Retiring Big Four partners can find opportunity at midsized CPA firms

Accounting

A new research study from professors Jenna Burke of University of Colorado Denver, Rani Hoitash of Bentley University, and Udi Hoitash and Summer Xiao of Northeastern University that will be appearing in theJournal of Accounting and Public Policyfound, among other things, that retiring Big Four partners are 56.40 years old on average (see story). Practitioner publications also report that most U.S. accounting firms in the Top 100 have a mandatory retirement age between 60 and 66 (Cohn, 2014, Stanger and Carlson, 2017). My own personal experience has found that many quality midsized firms actually retire their most productive partners at age 70 and that part-time consulting arrangements are negotiated after age 70.

For purposes of this column, let’s simply say that “retiring” Big Four partners are 56 years old while “retiring” Top 100 partners (other than the Big Four) are 66 years old. That gap of about 10 years could represent huge employment opportunities for “retiring” Big Four partners with the “right stuff”.

What’s the right stuff?

It goes without saying that “retiring” Big Four partners have technical excellence baked in. But there is a difference in being a Big Four partner serving public companies and a Top 100 partner serving midsized private companies. The Big Four partner is overwhelmingly focused on compliance with GAAP, GAAS and the PCAOB while the Top 100 partner is focused on GAAP and GAAS and most importantly takes on a trusted advisory role. Inherent in the trusted advisory role is the ability to build relationships with clients and others. Last, but certainly not least, Top 100 (other than the Big Four) partners understand they are partners in a business that is designed for a profit and, as a partner in that business, they have the responsibility to build and perpetuate the firm business.

Some Big Four partners are never exposed to the trusted advisor, relationship-oriented aspects of the business and have rarely seen their responsibilities include building and perpetuating the firm’s business. These partners will rarely find employment opportunities at the Top 100. On the other hand, if you are a “retiring” Big Four partner with the “right stuff,” there probably are plenty of opportunities for you in the Top 100 — with employment that can span an additional 10 years. Presented below are some key criteria and guidelines, among others, that a Top 100 firm would like to see the “retiring” Big Four partner demonstrate as the firm considers extending an offer:

1. Client relationships and client service excellence:

  • The partner has demonstrated strong business acumen and judgment.
  • Clients have perceived the partner as a trusted business advisor and seek counsel on multitudes of business matters.
  • The partner has developed sustained long-term relationships with clients by continuously creating business expansion and business referral opportunities.
  • The partner has managed all client relationships and client engagements with the highest level of integrity.
  • The partner has provided clients with the highest level of consulting and advisory services.
  • The partner has turned client relationships into long-term personal relationships.

2. Technical capabilities and distinctions:

  • The partner has excelled and has been recognized for technical competence.
  • The partner has developed technical excellence in others.
  • The partner has an acute sense of risk assessment and risk management.
  • The partner’s technical expertise has been highly sought internally and externally as a “go to” person.
  • The partner has ensured the highest level of technical quality has been performed.
  • The partner stays abreast of industry developments and professional standards.
  • The partner has effectively trained others.
  • The partner has attracted business based on expertise and has demonstrated the ability to monetize that expertise.

3. Personal attributes:

  • The partner has demonstrated integrity in all actions.
  • The partner has consistently demonstrated a strong team orientation and has recognized the importance of creating and leading highly effective work teams. This partner has not operated as a lone ranger or as a “silo” within a firm.
  • The partner has been a key contributor and/or led an important firm and/or practice area initiative.
  • The partner has demonstrated a commitment to quality in everything they do. This would include the services performed, work products, staff evaluations and leadership commitments.
  • The partner has demonstrated they have the resilience and agility to operate in dynamic environments.

4. Business development and profitability:

  • The partner has maintained a profitable book of business.
  • The partner has contributed to:

o Writing articles;

o Speaking engagements; or,

o Networking forums.

  • The partner has been effective at networking, listening for opportunities and closing sales.
  • The partner maintains a strong network that generates leads and converts those leads into business.
  • The partner has a sustained track record of developing new opportunities.
  • The partner has been an active leader in various associations and business groups and has regularly attended industry and community meetings.
  • The partner has contributed to the growth culture of the Big Four firm.
  • The partner continually expands existing client opportunities by cross-selling other services and service providers.
  • The partner has been “famous” for introducing other firm resources and expertise to existing client relationships.

Today there are boutique advisory firms that help “retiring” Big Four partners hone their “right stuff” skills. It’s a good investment in your personal development and I encourage you to consider it. There also are advisory firms that work with the Top 100 firms all day and every day. They are an excellent source of connecting with the Top 100.

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