Net Worth - Partners of Big 4 CPA
What is the net worth (not salary) of Partners of Big 4 CPA firms?
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I currently work for the IRS making 86,000 (GS-13). I have considered applying to the Big 4 cpa firms as a senior associate doing either M&A tax or International tax. I've heard that many of the Partners of Big 4s don't have much money (due to divorce child custody, or because they're sales people who get frequent new cars, clothes, big homes, etc). 50% of people who win the lottery file bankruptcy, and 78% of pro football players, and I've noticed that often sales people don't have much at 50 yrs old (due to frequent cars, golf, alcohol, living the showy lifestyle). Can anyone tell me the net worth of partners they've known, or tell me if partners get reimbursed by their CPA firm if they pay a bunch over the years for golf, for bigger homes/cars to wine and dine clients, for donations to charities to be on the board? Is it almost inevitable that they get divorced due to hours or affairs with associates? I have a law degree, CPA, and masters in tax, so I may have a good shot of eventually becoming a partner, and I know their salary (start at 300k and go up to 500k or 1 mil depending on size of city), so I know their revenue but I don't know what their expenses/profit is or what their net worth is.
I worked at Deloitte and currently work at PwC. From my understanding most of our partners have a pretty high net worth. As you mentioned, they start out at $300k-$500k depending on the line of service and can go all the way up to $1M+. It's extremely hard entering the partnership unless you've been with the firm a few years. You need 250 signatures from other partners to support you and vouch for you becoming a partner. Typically, individuals will come in as Directors or Senior Managers spend about 2 yrs in that position and then be considered for partner. You need to build time for rapport building and establishing your network. Most of our partners, at least that I know, are pretty happy, have families, encourage flexibility, etc. Maybe PwC is different, but the partners here seem to find time to spend with their kids, families, and whoever else. PwC actually has a firm wide shutdown for a week during the Christmas Holiday in order to force people to reconnect and spend time with families. Don't get me wrong you will have to pay your dues and work hard, but if you can find your niche in the Big 4 it will definitely be rewarding. From an expense standpoint, that's kind of an odd question. I mean, they pretty much have the same expenses as everyone else. Partners aren't driving around in lambos and bentleys, and they aren't boosting some luxurious lifestyle. They have some pretty baller homes and neat toys, but there expenses aren't anything you wouldn't expect.
Jesus.
Agreed.
can we just delete this thread?
I agree with the terseness of replies in this article but I guess I'll explain in a little more detail why your question is absurd.
Evaluating the net worth (roughly total assets minus total debt) of a subset of people with a given title is impossible. There are so many obvious variables, like age, salary, service line, and firm. Then, there are the less obvious variables like culture, location, and tax implications. After that, there are highly diverse personal variables, like marital status, number of children, number of other dependents, family money, spousal and personal debt, size of estate, alma mater, religion, past experiences, past work, other sources of income including royalties and carried interest, and personal spending, saving, giving and investing habits. There are so many variables in addition to these that they cannot be enumerated.
Given these variables, it is quite possible that two Big 4 partners in the same office and service line with identical ages, salaries, alma maters and family compositions could have vastly different net worth. Extrapolate that to all partners at all types of firms, and it would be quite impossible to come up with any net worth figure. Even hypothetical mean and median net worth cannot be found because it isn't feasible to get enough data points to have a statistically significant sample.
To assume that all partners are have ego-driven spending habits and pay some combination of alimony and child support is as ridiculous as the question of their net worth. Again, while many may fit that description, certainly not all do.
In an attempt to answer your question, however, the partners that I have known were quite stable, with relatively modest spending habits and low debt. However, most of them happen to share a unique culture that encourages saving and discourages debt, which, again, probably makes them outliers in some variables if not in total net worth.
Thanks, so it sounds like you're saying to become a partner and bring in the amount of business does not require a flashy sales personality. I previously talked with a guy who worked at a Big 4 and while there he prepared the tax returns for the partners and he was surpised at them not having stock accounts and they had big mortgage interest. He thought "these partners work in this sweatshop for 20 yrs and they just have a few thousand dollars in the checking account". I've also talked to coworkers who thought partners had high divorce rates that cost them a lot of their wealth. I don't really know any partners which is why I asked my question.
Big 4 partners generally are more personable and outgoing, and some are definitely flashy, but most of the partners I know are simply a little above average when it comes to some combination of smart, personable, and ambitious.
Most partners are taxed A LOT too, close to 50% in many cases. So I'm not surprised that some have little saved. But they also have really good pension/retirement and hefty 401k. I can guarantee you one thing, even the flashiest partner isn't spending their own money winning client. The wining and the dining is on the firm (which is arguably their own money since it's a partnership, but not coming directly out of their salary).
Also, the winning of audit/tax clients is a different beast than winning the mandate for a merger or acquisition. It's not all flashy. It's regulatory, so big firms know they have to pick an audit firm and there are only 4 choices. Good partners can develop relationships, but they aren't based on being flashy from what I've seen.
If I had to guess, I'd say most partners have pretty decent savings relative to their income and people in other professions, rather than the opposite.
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