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I don’t think so. Def not at PwC. Again, I defined as like:like horizons, so if you want to be an MD working til 80 then I guess you might “win,” I’ll gladly take my 20-25 years of retirement making 56-82% of what you do during that time as a pension payment while playing golf.
We have MDs who make 1.5M (rare) and those that make 300k (not uncommon) but it’s simple:
Minimum partner comp 600k, avg 1.1
Avg MD comp 700k
Hockey stick for partners is the pension, and you are looking at no value anyway if you make P after 50
What would you choose
Okay so let’s address where this notion comes from (Deloitte P here). As an MD you make a guaranteed salary plus AIP. As a new partner you make a unit buy in and then get a split of profits equal to your number of units. If at the end of year 1 you took your earnings minus your buy in, your balance sheet would make it look like you made less. But the reality is that you get your buy in back when you leave the firm so this is really a wrong way of looking at it.
Are there seasoned directors making more than new partners? Yes.
Are there other expenses to bring into the equation such as state taxes and insurance? Yes
Is there risk in being a partner, yes (just ask any ex Andersen partner)
Is it most profitable as a partner to stay longer and vest in your pension? Yes.
Have we brought in ex CEOs and market luminaries as directors and paid them more than a new partner? Yep
But generally speaking, the partner path is more profitable straight up than MD if you have all the right assumptions.
What are you even talking about?
Um…no?
But give me more to work with, how are you defining “profit”
Profit = ‘make more than a MD with similar years & performance’
Hmm. From where did you “hear”. Credible sources are they?
Ok then - at least at PwC, there is really no world where you make more $s by any measure along any time horizon as an MD than a P.
There are always exceptions, like our Corp Finance branch but the above holds true not for just the majority, but for 99% of comparisons you could come up with at our firm. Can’t speak for others.
How much did you make MD1?
EY Partner here. New Partners are a bit f’d. Salary is defined the first couple years with no bump or “bonus.” There are numerous MDs that make more than you as an early career Partner promote, especially if they were hired externally. Frankly, severally senior managers are taking home more than newly promoted Partners now after considering the new bonus increases just announced. It’s a very sad situation when you consider the amount of work and pressure applied to new Partners.
EY2 is spot on. That’s exactly what happens. If you are a direct admit MD then your comp could be significantly more than most partners.
10 years as a Partner and I’m going to make 1.4m this year; yes, it’s profitable and worth it
Believe this year is an exception (no travel expenses & unexpectedly good business). How much did you make last year, when the chips were down?
Depends at what age you make Partner. It’s a bit of a hockey stick curve for P. Given that you’re forced to retire at 60 (at Deloitte and EY) - you’re probably better off as MD if you’re 43 plus.
At 45 you’re better off as MD with a more gradual curve and no forced retirement.
Also, there is no take home comp for P, it’s what they want to draw down
As with everything like this, it’s all about what you negotiate.
A.) Don’t confuse the metrics between D and PWC. Different companies with different definitions of the same titles.
B.) It depends. MD provides more flexibility. P provides a potential path to more earnings on the traditional path. Nothing is guaranteed and it’s all negotiable if you have something to negotiate with.
So at Accenture this is kind of true to an extent. Your first year comp may be higher than a SM or AD, but if you are maxing out VEIP with 30% of your salary your cash take home will be potentially lower.
So in terms of cash flow it can be a bit bad the first year. Of course your TC is way way way higher if you max out VEIP. After the first year it isn’t much of an issue though.
https://adventurewealth.com/accenture-voluntary-equity-investment-program-veip
Any ey partners ?
Any McK partners??
Coach
What does McK have to do with it?
OP’s question is around the Big 4 choice of MD versus Partner/Principal. It’s a Big 4 construct question.
What do you want to know? Partnership is extremely profitable from Day 1.
More-so a blanket question, but what are the economics of Partnership at McK? Buy-in amount, equity distribution, forced retirement age, pension, etc.?
Coach
<Getting us back on track here>
To your original question, OP, it is not the case that it takes 7-10 years for partnership comp to exceed comparable MD here. They generally give you a raise and some uplift to cover the costs you weren’t responsible for as an employee. But from an Advisory standpoint you’re never worse off than you were as an MD.
Which is a different question than “Are there MDs who make more than first or second year partners?” The answer is of course yes, but those are either folks who have been MDs forever and will never be partners, or came in with a better package. If you have two people start as MDs and three years later Partner A gets partner and Partner B stays MD, A will always make more than B, barring a Pandemic perhaps.
I suspect the seven years part refers to something else..
This was for Advisory, by the way. Audit and tax are different.