How much money will you make? How does that figure compare with other companies and industries? And how do you decide between different offers from Big 4 firms?
Salary: The ever-popular topic that is always at the front of candidates minds but which is never an acceptable talking point with recruiters. We will try to shed some light on the subject and ease some of the pains that come from not knowing.
Before we get to the juicy details (cold, hard numbers) there are some important points to keep in mind when considering your potential starting salary. These points are even more important once you zero in on a more reliable number and, as many candidates then tend to do, analyze, judge and extrapolate that starting number to wildly illogical ends.
#1) You will make a good living.
The accounting and consulting professions are consistently recognized as two of the highest paying industries for new graduates. There are probably some engineering and computer science/IT jobs out there that will pay more to top graduates, but outside those standout performers, accounting and consulting are right there with these industries in top pay rates for graduates.
The exception to this is high paying finance jobs, but those usually hinge on huge bonuses, which may be very hard to come by in the next few years. However, if you are of the select group of individuals that has a shot at landing one of these finance jobs you actually should have a long hard look at the numbers as part of deciding the best path for yourself. The same goes for anyone considering a job with a top 5 consulting firm. Aside from these individuals, the rest can sleep comfortably knowing they won’t be too far from the top of the food chain of starting salaries either and that no matter how much searching they do they won’t be able to find an offer out there paying significantly more.
Once people feel good about how they shake out compared to the rest of the world, they often look inward to make sure they’re getting paid properly compared to everyone else in their group. Thus we address concerns within the industry next.
#2) Your offer will be competitive.
The Big 4 firms spend thousands of dollars each year researching what the market is currently paying. They know what each of the other Big 4 firms are offering new hires, they know what private industry and government are paying people in your field, and they know what the compensation expectations are in your city or area. Simply put, these firms are not going to lose talent due to poor starting offers.
Yes, you will be able to find some other job with a higher dollar amount for the first year’s salary. Guaranteed. If you consider the starting salary offer, along with the non-monetary benefits of a job (for a complete list of those relating to the Big 4 see our article on its Pros, but world-class experience and limitless options when you leave come to mind as examples), your offer from any of the Big 4 firms is going to be very competitive.
That sounds a lot like a line a Big 4 recruiter would feed you. We state it here because we believe its valid, but if money is the only thing that matters to you then you will obviously be taking a different approach to determining the starting offer you should accept than the one we’re suggesting here. We know money matters, the last thing we would suggest is ignoring it, but in the overwhelming majority of cases these starting salary differences within the industry amount to $5,000 or less. We move to the next point to address why we think this is worth mentioning.
#3) Keeping the big picture in mind is key.
All our previous points really boil down to this: for the vast majority of candidates there are more important things to consider and put deep thought into than a couple thousand dollars.
For almost all candidates this will be their first full-time salaried position. It’s fun to think about big numbers and even more fun to think about what you can do with them. The temptation for some is to keep pushing and pushing, looking for the highest salary possible and then looking down on the rest of their options. Try not to lose sight of everything because of five thousand dollars or less. We realize you haven’t made partner just yet and that is a lot of money, just bear with us.
Five thousand dollars is likely to be less than 10% of your starting salary. Current bonus structures at the Big 4 firms call for additional compensation of between 5% – 7% for top performers each year. Raises each year for the very top performers (who are very early in their careers and thus receive smaller raises) can be around 5% (poor years), 10% (average years), or even 15% (great years). In a single year a starting pay discrepancy of $5,000 can quickly be overtaken by other compensation measures, and over the course of 2, 3 or 4 years it can be dwarfed.
There is no guarantee you will be a top performer at a Big 4 firm. It’s hard enough to get a job there let alone to outshine all the other outstanding candidates. The important points here are that you will perform much better at a firm where you are happy, and that no matter where you go your compensation will reflect your performance. Therefore we think it is smart not only for personal reasons, but for economic reasons, to evaluate and select a job offer not based on a dollar amount that differs by $5,000 or less, but by characteristics that align with your goals, talents, and personality. We won’t even begin to try and quantify the value of job that offers you better options in the future or that makes you happy; that’s a task for more philosophical types,but even without that consideration it can still make very good economic sense to ignore small differences in starting salaries in order to keep the bigger picture in mind.
With all that said, we hope we have alleviated a lot of unnecessary stress from your future. If you have no interest in our advice that’s certainly your prerogative, but you can’t say we didn’t try. With all the considerations behind us, let’s move on to talking about some actual numbers.
Starting salaries with the Big 4 range from $40,000 – $70,000. How’s that for unhelpful? We’re not doing it on purpose, there are just a number of factors that will bump an individual’s starting salary higher or lower in this bracket. Let’s start with the biggest factor.
Cost of living in your city is the biggest culprit in driving pay discrepancies within Big 4 firms (for starting salaries). A starting salary in New York could be more than $15,000 higher than the salary for the same exact job in Louisville, KY. Before everyone in the great state of Kentucky throws a fit, please realize that your $40,000 will buy you a lot more living than the $55,000 will for the folks in New York.
Therefore if you live in a big expensive city like LA, Chicago, or Boston you can expect a starting offer at the higher end of the range (for your service line/industry, which we haven’t gotten to yet), while those in smaller cities like Memphis, Birmingham, or Santa Fe can expect to be in the low end. You can use your own common sense and reasoning to judge where your city falls in the general price index of America.
If you’re not familiar with the term service line take a look at our Who are the Big 4? article at some point, but essentially we’re referring to the most popular areas you could work in as a new hire at the Big 4. The service line you chose will also have an impact on your starting salary.
