Big 4 Partner earnings (drawings) have been declining in the last few years
KPMG has probably seen the biggest fall in partner earnings over the last few year. When KPMG filed its accounts for the year ending September 2012, it was reported that UK partners’ profits had fallen from £682k per partner to £568k. Given that the average earnings per partner in 2016 were £582k, which were a 10% drop from 2015, it’s fair to say that KPMG’s partners have not seen the level of 2011 profits for a long time.
It’s a similar picture at Deloitte. In 2012 the average partner earnings were £789k. In 2016 they enjoyed a 2.5% increase on the previous year to £608k.
PWC have seen fairly static earnings for their partners over the last few years. In 2016 they took home, on average, £662k which was a drop of 5% on the year before. This drop was caused by EY investing in technology and more trainees. In 2011 PWC partners enjoyed earnings of £707k, and in 2012 their earnings dropped to £697k.
It is not easy to find EYs average earnings per partners in the UK. Partly because they are the most globally lead of the Big 4 firms. I.e. they report per region of the world rather than by country. From publicly available information, the UK partners in EY saw their earnings drop by 5% to £662k in 2016.
It seems slightly churlish to mention this, but the profit per equity partner (PEP) for Magic Circle firms is over £1 million.
But there’s more to how much a partner really earns
You thought I said it wasn’t an easy question to answer? Well, remember that these figures do not represent the money in the bank account each year. Firstly, partners have repayments and interest on any partnership loans they took out to get them to where they are. Then they have their pension pot to contribute towards, and finally, they’ll pay income tax as a self-employed person. These are all going to be hefty deductions from the amounts mentioned above.
All the same, those amounts may still seem very attractive to you, and certainly, partnership is one route to becoming a very rich man or woman. Remember though, 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.
Do all Big 4 partners get paid the same amount of money?
The short answer is no. Remember that partners are NOT earning a salary because they are classed as self-employed. They are getting a share of the firm’s profits; even the fixed share equity partners.
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 shared with them tend to be:
- The more junior partners who have not had the 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.
- The fixed share partners rather than the full equity partners
- The audit partners rather than the advisory or consulting partners
- The low performers