"Deferred Compensation Structure"
The big four accounting firms operate under a deferred compensation structure where the large chunk of your compensation is not paid in cash as a year end bonus, but rather the compensation comes in the form of a balloon raise upon making partner, and an outstanding pension program.
Once you make partner, you can expect more than a 100% raise. Typical partners in my office, and practice, start at a salary of $350, which is a 133% raise from a typical senior manager's salary of $150. Further, the partnership provides all partners a defined benefit pension plan, where the benefits paid are a certain percentage of your three highest year's salary. For example, I have heard of retired partners earning 40% of the average of their three highest year's compensation, which was $2,000. They get to take home $800 a year for the rest of their lives. What is the value of a guaranteed $800/yr annuity beginning at age 55? What kind of banker or trader get's that kind of deal?
The true compensation and profits in accounting accrue to the partners of the firms over time. If you are not planning on staying at the firm for the long run, all of the earnings you are working for are accruing to the firm, and you wont realize any of them. Decide sooner rather than later if you want to stick it out; otherwise you are being squeezed for your profits in the partner's pyramid business model.
Great blog!! I discovered it this weekend and I have gone through all the posts like if I was reading a book. It is a pity that yo quit on postinh that long ago, I want more posts...Please!!
ReplyDelete