Accountancy firms taking the mick

[Skeptisk]

In recently started a new role where I am back buying services from the big 4. I asked for their hourly charge out rates by grade. Oh dear. My previous role was in Denmark. There a partner was around £500 an hour, which is already a fairly outrageous amount. In the UK? Well you can get an associate (basically someone just started from university) for £400! A partner is £1875. I’m sure they don’t really recover that amount very often but still.

I am genuinely puzzled about the difference. Yes UK salary costs are higher because of NI and higher pension contributions but I don’t think the difference is more than 25-50%. All other costs would be similar (Denmark is a very expensive place). So how can the same firms be charging almost 4 times as much for a UK partner compared to a Danish partner?

[eltax91]

Use the danish ones remotely?

[jonsp]

eltax91 said:

Use the danish ones remotely?

Since we left the EU would a Danish firm be qualified to act in the UK?

[trickywoo]

£13k for a 7 hour day of a partner?

That simply can’t be right.

Would kind of explain why everything else in this country is so expensive though.

[ATG]

Why use the big 4?

[2 GKC]

UK profit per partner tends to be higher than their network firms abroad. What line of service are those rates for? M&A?

Some of the mid tier firms add 3% to their already ridiculous fees for expenses now too.

[Lefty]

I don’t know what a partner in big 4 earns but including bonuses it might be approaching £2m or ~£1000/hr so by the time payroll burden, overhead and profit is added £2k/hr might not be ridiculous.


I’ve seen plenty of specialist consultants in the £5-10k/day range . They are generally specialists in a specific niche to be worth that kind of money though.

[Lefty]

£400 for a grad is clearly taking the piss though! Anyone paying that is either a fool or laundering money somehow.

Be better just hiring a mid level contractor/consultant for £100-200/hr but I suspect the value is really in access to data / systems and/or other corporate knowledge via the associate.

[2 GKC]

Lefty said:

I don’t know what a partner in big 4 earns but including bonuses it might be approaching £2m or ~£1000/hr so by the time payroll burden, overhead and profit is added £2k/hr might not be ridiculous.


I’ve seen plenty of specialist consultants in the £5-10k/day range . They are generally specialists in a specific niche to be worth that kind of money though.

Most less than half that.

[Lefty]

Oh really?

Ah well ignore me then

[Lefty]

I commissioned a study with a large well known consultancy for one of my clients.

Two short meetings with a partner and an associate.
They came back with a simple proposal by email
A grunt did the work (I looked her up on LinkedIn and she’s about 21) - I would guess a weeks work plus say 4 hours of an associate reviewing then an hour of partner checking

Using those rates above:

Partner 3 hours @ £2000
Associate 8 hours @ £1000
Grunt 40 hours @ £400
= £30,000

The proposal was actually £50k which was a screaming bargain for the data / info we got from it but on an hourly basis it looks insane. The value is the content / intel and not the actual hours in crunching the numbers and making a slide deck to present it.

[Countdown]

Skeptisk said:

So how can the same firms be charging almost 4 times as much for a UK partner compared to a Danish partner?

Supply and demand.

Have you tried going outside the Big 4? Lots of very competent firms with much better hourly rates. We use RSM for a lot of our advisory work.

[Skeptisk]

Countdown said:

Skeptisk said:

So how can the same firms be charging almost 4 times as much for a UK partner compared to a Danish partner?

Supply and demand.

Have you tried going outside the Big 4? Lots of very competent firms with much better hourly rates. We use RSM for a lot of our advisory work.

Yes definitely exploring other mid tier firms although I am not sure how much lower their rates are.

[Skeptisk]

Lefty said:

I don’t know what a partner in big 4 earns but including bonuses it might be approaching £2m or ~£1000/hr so by the time payroll burden, overhead and profit is added £2k/hr might not be ridiculous.


I’ve seen plenty of specialist consultants in the £5-10k/day range . They are generally specialists in a specific niche to be worth that kind of money though.

Partners don’t generally earn the big bucks because of their charge out rates it is because of the staff below them being charged out at many multiples of their salaries. A manger is charged out at £1000 an hour but they would be lucky to earn £50 an hour.

[Skeptisk]

jonsp said:

eltax91 said:

Use the danish ones remotely?

Since we left the EU would a Danish firm be qualified to act in the UK?

Unfortunately if you are after UK tax advice you need UK accountants or lawyers.

[Unexpected Item In The Bagging Area]

A quick Google suggests (may be BS of course) that Danish B4 partners earn a lot less than UK ones.

Source: my wife is a UK B4 partner

[Lefty]

Skeptisk said:

Lefty said:

I don’t know what a partner in big 4 earns but including bonuses it might be approaching £2m or ~£1000/hr so by the time payroll burden, overhead and profit is added £2k/hr might not be ridiculous.


I’ve seen plenty of specialist consultants in the £5-10k/day range . They are generally specialists in a specific niche to be worth that kind of money though.

Partners don’t generally earn the big bucks because of their charge out rates it is because of the staff below them being charged out at many multiples of their salaries. A manger is charged out at £1000 an hour but they would be lucky to earn £50 an hour.

Surely they’ll be making more than £100k?

[Skeptisk]

Lefty said:

Skeptisk said:

Lefty said:

I don’t know what a partner in big 4 earns but including bonuses it might be approaching £2m or ~£1000/hr so by the time payroll burden, overhead and profit is added £2k/hr might not be ridiculous.


I’ve seen plenty of specialist consultants in the £5-10k/day range . They are generally specialists in a specific niche to be worth that kind of money though.

Partners don’t generally earn the big bucks because of their charge out rates it is because of the staff below them being charged out at many multiples of their salaries. A manger is charged out at £1000 an hour but they would be lucky to earn £50 an hour.

Surely they’ll be making more than £100k?

Maybe £100k in London but less outside.

[Lefty]

That’s outrageous

[hawkzzter]

Skeptisk said:

Lefty said:

I don’t know what a partner in big 4 earns but including bonuses it might be approaching £2m or ~£1000/hr so by the time payroll burden, overhead and profit is added £2k/hr might not be ridiculous.


I’ve seen plenty of specialist consultants in the £5-10k/day range . They are generally specialists in a specific niche to be worth that kind of money though.

Partners don’t generally earn the big bucks because of their charge out rates it is because of the staff below them being charged out at many multiples of their salaries. A manger is charged out at £1000 an hour but they would be lucky to earn £50 an hour.

As someone currently working in Big 4, this is it. When you add in overheads and the fact that on certain projects (e.g. audits) the fees are heavily discounted (lower than hours * full charge out rates), overall there isn’t much profit margin in the partners own charge out. It comes from the Managers / Associates.