So you want to know how much do Big 4 partners make? And you’re curious about how much is the Big 4 partner salary in the UK? Who wouldn’t be? It’s only human to wonder; we all probably wonder how much they earn. A Big 4 partner salary depends on many factors so it’s not easy for me to answer directly. I can take publicly available data and analyse it, however, to give you an idea of the average partner drawing. That’s exactly what I’ve done (you’re welcome!).
Big 4 Partner earnings (drawings) had peaked and then the COVID-19 pandemic hit.
Over the past decade, I’ve seen the Big 4 reporting declining profits along with the biggest fall in partner earnings. Fast forward to 2018 and I was a different story; Big 4 partner salaries were growing nicely. In 2019, it changed again (keep up at the back!). The consultancy market (which makes up a large part of the Big 4’s revenue) had endured its slowest growth for 7 years in 2019. I think that Big 4 partner salaries had probably peaked in 2018. 2019 saw partner salaries in EY and KPMG in the UK decline. Up until that point the Big 4 saw global revenues grow to record highs with some partners in line for the biggest payday in 10 years. However, we were all affected by the COVID-19 pandemic in 2020. And, it’s fair to say, everything then changed. (See more below on how I think the COVID-19 pandemic has impacted partner salaries at all the Big 4 firms in the UK). In fact, in April 2020 all of the Big 4, apart from KPMG, said partner pay would be cut by 20% to preserve jobs.
How much does a partner at Deloitte make?
Deloitte, up until COVID-19 hit the global economy, was doing really well. It had seen the biggest increase in partner earnings in 2018 and 2019. When Deloitte filed its accounts for the year ending June 2019, it was reported that UK partners’ profits had jumped from £608k per partner to £882k. Given the highest average earnings per partner for Deloitte was £789k back in 2012, this is a significant increase. However, I see that Deloitte has already announced that Deloitte partner salaries are likely to be 20% down in 2020 vs 2019.
How much does a partner at PwC make?
It’s a similar picture at PWC. For the year ending June 2019, I found that partners took home, on average, £765k which was an increase of 13% when compared to figures in 2016 (£662k). Interestingly, I found that part of PWC’s income came from advisory services on how to handle Brexit.
The information I could find in the public domain suggests that PwC partner salaries have been cut by 20%. It has also delayed its staff annual appraisals for 6 months. In practical terms, this means no staff promotions, bonuses or pay rises for 6 months. Given that the UK consultancy market had endured its slowest growth for the last 7 years in 2019, I would expect to see in 2020 a large cut to the PwC partner salaries in 2020.
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How much does a partner at KPMG make?
In 2019 KPMG was hit by a 2% drop in consultancy income. This is probably a big factor in why it has reported a £49m drop in profits from 2018 to 2019. Any large drop like that is going to have an impact on the partner salaries at KPMG. The average KPMG partner salary in the UK in 2018 was £690k. This has dropped to £640k in 2019. In April 2020, KPMG was the only Big 4 firm not to impose a mandatory 20% pay cut to its partners’ salaries. KPMG in July 2020, to protect its profit margin, announced it was going to axe up to 200 employees in the UK. So expect a big fall in KPMG partner salaries in 2020!
How much does a partner at EY make?
EY partner salaries fell slightly in 2019 from £693k to £679k. Profitability had been hit by declining revenues from its assurance (audit!) and advisory (consultancy) practices.
EY is doing everything it can to try and avoid staff redundancies in the UK. Whether they manage that, who knows? But they announced in April that their partners would take a 20% pay cut, and no staff member would be furloughed or expected to take a pay cut. Since then they have delayed their May partner promotions until October.
It seems slightly churlish to mention this, but the profit per equity partner (PEP) for Magic Circle firms is over £1 million!
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But there’s more to how much a partner really earns
You thought I said it wasn’t an easy question to answer? Well, you should remember that these figures do not represent money in the bank account each year. Firstly, as a Big 4 partner, you’ll have repayments and interest on any partnership loans you take out (today, Big 4 partner buy-in payments can be between £250,000 to £800,000). Then you have your pension pot contributions and you’ll pay income tax as a self-employed person. So you’ll have hefty deductions from the amounts mentioned above.
