One way for firms to retain promising young talent amid an ongoing staffing crunch is to make sure their best and brightest see a clear path up the leadership chain. If the partnership is overstuffed with entrenched long-haulers, for instance, those aspiring for a seat at the ownership table may look elsewhere to get that opportunity. But convincing longtime partners to bow out gracefully can be an awkward task.
That’s why, when it comes to partner succession, many firms prefer to require veteran leaders to retire at a certain age to make room for the next generation of up-and-comers. In fact, nearly 72% of non-Big 4 firms in the 2022 IPA Practice Management Survey reported having a mandatory retirement age, with those between $50 million and $75 million in net revenue most likely to have such a mandate (96%), while smaller firms between $5 million and $10 million and those under $5 million are far less likely to go this route (56% and 45%, respectively). Mandatory retirement ages are also exceedingly common among IPA Best of the Best firms at 84%.
What’s the magic number for partners to bow out? Just over half of all non-Big 4 firms (52%) set the mandatory retirement age at a hard 65, while nearly 36% opt for a number somewhere above that threshold. Other age plateaus – including 62 (4%), something under 62 (2%) and full Social Security retirement age (4%) – are far less common.
Are mandatory retirement ages an effective means of keeping partner groups younger and more fluid? While they’re certainly not the only factor contributing to the average age of partners across the profession, that number stood at just under 53 for all non-Big 4 firms in the 2022 survey.
What stories will this year’s numbers tell? The 2023 IPA Practice Management Report is coming! Order your copy by June 30 to take advantage of special pre-publication pricing.
