by James | Career, Compensation | 36 comments
The pinnacle of the public accounting profession is making it to partner, mainly because of the allure of the Big 4 partner salary; a lavish compensation package designed to make years of grinding for the firm worthwhile. However, for most professionals in public accounting, the rank of partner seems unattainable due to the pyramid-like structure of the firm, the limited spots available each year, and the immense time investment required to get there. Even if you can endure years of long hours and stress to make it, there’s still more barriers like being nominated, accepted, and affording the initial buy-in price. For every one of the wild stories you hear about partners making $10MM per year, you’ll hear another who says their cousin is a partner and barely scrapes together $200k. So, how much do Big 4 partners make and how can you tell who’s making what? Below, we answer many of the common questions that people have about Big 4 partner compensation, including the average salaries across firms and lines of service.
How much is the Big 4 partner buy-in?
When someone becomes a partner, they are no longer a traditional employee of the firm, but instead a part owner in the partnership of the firm. That doesn’t happy like a typical promotion – it comes with a serious capital investment. Just like salary and total compensation varies based on the line of service, location, and industry, the buy-in for partnership can differ depending on the partner’s role, area, and how much business they oversee. Recent partners have reported buy-ins averaging between $150k at the low-end, to upwards of $750k in high-end groups. There are a few reasons that this is so expensive, the most obvious is that it creates a barrier to exit for the newly promoted partners to ensure they stay with the firm. Of course, many newly minted partners don’t have that kind of capital sitting in the bank, so the firms help with that buy-in by taking it out of the yearly pay of the employee.
What are the levels of partnership structure?
The partners that you’re most commonly familiar with are typical partners who manage specific clients in their offices. There are still other partners with different roles and income streams that focus on “firm-level” operations. Partners often refer to buying-in as “being back at the bottom” because there as an entirely new hierarchy to climb once you’re a part owner, especially if you want to get moved into one of these firm-level roles. Some of the most common promotions are “Office Managing Partner” (OMP), PCAOB reviewing partners, or promotions that focus on the oversight of a specialized type of accounting or a few specific states.
How are Big 4 partners salaries determined?
It’s important to understand how owning a part of the firm can change the partner compensation. Rather than a strict and absolute salary, partners get a share of the profits that the firm generates throughout the year. If the partner is a standard partner handling client accounts, the engagements that they work on drive most of their profits. For audit, most publicly traded companies are going to offer higher fees and profit margins than smaller companies. For tax partners, salaries will depend on what clients that partner has personally sourced and closed. If a tax partner brings in a large group of smaller company returns, it could result in higher compensation than just a few corporate returns.
Which line of service makes the most?
If you’re comparing the separate lines of service, no matter what location you are in, advisory partners are going to bring home the most money because of the nature of the service. Advisory practices are specialty practices that have service lines dealing with technical issues such as implementing ERP systems, planning expansions into new markets, buying and selling companies, and even performing initial public offerings to the market. All of these are expensive, niche services that are extremely profitable and have driven a ton of growth in the past ten years. Additionally, hot-shots climbing the ladder in advisory don’t necessarily have to stay with the Big 4 to make serious money. Most middle-market companies use smaller boutique consulting firms that specialize in a specific service they are after and can make more than Big 4 advisory partners.
Do Big four partners get pensions?
One often overlooked aspect of the partnership is the pension which may be one of the best benefits. Most partners receive something along the lines of 25-30% of the average of their three highest years of earnings – for life. It’s safe to say that they aren’t worried about retirement.
Audit and Tax Partner Compensation
So, how much do these partners really make? Of course, as we’ve explained, it can vary, but we’re going to give you some hard numbers below. The average across all partners will land right around $650k – $850k each year. Big 4 Firms – PwC, KPMG, EY, and Deloitte Partner Salaries:
- Years 1-5: $300k – $500k
- Years 6-10: $400k – $1.3M
- Years 10+: $600k – $3M
Small Firm (10-50 people): $140k – 150k
National Firm: $200k – $800k
samantha lalon February 1, 2015 at 3:57 pm
Are these figures per hour?
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DiDaDion April 25, 2015 at 2:27 am
I would say it’s in the unit of K
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aeon April 26, 2015 at 3:24 am
yes. they are making hundreds of thousands of dollars per hour. hahahahah
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Sulabh Dubeyon April 14, 2022 at 9:18 am
No Bhsdk, These figures are for per second
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Camon July 23, 2022 at 4:17 pm
Yes.
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The Real Big Fouron February 17, 2015 at 6:59 am
Partners are delusional. I can’t believe they actually *choose* to buy into such old an stagnant businesses that will be disrupted by smaller and more agile players in the market.
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Daveon August 12, 2016 at 1:51 pm
I would challenge that notion purely because if you want to independently audit a company, your business needs to be big enough that your independence can’t be easily compromised by the company you’re auditing.
The Big 4 firms to try to innovate, but not at the speed that smaller practices can – so while the businesses might be overtaken by start-ups at some point, you’ve got quite a while before you worry about that.
