the equity partners in an acquired firm to become equity partners in the combined firm. As the survey points out, in mergers over the past 10 years, many of the seller partners joined the buyer firms in positions other than equity partners, thereby swelling the ranks.

Finally, according to the Rosenberg Survey, firms are recognizing that acquiring growth is not as easy as simply acquiring a smaller firm. They are discovering the need to focus on the firm’s culture, people, technology, client transition, and other issues. In addition, firms seeking growth are also looking for boutique firms that are knowledgeable in more specialized, higher-profit areas such as consulting, technology/cybersecurity, insurance, and wealth management. In addition, firms are dedicating more time and energy to organic growth by training all firm members in communication, business development, and client service; tying compensation to client acquisition and retention targets; dedicating more resources to niche development and thought leadership; and investing in customer relationship management and marketing automation technology.

Exhibit 4

Age of Partners

Average Age of Partners; % of Partners over Age 50 2017; 2016; 2005; 2017; 2016; 2005 Over $20 M; 52.7; 52.5; 49.5; 60.9%; 58.4%; 47.0% $10–$20 M; 52.9; 53.1; 60.8%; 63.6% $2–$10 M; 53.2; 53.7; 50.3; 63.0%; 65.5%; 52.0% Under $2 M; 55.3; 56.5; 51.6; 63.1%; 71.1%; 53.3% All firms > $2 M; 53.2; 53.7; 50.4; 61.7%; 62.7%; 51.5%

Exhibit 5

Audit Practice Impact on Key Metrics

Ranking by percentage of audit and review work done compared to the total fees; Percentage of total fees represented by audits and reviews; Annual net fees; 2017 IPP; 2016 IPP; 2015 IPP Highest 25%; 49.3%; $15,256,000; $441,044; $417,560; $407,372 Middle 50%; 22.9%; $10,404,000; $423,058; $410,552; $396,709 Lowest 25%; 7.7%; $6,959,000; $464,898; $472,395; $420,873 All firms >$2 M; 25.7%; $10,755,000; $438,015; $427,654; $405,416 IPP=income per partner


The turnover rates of both professional staff and administrative staff were down for the New York survey, at 16% and 13%, respectively, very similar to the national results (15.9% and 15.4% for firms over $2 million). In the prior year, turnover in New York ranged between 19% and 22%, a significantly higher rate than the national results. As noted above, there appears to be a correlation between partner-to-staff ratios and turnover rates; the higher the ratio, the higher the turnover. It is worth noting that accounting and auditing has among the highest turnover rates of all occupations, comparable to nurses, child-care workers, telemarketing and customer service representatives, movie-theater employees, hotel and restaurant workers, and sales professionals. There is a disconnect between this observed turnover rate and the long lamented shortage of talent.

Exhibit 6

Billing Rates of Partners within the Same Population Markets

Upper 25% Partner Billing Rate; Middle 50%; Lower 25% Population Range; Average Partner Billing Rate; IPP; Average Partner Billing Rate; IPP; Average Partner Billing Rate; IPP >2 M; $447; $627,000; $334; $470,000; $260; $323,000 1–2 M; $382; $439,000; $301; $351,000; $226; $308,000 250,000–1 M; $369; $545,000; $283; $349,000; $224; $260,000 <250,000; $323; $458,000; $256; $316,000; $187; $198,000 IPP =income per partner

Gender Diversity

Nationally, the Rosenberg survey reported that the percentage of female equity partners in multipartner firms continued to increase, to approximately 21%; firms of all sizes showed increases. In the national survey, the number of female partners in firms over $20 million showed only a slight increase, from 16.4% to 16.9%; the staff mix ranged from 68% female in firms under $2 million to 53% in firms over $20 million.

The New York results differed slightly from the national survey. Female equity partners were on average only 15% of total equity partners, up only slightly from 14% in the prior year. The ratio of male to female staff in New York also differed from the national survey, at approximately 50/50, and, if anything, showed a slight increase in male staffers. While the small sample size may limit the breadth of the conclusions one should draw, there has been a slight reduction in female staff in New York over the past three years.

