Benchmarking Uncovers: Average Partner Age Continues To Rise

We’ve all seen the statistic that 10,000 people turn 65 every day in the U.S. As Baby Boomers reach retirement age, the economy as a whole, and the accounting profession along with it, are in transition.

This year, the average age of all IPA 100 equity partners is 51.4 years compared to 48.6 years four years ago. While this increase of 2.8 years may not seem significant, it’s important to look inside your firm for the reasons. It may indicate that not as many younger partners are being admitted to maintain the age balance. Tracking average partner age is a very important performance indicator and the increasing partner age may be a cause of concern over time if philosophies of succession are not well thought out, and adequate planning procedures are not in place.

Many firms are comfortable with an average partner age of 50, which produces a mix of experienced and seasoned partners with younger partners being prepared to take on even greater leadership rules in the future. What are some of the stories that an upward age trend tell, and do any of them relate to your firm?

Another trend uncovered through the survey is the increasing number of non-equity partners being admitted in lieu of equity partners. When that happens, the equity partner average age increases. One must challenge the reason for the spike in non-equity ownership. If one of the attributes differentiating equity versus non-equity ownership is “entrepreneurship,” (as many firms believe) then perhaps the age increase is a sign that over time the entrepreneurial quotient of your firm is being diluted.

In a closely related matter, the average age of the IPA 100’s CEOs/MPs has increased over the past five years, from 54.3 years to 56.6 years. While this increase may not be a concern in the firms that have defined succession plans, it could be an indicator in others that the next leader has not been chosen, is not in the pipeline, or is not ready to take the helm. This metric is one to monitor as a reminder that leadership development is an essential element of the succession planning process.