How your firm is missing a $682,000 opportunity
According to a study released this past month by Inside Public Accounting, the average equity partner of a Top 100 accounting firm earns $682,000 a year. Wow, right? And that even excludes the earnings of partners at the Big Four firms, who, we all know, on average, make significantly more.
I bet if you ask the executive management of these firms about these compensation numbers they'll shrug it off or even try to avoid the conversation. No one likes to talk about how well-compensated we are. It's embarrassing. It's not professional. It's private.
Nonsense. As equity partners and leaders this number shouldn't be swept under the rug. It should be leveraged, advertised even. Why?
Because also included in that report was the fact that professional staff turnover (CPAs and other client-serving staff) averaged 16 percent for the top 100 firms, with one in six firms averaging more than 20 percent professional staff turnover. Twenty percent! That's a very high number. Just to compare, payroll giant ADP's 2019 State of the Workforce Report, which looked at data from 13 million employees from 30,000 firms across eight sectors in the U.S., found that the average turnover for the typical company was about 3.2 percent, with almost two-thirds (64 percent) of workers remaining on their jobs anywhere from four to nine years. Only 20 percent of the firms in the ADP study had turnover of 4 percent or higher. Our industry is more than six times the national average for turnover.
Which brings me back to that “embarrassing” $682,000 number.
What is so wrong about making $682,000 a year? Isn't that a good thing? Wall Street firms entice their investment bankers with fat bonuses and multi-million-dollar payouts as a reward for their deals. Talented salespeople in countless industries are incentivized with higher commissions, reward programs and competitions to increase their close rates. Many other line workers, administrators, customer service reps and engineers share in their company's profits.
There's nothing wrong with making money. It’s not unprofessional. The leaders of our top firms have big responsibilities and they’re carrying them out pretty well. According to the IPA report, organic growth exceeded 7 percent last year and billing rates are up. They’re not just prepping tax returns or signing audit reports. They’re successfully managing large, complicated businesses — and being compensated fairly for the job.
And yet we, as accountants, act as if it's shameful. That should change. Because isn’t that what aspiring financial professionals want to do? Succeed financially?
Our current and prospective employees should know that there's money in accounting. Lots of money. Firms should be more open about their compensation levels and how much their partners earn. People want security. They want to know that there is a pot of gold at the end of the rainbow. As much as we like to argue against it, we still live in a capitalist society. Being more open about the long-term financial rewards that can be achieved by committing to the accounting profession will keep many younger professionals in the game.
Sure, quality of life and all that stuff matters. But the money is also important, no matter how much people don’t like to admit it. Accounting firms that ignore this fact are missing a recruiting and employee retention opportunity. And they're losing good talent because of it.
So would you like to make $682,000 a year? Good for you. Now get to work and let's see what we can do to help you achieve that goal.