Secret #1 (Is it really a Salary?)
One of the first secrets about big 4 partner salaries is that they don’t actually earn a salary. They earn a guaranteed payment which is similar to a salary but you don’t get a W-2.
Partnership is exactly what it sounds like. You are a partner. Which means you are a partner in the business. You participate in the process.
Partners participate in the profits by earning units of the partnership. Yes, we mean units like equity shares. Most of the firms operate in an LLC form which means they have member units and not shares.
Secret #2 (How Much Is It Going To Cost Me?)
When new partners are created, they are expected to “buy-in” to the partnership. The amounts required to buy in are typically around $300,000. Most people buy in to the partnership by taking out a loan from the partnership and paying it back over time.
You can think of this like a mortgage. You are buying a house while living in it, but the bank actually owns the house. Think of big 4 partnership like a bank. The big 4 is loaning you money, so that they can use that money for other purposes. It is also a good incentive to trap these partners and preven them from leaving.
The other thing you need to learn about the big 4 is it’s a ponzi scheme. First they tell you that it is a great opportunity when you are an associate, and then they tell you it’s a great honor to be a partner. You are being fooled the whole way through. As an associate they pay you peanuts while charging you out at a high rate. They do this to pay the overcompensated partners.
When you become a partner, they tell you that you have to buy in to the partnership to pay for liability etc. In reality all you are doing is paying the retired partners pension plans. That’s right. You are paying retired partners to stay at home or golf.
Secret # 3 (Can you be promoted as a partner?)
So you think once you get to partner, you are done moving up? Well you might think you are, but you would be wrong.
You still have more bosses. It’s a ponzi scheme right. So partnership is just the beginning of another level in the pyramid. Now you answer to firm leadership.
This means that you have someone above you in your line of service. You have someone above you in your city. You have someone above you in your line of service in your country. You have someone above you in the global board.
You can also look at it as an opportunity. The higher up you move in the pyramid scheme, the more money you will make. It is really hard to make $1 million in the big 4 accounting firms because of the whole pyramid scheme structure, but you can do it.
You just need to keep constantly moving up the ladder.
You can bet that the partner that screwed up the Oscars for PwC, Brian Cullinan, made more than $1 million. He was on the Board for PwC’s US firm.
Secret # 4 (Pensions)
Another secret about big four partner earnings is the pension. How does that factor into partner compensation and benefits? Another way the big four firms entice people to stay until retirement is their pension.
Partners can earn in excess of $200,000 per year in retirement through their big 4 pension checks. This depends on vesting. You have to make sure that you stay until you are vested in order to receive a decent pension. Most partners begin vesting in their pensions after at least 5 years. Your pension gets larger the longer that you stay at the big four. This alone makes most individuals stay until mandatory retirement at age 60.
Secret # 5 (How much do partners make?)
How much do big 4 accounting firm partners make a year?
Big 4 partners make on average about $450,000 a year. This includes junior partners all the way up to the head honchos. If you work in a small office, you can expect to earn less than $400,000. Additionally, you might not ever pass $400,000 in a small office if you never move up in leadership.
Your book of clients also helps you. Not just because the client earns the firm a lot of money but because it earns you respect in the firm. For example, Tim Ryan at PwC was one of the lead audit partners on AIG. AIG is the largest audit client of PwC. Do you think he would be in charge of PwC’s US practice if he didn’t show the ability to lead a huge engagement. There is a reason he is the head of the US firm versus a partner from the PwC Phoenix office.
In conclusion, if you want to make the most money as partner, you should work in one of the largest cities and work on one of the largest clients in that city. This goes for tax and advisory as well. You don’t have to aim for the head of the US practice remember. You can be ok with Head of Tax in New York City. That will put you in the millions itself.
If you want to make the maximum amount of money, you will want to stay all the way until retirement to make sure you are fully vested and can pull the maximum pension draw.
PwC Partner Salary
pwc partner salary
According to glassdoor.com the average salary for partners at PwC is $542,567. The bonus for partners is $111,371. These are pretty large numbers. As stated above, the starting salary for partners is likely lower, but older partners probably bring up the average. The thing about glassdoor is that this is based on the honor system, you can’t know if the numbers on there are real or fake. This number does seem pretty realistic though. You have to also keep in mind that there are only 10 salaries reported on glassdoor.
The highest number for pwc partner salary is $1.1 million dollars. That is most likely a person in leadership or someone with a lot of years under their belt in a large market like New York. The lowest number is $97 thousand. I think that is just a misreported number. You don’t have to be a partner to earn $97k in a big four firm.
The average partner pay for partners in the UK is £685,000.
EY Partner Salary
According to glassdoor the average EY partner salary is 494k. The average bonus for EY partners is $52,240. The EY partner salary is high but not as high as the PwC partner salary. There are only 13 salaries reported for EY so just keep that in mind.
This makes sense though because EY’s revenues are lower than PwC’s revenues. EY is the 3rd largest accounting firm by revenue while PwC is the second largest accounting firm by revenue. EY also has more expenses since they have more employees than PwC.
KPMG Partner Salary
Thanks to recent information out of the UK we have updated information about partner salaries.
The average KPMG partner salary is 549,000 with the highest earning partners making on average about 629,000 pounds. This pay will be reduced by 25% in 2020 due to COVID 19.