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Sometimes I don't uphold the company mission 😱
Additional Posts in Partner One
Anonymous User
But what if you *are* Partner 1?
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P1 Thanks for sharing your opinion. Appreciate it. For those of us contemplating a career that requries major sacrifices in the personal life, it is helpful to understand the risks of not getting what you bargained for.
There are two parts to your question. In one part you ask if there are plans to reconsider this form of compensation or whether it's on its way out. That's a question that calls for knowledge of a specific firm that has this. So I won't comment on that as it would suggest I was at such a firm.
Your second question is whether it is sustainable, where I could form an opinion no matter where I worked. So here you go: Pension benefits are a function of contributions, investment performance, and longevity risk. The longevity risk for a large pool is well understood actuarily. So it's really a question of contributions and investment performance. Generous pension benefits are possible by taking large amounts of cash out of what would otherwise be in-year partner compensation and instead putting it in the pension plan. So if margins compress, total compensation available to partners will go down and therefore contributions must go down (or in-year compensation would need to decrease, but this can only go so far). This would lead to lower retirement benefits. The overall idea of having such plans is to facilitate the retirement of partners prior to the end of their working years to ensure there's room for new partners. So net net, I don't see the system going away entirely. Instead, the accrual of retirement benefits will slow. Of course it can expand again in the future. The industry has gone through a lot of cycles. So I don't expect any margin contraction to be permanent.
You think partners have a mind-reading forecasting attrition based analytics software of some sort ?
We are not surprised that people leave after bonus is paid. I have no forecast available and wouldn't share it if I did as it would be firm proprietary information. My general observation is that attrition generally is pretty consistent year to year except during recessions where it is notably lower.
As the "original" P1, it's been my long-standing policy not to reveal which firm I work for. As this is a firm-specific question, I therefore won't comment. But it seems there are several other partners who read these posts who don't have this policy, so perhaps one of them will be so kind as to comment.
I'll rephrase- what is the expected attrition rate this year after bonus pay out?
^ maybe. It happens every year that people get their bonus and bug out. And my understanding is it particularly particularly off partners so you are burning some bridges. But sure they forecast for it tho.
That's bull ^. Bonus is essentially differed pay for prior performance. Partners shouldn't be pissy if people leave right after.
P1 - It is not firm specific. I ask broadly.
The phenomenon of large pensions for retired partners is not a feature of all firms...
Weird question
Deloitte tries to forecast attrition... poorly, but we try
P1 Are there any plans to reconsider the amounts paid in pension to retired PPs? To save the whole model from being unsustainable? Seems margin pressures are here to stay and will only get worse.
P1 Ok. So for the firms that have this model, is it in its current form on the way out and/or unsustainable in your opinion?
I've previously heard mid single digits and that of its lower than expected then the voluntary turns to involuntary. Would love to hear a partners POV