The real difference here is between Audit & Tax and Consulting & Transactions. Consulting & Transactions new hires will often receive starting offers that are $1,000 – $4,000 higher than new hires in Audit & Tax. The reason isn’t because they’re more highly valued by the firms; Audit & Tax bring in the large majority of revenues for the Big 4 and are the backbone of the professional service model each firm uses to win clients. It is a more a function of market pay in the industry. All those studies we mentioned earlier that the Big 4 pay for tell them that new hires in Consulting & Transactions are going to be receiving higher offers from competitors than those in Audit & Tax. The Big 4 do not want to lose talented candidates based on starting offers alone so they bump up the first year pay to stay competitive.
In the Consulting service line you will also receive a higher starting offer ($2,000 – $4,000) if you have a graduate degree. A graduate degree (or 150 hours) is essentially expected in Audit, Tax and even Transactions and therefore will not change your starting offer. Your major can also affect your starting salary in Consulting. Candidates with economics, finance, IT, etc. backgrounds will usually receive offers for different amounts based on the firm’s needs and current market demands for each background. In the Audit, Tax, and Transactions service lines all new hires will essentially be performing the same job function, therefore starting offers are not adjusted based on a candidate’s major.
We guarantee there will be small differences between the starting offers of each firm for candidates in the same city and service line. We also guarantee these differences will be quite small. A difference of $3,000 would be very large.
The differences stem from a multitude of different factors surrounding each firm’s business. A firm’s hiring needs in a city will vary from year to year. One year they may need an exceptionally large or small hiring class depending on business developments. Likewise each office of each firm views service lines differently. One firm might have a dominant consulting practice in a given city while another firm may not even have a presence there. Starting offers are also based on the operating results of recent years as well as future outlook. For these reasons and many more expect slight variations in starting offers among firms. The only difference here is that these variations, unlike those mentioned previously, are almost impossible to predict and change from year to year. We mention them here so you are aware when you start receiving offers, but past differences do not make useful data points for estimating a rough starting salary for yourself.
Your GPA, extracurricular experience, and internships WILL NOT affect your starting offer. Starting offers are not negotiable.
No matter how great you were in school, what feats you’ve accomplished in your spare time, or quality internships you’ve worked in the past, those things will not change your first year salary. In fact, starting offers are completely non-negotiable. There is no way a Big 4 firm is going to put 60 new hires from a start class together for training on their first day having paid each person a different amount. They would have a mutiny on their hands in minutes.
The Big 4 also want everyone to start equal for other sensible reasons. Aside from any destruction caused by said mutiny, an employee who becomes disgruntled on the first day at the job is much less likely to be successful for the firm. When it comes to salaries disgruntled is a very kind term, people take money very seriously and just wait for raises after your first year to see how people react when others get paid more than them. Even more important than avoiding hurt feelings, the Big 4 want to compensate their employees based on their performance for the firm. On day 1 everyone has done the exact same for the firm; not much. It is up to each individual from there to determine what they get paid relative to the rest of their start class.
Nailing down some numbers.
Now that we’ve given you a lot of information in terms of relative pay scales, we are going to throw out some approximations that use concrete numbers. Using all the relative information above, you can adjust our examples to determine an approximate salary figure for yourself. For example, if we give a salary estimate for someone in Tax in Atlanta, and you are looking to join the Consulting team in a New York office, you should probably increase that figure by about $8,000 because New York is a much more expensive city and another $3,000 because the consulting service line pays more and the consulting industry is extremely competitive in New York. Alternatively if you are joining the Audit practice in a Jacksonville office, you would probably lower the figure roughly $5,000 for cost of living differences and make no adjustment for the difference in service line.
When using the numbers below to come up with a ballpark figure that is more personalized for yourself PLEASE keep in mind these are rough estimates, nothing more. Earlier in the article we made our feelings on differences of less than $5,000 perfectly clear, so we certainly aren’t going for perfection here. If your actual offer letter is for $3,000 less than you estimate based on information you get here, don’t go screaming at your recruiter for trying to rip you off.
The reality is that starting offers are very difficult to estimate unless you can talk to someone who knows exactly what the offers were last year for candidates in the same city, service line, and firm that you are interested in. The Big 4 are all private firms and they guard their compensation figures closely. Once in a while a major periodical will come out with an article or an employer ranking that will give an average starting salary for each firm. While this is about as good as publicly available information gets regarding Big 4 starting salaries, it still has its limitations. If such a publication does come out we will be sure to add it here, but if, say, one were to come out this year, we can already tell you two things about it: 1) the figure will likely be between $52,000 – $56,000 for each firm, and 2) even with this number, you will still have to make all the adjustments we described above to estimate your salary because there is no way to capture all the variability between locations and service lines for THOUSANDS of new hires across the country in a single figure based on an average.
Without further ado, here are some rough salary estimates by service line and location that you can use to come up with a reasonable guess for what you could expect to make in your first year at a Big 4 firm. Enjoy!
Audit & Tax
New York – $57,000
LA – $55,000
Chicago – $55,000
Dallas – $50,000
Atlanta – $48,000
Seattle – $46,000
Denver – $45,000
Jacksonville – $43,000
Louisville – $40,000
Consulting & Transactions
New York – $59,000
Boston – $58,000
San Francisco – $57,000
Chicago – $57,000
Dallas – $52,000
Note: Big 4 firms commonly source new hire positions in these two service lines from their larger offices.