Mid-tier accountancy firms are undergoing a period of structural change as they respond to shifting client expectations, technological disruption, and increasing regulatory complexity. Research from the ICAEW’s Evolution of Mid-Tier Accountancy Firms: 2025 highlights a profession that is actively adapting its service mix while balancing growth opportunities with operational and regulatory risk.
Traditional services such as audit, tax and accounts preparation remain foundational to the profession. However, firms are increasingly exploring adjacent advisory areas to deepen client relationships and support evolving business needs. Among the most notable developments is the emergence of sustainability-related services. The ICAEW research finds that 36% of mid-tier firms already offer ESG services, while a further 44% plan to introduce them within the next three years, reflecting growing demand for support with sustainability reporting and governance frameworks.
At the same time, firms are expanding their capabilities in areas such as technology and app advisory, including cybersecurity, data management and business intelligence. These service lines are becoming increasingly relevant as clients seek guidance navigating digital transformation and rising cyber risk.
However, diversification also requires careful strategic judgement. Not every opportunity aligns with a firm’s risk appetite, expertise or regulatory capacity.
Strategic Selectivity in Service Line Expansion
The ICAEW research shows that mid-tier firms are selective in how they expand their services. Public Interest Entity (PIE) audits illustrate this strategic calculus particularly clearly.
While regulatory reform has sought to broaden the audit market, only 22% of mid-tier firms currently undertake PIE audit engagements.
For the majority that do not, the decision reflects a combination of strategic and operational considerations. Among firms not offering PIE audits:
- 93% say the work does not align with their firm’s strategy or risk appetite
- 88% highlight the investment required in people and structural changes
- 82% cite regulatory compliance costs as a key barrier
This pattern demonstrates an important dynamic within the profession: firms are willing to diversify their services, but they are also acutely aware that expansion into highly regulated or technically complex areas can significantly alter their risk profile.
The same principle applies to emerging advisory offerings.
The Operational Risk Behind New Service Lines
Expanding into new service areas such as ESG advisory or technology consulting requires more than simply responding to client demand. These services often introduce new operational, regulatory and professional liability exposures that firms must actively manage.
The ICAEW research highlights that capability development is already a central challenge for the profession. In the case of ESG services, 69% of firms planning to introduce these offerings are investing in staff training, reflecting the specialist knowledge required to deliver credible advice in this evolving area.
This emphasis on training reflects a broader reality: advisory services frequently expose firms to greater professional judgement risk than traditional compliance work. ESG engagements, for example, may involve interpretation of emerging reporting frameworks, governance standards or sustainability metrics. Technology advisory engagements may require understanding complex IT systems, cyber risk management and digital transformation strategies.
Without appropriate governance, documentation and expertise, errors or omissions in these areas could lead to:
- incorrect or misleading advice
- regulatory scrutiny
- reputational damage
- professional indemnity claims
As firms expand their advisory capabilities, the need for robust risk management frameworks becomes increasingly critical.
Diversification in a Transforming Profession
Service line expansion is also taking place within a broader transformation of the mid-tier profession.
The ICAEW research highlights several structural trends shaping firms’ strategic decisions, including the influence of private equity investment, consolidation through acquisitions, and the growing impact of generative AI on professional services.
Despite these changes, the report notes that fee growth across the sector is currently being driven primarily by new clients and increased charge-out rates rather than new service lines alone.
This finding reinforces an important point: diversification is less about immediate revenue expansion and more about long-term positioning. Firms are broadening their capabilities in order to remain relevant to clients whose needs are becoming more complex and interdisciplinary.
But as firms evolve their service mix, their risk exposure inevitably evolves as well.
Supporting Safe Service Line Growth
For firms expanding into new advisory areas, ensuring that risk management frameworks evolve alongside service offerings is essential. Professional indemnity coverage, governance structures and internal expertise must all align with the nature of the services being delivered.
Marsh FINPRO supports mid-tier accountancy firms as they navigate these transitions. Our solutions are designed to help firms expand confidently into emerging service lines while managing the operational and professional risks associated with diversification.
Our support includes:
Professional Indemnity Insurance
Coverage designed to protect firms against errors or omissions arising from advisory engagements, including emerging services such as ESG or technology consulting.
Regulatory Risk Assessment
Guidance to help firms understand the regulatory implications of expanding into new service areas and ensure governance frameworks remain robust.
Technology Errors & Omissions Coverage
Specialist protection for firms providing technology advisory services, including cyber and digital transformation guidance.
Capability and Risk Reviews
Assessment of training, processes and internal controls to ensure service delivery aligns with the firm’s risk profile and professional obligations.
Building Resilient Service Lines
The ICAEW research makes clear that the mid-tier profession is evolving rapidly. Firms are adapting their service lines to meet changing client expectations while navigating a more complex regulatory and technological environment.
Diversification presents significant opportunities for growth and differentiation. However, successful expansion requires more than identifying new revenue streams. Firms must ensure their governance, expertise and risk management frameworks develop alongside their services.
Those that do so will be best positioned to deliver new advisory capabilities confidently while protecting both their clients and their long-term reputation.
