The prestigious pathway to becoming a partner in one of the Big Four consulting firms has seen a notable decline in appeal. Traditionally, achieving partnership at firms like EY, Deloitte, PwC, and KPMG has been considered the pinnacle of success within the consulting industry. However, in light of recent economic pressures and a slowdown in client demand, this once-coveted position is less desirable than it used to be.

During their financial year of 2024, all four major professional services firms reported a decline in total revenue growth. This downturn is not merely a number on a balance sheet; it has significant implications for the partner ranks within these firms. Partners, the highest-ranking employees tasked with client engagement and business development, face shrinking profit margins, which directly results in diminished annual payouts for those with equity status.

According to a recent analysis by Business Insider, there has been a marked decrease in the number of partners at the UK branches of three of these major firms. In 2024 alone, PwC experienced the departure of 124 partners, a startling figure that surpasses the total departures from the previous two years combined. Furthermore, EY saw a reduction of 43 partners in the same year, while KPMG has reported declines in partner numbers for a third consecutive year. In contrast, Deloitte UK managed to increase its partner count by six in 2024, although this represents a significant slowdown compared to the 69 partners added in the two preceding years.

Paul Webster, a former employee of EY and now managing partner at Page Executive, a senior talent recruitment firm, highlighted the dramatic shift in the partnership model over the last two decades. Once you achieved partner status, it was essentially a job for life, Webster remarked. It was quite rare for partners to be let go.

Alan Paton, previously a partner in PwC's financial services division and now CEO of Qodea, a consultancy focused on Google Cloud solutions, noted that current market conditions are pressuring many partners to consider retirement. Partners are either facing reduced compensation or a decrease in numbers, he explained. Naturally, partners are reluctant to accept lower payouts. Paton foresees that the trend of encouraging partners to retire will likely persist and become more pronounced over the next few years, further solidifying the perception that partnership at the Big Four is becoming an exclusive club.

Moreover, as the ranks of retiring partners grow, there is a noticeable scarcity of replacements. The emerging cohort of senior professionals is increasingly being categorized as non-equity partners, which means they receive a salary rather than a share of profits. James O'Dowd, founder of Patrick Morgan, a global executive recruiter, indicated that the prevalence of non-equity partner positions has surged in recent years, particularly as the market has slowed. EY has maintained non-equity partners for over a decade, while KPMG introduced the role in 2021.

From the perspective of current partners, admitting more equity partners dilutes the profit pool, resulting in lower earnings for existing partners. As a result, firms are opting for non-equity titles as a temporary fix, allowing them to bestow the partner designation without the accompanying profit-sharing responsibilities. O'Dowd noted that many non-equity partners are experiencing frustration as their trajectory toward partnership seems increasingly distant. While 20 years ago, it was common for employees to reach equity partner status around the age of 35, now many find themselves waiting until their early 40s.

To address the gap below the equity partner level, PwC has introduced a new role titled managing director set to roll out on July 1. According to a spokesperson from PwC, this new grade reflects a commitment to adapting to the changing business environment. Our new managing director grade provides our senior, high-performing staff with an alternative to partnership, the spokesperson elaborated. This role is designed to offer more diverse career opportunities, which is essential for attracting and retaining top talent.

The shake-up in the partnership model has also altered the perspective of junior employees regarding the executive role. Both Webster and O'Dowd pointed out that the allure of becoming a partner in a major firm has diminished over the past decade. Younger professionals are now more interested in merit-based compensation structures rather than the traditional partnership model.

The problem with the partnership system is its lack of inherent meritocracy, O'Dowd commented. Profit distributions are often based on seniority and perceived contributions rather than actual performance. Numerous alternatives are emerging in the market, offering salaries more closely tied to individual performance. Webster added that concerns surrounding the partnership model's risk-sharing nature have intensified, especially following several high-profile auditing scandals and resulting regulatory penalties.

Paton, the former PwC partner, expressed a differing view, asserting that aspirations to become a partner remain strong among younger professionals. He characterized the role as super aspirational and still one of tremendous prestige. However, he acknowledged that the pathway to achieving that dream is becoming increasingly elusive. He noted that the impact of artificial intelligence on the professional services sector is likely to further reshape the nature of partnership in the coming years. People are beginning to realize that even if partnership remains an aspiration, it may not exist in the same form in the future. At the time of publication, representatives from EY declined to comment, and KPMG and Deloitte did not respond to requests for input.