Wait… what’s this Big 4 buy-in payment?
Most Big 4 partners are classed as self-employed. When you make partner, you resign from your job and become an owner of the Big 4 firm you’ve made partner in. Unfortunately, you’re not magically gifted equity when you become a partner at a Big 4 firm. You have to buy into the firm and make a capital contribution to the firm in return for your very small slice of equity. This Big 4 buy-in payment:
- Pays for your equity slice
- Makes it harder for you to leave
- Rebalances the books of the firm (the firm repays capital to any partner leaving the firm).
Depending on which country and which firm, I would suggest that the Big 4 partner buy-in payment is normally £250,000 to £800,000. (But it can go as low as £50,000.)
Now you may be thinking, I can’t afford the Big 4 partner buy-in payment! We don’t have a spare £250k sitting around! So the Big 4 firms will organise an interest-free loan to fund your buy-in paymemt. Your firm will take any loan repayments off the drawings you’re given.
All the same, those Big 4 partner salary amounts may still seem very attractive to you. If you make partner you’re en route to becoming a very rich man or woman. Remember that these big firms make sure they get their pound of flesh in return for these huge sums.
Or, as one member of my network put it:
I realised that if I had made partner at E&Y, there would always have been three people in my marriage.
Making partner may not be quite what you expected. Read the post on What does it really mean to make partner? for more insight.
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A Big 4 Partner Salary is not a salary. It’s a profit share
Did you think that Big 4 partners get paid a salary? Most Big 4 Partner Salaries are actually not a salary. As a Big 4 partner, you won’t earn a salary because you’re classed as self-employed. You’ll get a share of the firm’s profits; even the fixed share equity partners. This is why all but KPMG announced in April 2020 that their Big 4 partner salaries would be cut by 20%. In other words, as a partner, your drawings would reduce by 20%. KPMG did this to preserve cash flow during the early days of lockdown. I think that given the economic trading conditions in the UK as a result of COVID-19, I would expect to see all of the Big 4 heavily reduce their partner profit distributions in 2020.
Within each Big 4 firm, the amount of profit each partner is allocated is distributed as a bell curve. The partners who get the least amount of profit share tend to be:
- The more junior partners who haven’t had time to build up their equity points. (Partners are often awarded points. The more points you have, the greater the share of the firm’s profits.)
- Fixed share rather than full equity partners
- Audit partners rather than the advisory or consulting partners
- Low performers
If you’d like more guidance on the different types of partner in a firm, see what does it really mean to make partner?
As a partner, you’ll see that each partner has a different share of equity, hence the differences in Big 4 partner pay. To make things more complicated, your share is determined by:
- Your partner level
- Importance of their clients to the firm
- Fees earned per year
- Your back office duties (e.g talent leadership, risk etc)
- Service line (e.g advisory/consulting partners deliver the most value in the marketplace so earn more)
- Helping other employees become Partner
So how much do Big 4 partners make?
As I said at the beginning of the article, a Big 4 partner salary in the UK depends on so many factors that this is an impossible question to answer fully. Hopefully, my efforts to give you the data from annual reports have given you an idea of the current average partner drawing.
To leave you with a more definitive answer to ‘how much do Big 4 partners make?’ here are the latest glassdoor reports for the Big 4 when it comes to average Partner salaries:
- Typical partner salary range – £186k to £650k
- Average total pay – £250k (including bonuses and additional compensation)
- Typical partner salary range – £81k to £350k (these figures probably include some salaried partners or non-chargeable salaried partners as the low end feels on the very low side)
- Average total pay – £190k (including bonuses and additional compensation)
- Typical partner salary range – £261k to £301k
- Average total pay – £326k (including bonuses and additional compensation)
- Typical partner salary range – £100k to £820k
- Average total pay – £654k (including bonuses and additional compensation)
How different is a Big 4 Partner Salary in the US?
The Big 4 partner salary levels in the US are fairly similar to the UK. (No surprises really!) This Big 4 career lab article, talks about Big 4 partner salary levels in the US ranging from around $300,000 a year to $3 million plus.