Technology Change

According to the Rosenberg survey, the CPA profession is on the cusp of arguably its greatest transformation. The trigger for the changes will be technological innovations, such as blockchain and artificial intelligence; this in turn will dramatically transform how a CPA firm is managed and staffed, and what it will mean to be a CPA. The Rosenberg Survey posits that this will resolve two previously debilitating external pressures: the lack of qualified staff and the compression of busy season. Allan Koltin reports that, by 2020, the Big Four are predicting a 50% reduction in college campus recruiting of accountants as a result of artificial intelligence; they plan to search for nontraditional employees in technology, supply chain, and other areas to fill these gaps. Similarly, Roman Kepczyk at the software firm Xcentric points out that the evolution of technology is continuing rapidly as “companies such as MindBridge are integrating AI and cognitive capabilities to the audit process while companies such as AuditFile, SuraLink, and the AICPA’s OnPoint PCR challenge the major vendors’ audit production capabilities.”

To date, however, the data does not support this sea change. In the New York survey, while net fees rose by approximately 2%, total firm work hours remained approximately the same. Average staff hours, equity partner hours, and nonequity partner hours remained flat compared to the prior year, while audit and review services showed a slight decrease and consulting services continued to show a slight increase. The continued reduction in fees from compilation and write-up work may be a result of the entry into the marketplace of low-cost client software or cloud-based tools that allow clients to handle simple accounting transactions without outside assistance. One anomaly is that national firms under $2 million actually showed an increase in accounting and auditing revenue.

Financial Planning and Advisory Services

After a decrease in firms offering investment advisory services between 2014 and 2015, there has been a steady uptick through 2017 of firms that plan to offer or offer wealth management and financial planning services. This year, for the first time in the survey’s history, the majority of firms over $20 million in sales offer investment advisory and or insurance services. About one-third of firms in the $10–$20 million range offered investment advisory and other financial services, while 95% of these firms expect to offer these services within the next 12 months. In the New York survey, there was little movement; only the largest firms offered or were likely to offer wealth management and investment advisory services over the next 12 months. The principal reasons for smaller firms not offering these services were reported to be a conflict of interest, a lack of knowledge, and a belief that clients are satisfied with other financial service providers.

Practice Management and Work Environment

One of the most significant changes on the accounting landscape, according to the Rosenberg survey, is an avalanche of new managing partners at firms. Rosenberg reports that these new managing partners are more sophisticated and management-oriented than their predecessors. On the other hand, Rosenberg reports that many firms today are at a critical juncture: they are first-generation firms with a relatively small partner group who have been together for 20 or more years. The partners in these firms are in their late 50s and early 60s, but have utterly failed to develop future leaders throughout these past 20 years. Many such partners simply refuse to face the obvious: their only exit strategy is an upward merger.

Among other findings, newer managing partners focus more on managing and leadership development and less on client work; they focus on partner accountability, strategic planning, and business management. According to Rosenberg, younger partners are also questioning why they have been paying out millions of dollars in buyouts to partners who, in their estimation, did not deserve the money. Some firms, for the first time, are even adding clawback provisions that penalize retirement-minded partners who cause the firm to lose their clients upon their retirement by not transferring the relationship.

A Critical Juncture

According to the Rosenberg Survey, this is an exciting time to be working in the accounting profession. Marc Rosenberg points out that the profession will be full of careers that are exciting, change from day to day, provide opportunities for advancement, allow accountants to be entrepreneurial and obtain ownership, enable them to constantly learn, and allow for the development meaningful relationships. But he also argues that to entice the best and brightest to join and stay at a firm, the profession needs to reduce the extensive hours (which turn off younger staff and drive them to leave the accounting profession completely), develop accountants’ technical and nontechnical skill sets from day one, and embrace new technologies and the change they will bring.

To participate in the 2019 Rosenberg Survey, please visit between January 1, 2019, and July 15, 2019. To purchase a complete copy of the 2018 survey results, visit the same website at any time.