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The PwC Partner Class Will Be Much Smaller This Year

colorful blocks representing cutting of spending, scissors and stacks of money

Last week PwC announced it is “aligning its organizational structure across three lines of service— Assurance, Tax and Advisory—to better serve client needs, their buying patterns and the market” and now Wall Street Journal is saying the incoming consulting partner class will be much smaller than last year’s. Should we be worried?

WSJ:

PricewaterhouseCoopers is looking to shrink its new class of U.S. consulting partners by more than 50% compared with last year as demand for advisory services continues to slow and the firm reorganizes its business lines.

The Big Four accounting firm is considering adding about 85 U.S. consulting partners effective July 1, down from 174 a year earlier and more than 200 two years earlier, people familiar with the matter said. The figures include both partners and principals, which are partners who aren’t certified public accountants.

That number could change as the figure for the coming fiscal year is finalized, likely in the coming weeks, the people said.

They didn’t have numbers on the total expected partner class. Dear reader is welcome to make an educated guess using the information below.

Of the 283 new partners and principals in 2022, 203 of them were in ‘Consulting Solutions,’ almost three times as many as assurance and tax promotions that year (76) if we’re being generous with the math for simplicity’s sake. In 2023, the number of consulting partners shrunk to 174 versus 77 in the soon-to-be-defunct “Trust” category.

For fun, let’s search the archive and take a look at the total partner and principal classes of PwC’s past to find out if we should be worried.

We’re not going to dig around in all those old posts to find out just how many people in advisory climbed to the very top of the ladder in a particular year but looking at the data from a decade ago, it was 61 people in 2014. While we’re rooting around in the past, let’s look at revenue from that year. The total global take for the fiscal year ended June 30, 2014 was $34 billion with advisory accounting for 29 percent of it ($10 billion, they said). This represented a doubling of global advisory revenues in the five years leading up to 2014.

Meanwhile, back in our current decade, PwC firms around the world reported record gross revenues of $53.1 billion for the 12 months ended June 30, 2023. Advisory grew by 13% in FY23 to $22.6 billion, up from $20.7 billion in 2022.

We won’t know until October-ish just how tough a year it’s been for PwC, that’s when 2024 revenue will show up and tell all. New partners officially enter the thunderdome on July 1 every year, the firm’s announcement always follows in August.