See AlsoHow to become a partner at the Big 4 | How to make partnerPwC vs EYHow hard is it to become a partner at a Big 4 company?Big 4 Accounting Firm Number of Employees, Statistics, Diversity, Demographics, and Facts - ZippiaAlso – as a Partner and co-owner of the firm, you’re in a position to start to start to drive changes and create your own innovations.
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Johnon February 17, 2021 at 11:06 pm
Big 4 partners are under great pressure to retain and grow their client base to please their peers. Independence is all about integrity whether big or small. I have owned a highly respected small firm for 20 years. I was also a Big 4 Sr audit manager and have CFO experience with public companies.
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tod Watkinson July 14, 2022 at 7:24 pm
Save some p*say for the rest of us John
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JNon June 29, 2015 at 5:38 pm
actually – those big 4 ranges are pretty accurate. Just keep in mind that the typical year 6 to retirement aged partner makes in the 600-800k range. You have to be something special to get to the high end of the range and its not common, especially outside the high cost of living areas.
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GBAon September 9, 2015 at 3:36 pm
I am a retired partner since age 56 and my earnings ranged from $105,000 my first year back in the mid 1980’s to $1.3 million the year I retired about 7-8 years ago. Average now considering all the new and experienced partners should be about $850-$900K. (just an estimate).
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Milan Evancicon October 12, 2018 at 2:12 pm
Hi GBA,
Did you enjoy being a partner? How much time was expected of you?Reply
call me Shaunon December 18, 2018 at 4:09 am
so an inflation-adjusted figure from your earnings in 1980 would be today a little more than $440,000. Not too bad for an unseasoned partner.
https://www.rba.gov.au/calculator/
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Privateon March 6, 2019 at 12:07 pm
I am a 13 year Big-4 partner and make $1,2 mill divided between salary and profit sharing. The average in tax is now a little over $1 mill.
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Joe Shmeltzon November 5, 2016 at 11:52 am
I am a partner at PWC. I make 500k per year but had to buy in for 750k. The 750k is a 10 year loan that effectively reduces my salary by 100k per year. I work for 24×7 and have no time for family.
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Doesn't take a geniuson October 8, 2018 at 11:04 am
That math doesn’t add up. 750/10=75. 500-75=425.
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Gregon February 6, 2022 at 10:03 pm
offon March 7, 2022 at 10:52 pm
His after-loan earnings was 500k. That means Joe earned 600k-100k.
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Prabhuon September 25, 2019 at 8:04 pm
HI Joe
Then why do you work as a partner. You can easily get 400K plus and a very good work life balance if you go inhouse
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Unaffiliatedon March 29, 2022 at 3:49 pm
I have several PwC partners in my family and none of them paid 750k (or even remotely close to that) and you won’t find anyone who is an actual partner commenting on what they make or what they paid to buy in so this guy Joe cannot be legit. Those people would just state whether or not the ranges provided above are fair or what other considerations there are.
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No Nameon February 14, 2019 at 4:40 pm
The Deloitte partner “pension” is unfunded, as are probably all of the rest of the big 4 firms. Ask the retired Arthur Andersen partners what happened to their “pension” when the firm went bankrupt.
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Privateon May 7, 2020 at 9:57 am
I’m a new partner at a Big 4 in Japan. I make $400k equivalent per year. I make $20K monthly fixed, then $160K bonus guaranteed once a year. If we have a good year, then it goes up from there. I get retirement pension after 10 years of service.
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Stephanieon May 21, 2020 at 7:56 pm
This is excellent information. Thank you so much for sharing!
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Shawnon September 25, 2021 at 7:44 pm
Wow. Are you fluent in 日本語 and did you xfer from the west or work your way up domestically?
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Gregon February 6, 2022 at 10:06 pm
That’s inaccurate, it is partially funded and that is a significant portion of the plan. Not all, but we’re not Andersen. Know what you’re talking about before you spout off.
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Small is betteron November 2, 2020 at 11:05 pm
Sometimes a high achieving small firm partner can make much more than that. I have been a partner at a firm less than 100 people for 13 years. Average Annual Compensation: First 5 years: $800K; Second five years: $1.2 million; the past three years: $2.1 million.
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Stephanieon November 25, 2020 at 9:13 pm
Thanks so much for sharing! If you don’t mind, please let us know a couple of your firm achievements that led to your increased salary. I’d love to update the article with insight into how small firm partners can be as successful as you! Cheers!
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Joshuaon February 21, 2021 at 9:21 pm
Where are you located? What type of firm are you at? A full service firm or a boutique firm? How many partners, how many CPAs, and other accounting and support staff? How many hours during busy seasons and how many during the off season? Are you tax, audit or advisory?
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Pavelon March 7, 2021 at 3:01 am
How many years of post secondary do you need to get the job ?
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Georgeon November 5, 2021 at 9:32 pm
Agree that small firms are much better sometimes: Here is my salary for 14 years as a partner in millions: First five years: $0.8 million average per year. Second five years: $1.2 ; million average per year; Past four years: $2.8 million per year
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Tom Robbson March 14, 2022 at 2:50 am
How does an Audit Partner at Deloitte make $150k in one day?
