How Much Money Do Big 4 Partners Make?

As of my last knowledge update in August 2023, the compensation for partners at the Big Four accounting firms Deloitte, PwC, EY, and KPMG can vary significantly based on factors such as the firm's performance, the partners' seniority, geographic location, and the specific service lines they are in.

Overview of Partner Compensation

On average, Big Four partners typically earn between $300,000 and $1 million annually. This range can be further detailed as follows:

Entry-Level Partners

Those who are newly promoted may earn around $300,000 to $500,000. These entry-level partners are just beginning their journey in leadership roles and are expected to solidify their expertise and client relationships.

Mid-Level Partners

Partners with more experience may earn between $500,000 and $800,000. These mid-level partners have built a strong professional reputation and are often responsible for significant client relationships and project management.

Senior Partners

Highly experienced partners, especially those in leadership roles or with a significant book of business, can earn between $800,000 to over $1 million. These senior partners are at the top of their profession and contribute significantly to the firm's success and growth.

In-Depth Look at Compensation

It is important to note that the compensation figures mentioned can vary based on the market and the fiscal year. The growth of an employee's pay after becoming a partner is not synonymous with receiving a regular salary. New partners receive payments at similar intervals, but these payments are known as guaranteed payments, a form of profit-sharing. These payments are taxed at a higher rate than standard employees, and self-employment taxes are also withheld, amounting to 15.25% on wages up to $137,000 in 2020.

Initial Years of Partnership

During the first 3–4 years as a partner, a new partner will earn around $250,000 to $300,000. By year 5, the target earnings increase to approximately $500,000. Health insurance benefits are no longer subsidized, so the partners pay the full share for themselves and their dependents. Additionally, they must pay off a note to enter the partnership, which ranges from $200,000 to $300,000, to be paid back in 3–4 years. This is considered a significant financial burden.

Comparison with Previous Earnings

There are opinions circulating that new partner pay and benefits are lower than what partners earned 20 years ago. These claims suggest that the financial landscape for new partners has shifted, potentially impacting their ability to maintain the same standard of living they enjoyed when they were in more junior roles.

Conclusion

The compensation for Big 4 partners is a complex mix of base salaries, bonuses, and profit-sharing. These factors contribute to a range of earnings that can significantly vary depending on an individual's position and experience within the firm. Understanding the intricacies of partner compensation is crucial for aspiring professionals and current partners alike.