Big 4 Partner Salary 2017-06-09T00:58:55+00:00

What is the average big 4 partner salary?

Before people sign up for a big 4 career, they are already dreaming of partnership. They want to know how much they will make when they become partner. They’ve seen a partner come in and speak to them while wearing cuff links. They want those cuff links and they want the salary.

Today you’ll figure out what the average Big 4 partner is.

It take about 15 years to make partner at the big 4. You can make it faster if you are extremely good at internal politics. If you can stand all the wear and tear of a career at the big public accounting firms, the compensation is tremendous.

Big 4 Partner Salary

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.