PracticeAccounting FirmsTop 50: you’re getting older

Top 50: you're getting older

Partners are on average half a year older than they were before. Is such a shift significant?

alex hawkes, accountancy age

The average age of partners at UK firms has risen significantly from 2006 to
2007, a shift that ACCA
described this week as possibly resulting from new age discrimination rules.

On the most comprehensive basis, partners are on average half a year older
than they were before. Taking just the average age of partners at all 50 firms,
and then dividing by the number of firms who submitted figures, you get an
average age of 41 in 2006, and 47.6 in 2007.

Of course, such an analysis does not do justice to the fact that there are
far more partners at PwC (793) than there are at Cooper Parry, for instance
(21).

We also multiplied the average age of partners in each firm by the number of
partners at the firm, to give a total combined age of all partners in each firm.
Add them up across the UK, and then divide that by the number of partners in
total in accountancy firms, and the trend is still clear, if much more muted.

In 2006, the average age of a partner at a UK firm was 45.9. This year it is
46.6. Is such a shift significant?

There are several other points that are also notable. For the three of the
Big Four for which we have numbers for both years (PwC, Deloitte and E&Y),
the number of partners under 40 has declined from 305 in 2006 to 273 in 2007.
The numbers could indicate succession problems in the future.

Industry consultant Phil Shohet says he believes the reason could be the
influx of partners who are older, as opposed to the profession taking in
partners in their lower thirties.

‘This ultimately leads to a succession problem because of our ageing
population. We have fewer qualified people coming into the profession. And even
if they are qualified, they want to leave because of intense risk and heavily
regulated environment associated with the profession. The rewards to the
profession are not what they used to be.

‘People prefer to go to banks, or other corporate positions. The result is
that this drives up the number of mergers, especially as partners retire without
having suitable candidates to replace them,’ Shohet says.

Mergers in the mid-tier sector particularly have become prolific in the last
year. Grant Thornton threatened it would edge closer to the Big Four as it
swooped in on Robson Rhodes, following the Mazars/ MRI Moores Rowland merger
last month and KPMG which merged with its German counterpart.

Shohet is of the opinion that the final outcome may not be the best for
clients, who may be left with far too few firms to choose from. ‘I think in the
next three to five years, we may be left with considerably fewer firms, which
means less choice,’ he says. ‘Firms have to become more efficient, offer more
rounded work to clients as opposed to just compliance work to cover their backs.
We’ve seen a lot of knee jerk reaction to the corporate failures. We’ve got to
reverse the trend otherwise we will be in a crisis,’ Shohet says.

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