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Tom Robbson March 14, 2022 at 2:51 am
How does an Audit Partner at Deloitte make $150,000 in one day?
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LESEon May 30, 2022 at 9:02 am
Big 4 Partner salary of multi-million dollars is thing of the past. I hope no one joins Big 4 thinking they will get to 3MM after staying as a partner for 10 years.
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Cormacon June 22, 2022 at 5:53 pm
Can any of the audit partners here tell me how an audit firm determines how large of a portfolio of clients each engagement auditor has? I believe that partners are expected to manage a client portfolio that has some minimum dollar of audit fees. In other words, for a given audit firm, each engagement auditor should have roughly the same amount of total audit fees across their portfolios of clients. Is this consistent with your experience and understanding? Thanks.
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Pati Pon November 22, 2022 at 5:45 pm
Have just finished reading this and a few other articles on Big-4 partner earnings. As a retired PwC audit partner, I thought I could add some info and clear a couple of things up.
It is important to understand that each of the Big-4 is really the combination of two businesses: an accounting firm (audit, tax and specialty work (IPOs, M&A consolidation projections, etc)) and a consulting business. The accounting businesses are very similar across all four and they compete with each other. The consultancies vary a great deal and can be far more profitable.
Partners do not receive a salary. Based on their recent comp and responsibilities, partners receive a monthly draw against their share of that year’s earnings. . Draws are calculated to be approximately 60% of the partner’s projected full year share of earnings.
a. When I was admitted as a partner in 1991, each new partner in the U.S. was awarded a block of shares in the firm. At the time, regardless of where you worked or what accounting practice area you were in, all new accounting partners started as equals (I.e. size of the block.) It should be noted that the largest offices in the firm – NY, LA, SF, etc corresponded directly with the higher cost cities in the U.S. On average new partners in/from those higher cost cities made partner in 10-11 years. The firm average was 12. It typically took 13-14 years to make partner in a smaller, second tier city. But all first year partners were compensated the same. We each had to buy our initial block of shares (this is the buy-in referred to in the article). The firm provided financing, at a very low interest rate, which required that I pay for my initial block within five years at a total cost of $85,000. For fiscal year-end June 30, 1992, each share in the firm “paid” around $770/sh. So my first fiscal year as a partner, I earned just under $175,000. That pay-out was reduced by $17,000 to pay off 1/5 of my original buy-in.
b. An major administrative aspect each summer for each big-4 firm is determining partner “raises.” What are called partner raises really are not raises as most people understand that term. The means to achieve higher compensation was the awarding of additional shares in the firm . . . shares that each partner paid for. It was a practice known as buying your raise. In the summer of 1992, I was awarded additional shares in the firm at a cost of $9,600. As with the initial, new partner grant, the firm offered very low rate financing and those shares had to be paid for within 5 years. I was fortunate to be newly married and unlike the majority of other new partners, none of my income at the time went to raising children. So I paid for those shares out of my my first year earnings. That process of buying one’s raise was an ongoing annual cycle for each partner’s tenure. If I recall correctly, the $9,600 investment in my “raise” returned over $20,000 the following year . . . and they paid out more each and every year that I held them until 2018.
c. The article refers to the range the Big-4 partners can earn in their careers. At PwC, an accounting partner’s earnings was a function of how profitable the firm was times the number of shares that partner owned. Given the return on shares, being awarded (and then paying for) more shares accounts for the width of the ranges. More shares would be awarded for basic business productivity – how much revenue the partner’s clients brought in vs the cost to deliver those revenues. Promotions to run a department or an office always led to more shares available for purchase. But nothing made more shares available “at raise time” than by bringing in (and in some cases assisting to bring in) in new clients or obtaining more revenue from existing clients. The most opportunities and most potential problems were associated with brining in new consulting revenue from existing audit/tax clients. One of the most rewarding aspects of introducing myself as a PwC partner (before the 2017 Oscars) was the unwavering commitment across the partnership to protect the independence of the firm and its reputation. Finding new consulting revenue from existing clients required a deeper then normally required understanding of the client, what type of service the firm’s consulting practice could provide and the methodology of providing it. Those that truly mastered navigating that path while assuring the independence and reputation of the firm were the ones at the high end of ranges.
d. Throughout my career, PW’s and then PwC’s average accounting partner’s earnings was always consistently the highest among the Big-8, Big-6 and now Big-4. Using some dated numbers from the era of mergers explained this phenomenon then and now: The ratio of the number of partners to the number of professional accounting staff drove Pwc’s higher earnings. I’n the late 80s there was 1 PW partner per 14.1 accounting staff professionals. The second most profitable firm in the late 80s was E&Y whose professional staff to partner ratio was 13.3:1. (No coincidence that The second most profitable firm had the second highest staff to partner ratio.) The least profitable Big-8 firm (when there were that many) was Touche Ross whose staff to partner ratio was below 9.
Wow. I really went on a roll didn’t I?
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Susan L.on November 28, 2022 at 10:03 am
WOW! Thanks for the GREAT comment, Pati. We will leave this comment visible on this post so that other readers can benefit from your insight. Thank you! Cheers, Susan (Big4Bound Team)
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