Question for the accountants here
I'm an accounting student who will be attending a top MAcc next year intending to work in Big 4 tax. I really have no idea what I want to do afterwards, but I do know I would make a shitty partner and therefore had no intent of sitting in the SM parking lot forever. The other day I came across a comment on GC that suggested good SMs who wouldn't cut it as partners get promoted to a "director" position. I had never heard this term used, but it sounds like it would be something I could do. Is there any info about the responsibilities/pay of people in these positions? I'm sure there are dozens of directors with different titles and functions, but what would be a common one for people coming out of tax? How much do accountants make?
There are two positions at the upper levels - Executive Director and Partner. The difference is fairly significant.
EDs are retained for their experience and expertise - usually in some obscure area (i.e. pension accounting, pension plan audit, R&D, etc.). They are expected to service existing clients, but are not expected to actively pursue new clients. Their compensation is lower, and of course, they don't share in the partnership pool (though they are given a bonus of some kind).
They're often promoted after sitting in the SM parking lot, and either threatening to leave, or convincing the partners to promote them. In uncertain economic times, that promotion is probably harder to come by.
There may also come a time where as an SM, you are brought before the partnership committee and told flat out that you will not be making partner for XYZ reason, usually because you have the personality of a wet paper towel. At that point, you may be given the option to stay as an ED, or take your leave.
Well, that's exactly the reason I know I'd make a shitty partner. Any detailed numbers on the comp? If it's not too miserable, this sounds like it would be right up my alley.
Depends on your definition of miserable - I quit after 1 year.
I can only give you rough Toronto compensation, but I'd call it somewhere in the $200-300K range. Higher than an upper-level SM ($150-180K), and approaching the low end of partner ($300K).
Sounds livable to me. Can you tell me what a new hire makes in Toronto so I can compare it to a US office?
An upside is that ED doesn't share the liability of partnership, and there is no buy-in, so you don't have to borrow or put up hundreds of thousands of dollars. typically people scoff at the idea of Big4 partner liability, or putting up a few hundred thousand to buy in, given how much you can expect to make going forward, but just remember all of those 1st and 2nd year Anderson partners when that ship went down - they were around just long enough to take on a few hundred thousand in debt, but not long enough to recoup that investment. So, they got screwed, and mostly through no fault of their own.
$200k-$300k in comp is pretty good money; better than you're going to see as an ED at F500. You typically aren't breaking that comp range at F500 until the VP level.
New hires in Toronto clock in around $45k CAD.
chances are good you will be out within 2-3 years. chances are even better (80%) you will be out before making manager. i wouldn't spend you time worrying about the decision between senior manager, director, partner, or whatever else when you haven't even started yet. take it one year at a time and re-evaluate your goals annually.
also, at my firm, when new partners buy-in, they borrow the money with the assistance of the firm at a very low interest rate. on top of any income they receive associated with their partnership units, they are paid an interest rate by the firm on their equity investment at a rate higher than their cost of borrowing. so, they actually end up profiting directly from their investment. yes, the firm could still collapse, but considering the insane focus on risk management that never even existed a decade ago, i wouldn't count on that happening.
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