Sacked from Big Four (Exam Failure) What next?

is it easy to change between divisions eg audit to consulting/ what's salary like in co sulting and progression?

Not easy to make the switch from audit to consulting directly, although does happen. More likely to move consulting to corp finance, and then that links in better to consulting. Plenty move to corporate finance from audit after qualifying, although it's still a challenging move.

Salaries are a bit higher in consulting when comparing against audit, which reflects higher charge out rates. However it's not a world of difference, if money is the main ambition I probably wouldn't pick either of them. Progression similar, merit based so comes down to the individual.

what would you pick instead then i fmoney was the driver? i think for mix of interesting work and money consulting is more or less top no?id gladly take a wage cut to do much more varied work

I entirely agree, consulting does give a good mix of interesting work and decent money. Of course the money can be outstanding if you make partner as well, and often consultants do go on to highly paid industry roles later in their career.

If major money was the main driver, then your username probably sums it up. Obviously the downside being the extreme work environment, but I'm sure some people love it.

I entirely agree, consulting does give a good mix of interesting work and decent money. Of course the money can be outstanding if you make partner as well, and often consultants do go on to highly paid industry roles later in their career.

Most consultants are either glorified temps or doing what is essentially a non-financial audit. Consultants essentially do jobs that full time staff of a company either won't or can't be bothered to do.

The notion that junior consultants "consult" as in, give advice, is positively laughable.

Most consultants are either glorified temps or doing what is essentially a non-financial audit. Consultants essentially do jobs that full time staff of a company either won't or can't be bothered to do.

The notion that junior consultants "consult" as in, give advice, is positively laughable.

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You seem angry, what's the basis for your opinion? I seem to remember talking to you about consulting not so long ago, and if I remember correctly you didn't seem to have much of a clue then either - no offence.

Most consultants have a daily charge out rate that far exceeds the cost of a companies own staff, or temporary alternatives (contractors for example). I'm talking four times the cost of in-house staff comfortably, which makes your comment about doing things they "can't be bothered to do" look pretty silly really. If consultants didn't bring value to the client, they wouldn't pay the fees.

By non-financial audits are you referring to things like process redesign? If so, different world. If not, expand?

Charge out rates don't mean much if you don't account for recovery rates. In audit the recovery rates are like 30% - mainly because it operates as loss leader to win other work. In the highest margin areas the recovery rates are at best probably 80% (and that's for things like tax advisory - the big money spinner for the big 4).

Another reason that the big 4 use such absurd charge out rates is as a negotiation tactic. They will turn up to the client and say: "this is how much you've cost us". The client then says "hmmm, how about we pay 30% of that". The Partner then comes back with "60%?". And so the game continues. What the high charge out rates do is turn every piece of work into a negotiation over the fee. And the big 4 firm make the first move, and pitch a very high fee, which is then negotiated down (but is still a good deal for the big 4 - there is an asymmetry of info because the auditors actually know what things costs, what their opportunity costs are, and what their competitive would pitch; while the client typically doesn't know any of this, and therefore is usually exploited)

The same thing happens for inbound audits. Big 4 Sweden has to negotiate with a big 4 UK for the fee paid to the UK big 4 for work they've done on a Swedish company that has subsidiaries in the UK. Again, the role of the partners are to negotiate the best possible deal over the fee. However in this case, the big 4 Sweden will know everything the big 4 UK knows, so it much harder for the big 4 UK to extract value out of the deal)

Some audits are done to make a profit, others are done to win other work. More often the audits on small firms are done to win work later on (tax advice, corporate finance). This is because in small firms the senior management will have less scope to put out competitive tenders, and instead will just default to asking their audit partner for their thoughts. Also, small firms may grow quickly, and therefore may need additional services to support their growth.

On large firms, the audits are done more to make a profit because (1) there are much more stringent restrictions on non-audit services for big firms (2) big firms can put all of their work out to competitive tender easily, so cross selling is much harder.

Another reason that the big 4 use such absurd charge out rates is as a negotiation tactic. They will turn up to the client and say: "this is how much you've cost us". The client then says "hmmm, how about we pay 30% of that". The Partner then comes back with "60%?". And so the game continues. What the high charge out rates do is turn every piece of work into a negotiation over the fee. And the big 4 firm make the first move, and pitch a very high fee, which is then negotiated down (but is still a good deal for the big 4 - there is an asymmetry of info because the auditors actually know what things costs, what their opportunity costs are, and what their competitive would pitch; while the client typically doesn't know any of this, and therefore is usually exploited)

The same thing happens for inbound audits. Big 4 Sweden has to negotiate with a big 4 UK for the fee paid to the UK big 4 for work they've done on a Swedish company that has subsidiaries in the UK. Again, the role of the partners are to negotiate the best possible deal over the fee. However in this case, the big 4 Sweden will know everything the big 4 UK knows, so it much harder for the big 4 UK to extract value out of the deal)

Some audits are done to make a profit, others are done to win other work. More often the audits on small firms are done to win work later on (tax advice, corporate finance). This is because in small firms the senior management will have less scope to put out competitive tenders, and instead will just default to asking their audit partner for their thoughts. Also, small firms may grow quickly, and therefore may need additional services to support their growth.

On large firms, the audits are done more to make a profit because (1) there are much more stringent restrictions on non-audit services for big firms (2) big firms can put all of their work out to competitive tender easily, so cross selling is much harder.

I'm going to disagree with this point a bit (though I do see where you're coming from).

Yes the "recovery" rate might be low in audit but even that's a bit misleading. The theoretical charge out rate might be quite high but that's just a theoretical internal costing system. That isn't the true cost of your staff which is far far lower. Audit is still profitable, albeit perhaps a bit less so than some advisory work.

Plus as there are limits to what services you can offer audit clients (with most audits having non audit fees be quite negligible compared to audit fees while as for the firm overall advisory is by far the biggest revenue generator- meaning those cross sales are not that material) and as such although there is definitely some cross selling, it's not really the most key for winning other work.



Definitely agree on the junior consultant work bit: some punk kid straight out of uni is not going to be advising on the future strategy of a FTSE listed client or anything near that.

Change management would fall into this category,

Strategy consultants work out high level strategies for their clients to generate long term profitability. They essentially assimilate information about the client, perform a variety of analyses and develop innovative long-term plans for the client to adopt. For example, their capital structure should be X. They should focus on X business line. They should look to explore X niche market. They should consider going public. They should expand to X country. Far sexier and much more lucrative. What many people also don't realise is the client doesn't have to take up a strategy's consultants advice. The client (often a large corporation if the strategy consultants are from McKinsey/BCG/Bain) might pay enormous amounts at huge margins for a strategic plan, but decide to not implement it. The strategy consultants still charge for their time regardless.

Apologies - I don't remember you.

Charge out rates don't mean much if you don't account for recovery rates. In audit the recovery rates are like 30% - mainly because it operates as loss leader to win other work. In the highest margin areas the recovery rates are at best probably 80% (and that's for things like tax advisory - the big money spinner for the big 4).

Also, you're not including the costs of training staff, costs of hiring them, costs of dismissing them, national insurance costs, pension contribution costs etc. when you compare the costs of consultants vs in house staff. You're definitely right that consultants cost more per hour, but on the other hand employees have employment rights etc.



Things like: how does the process of people getting mortgages at our bank work? How many of our customers come into the shop and don't buy anything?

Essentially the role of the consultants in these situations is to inform senior management how the company actually functions (because typically execs are hideously out of touch). You might ask, why don't execs just get their middle management to work these things out? There are two typical problems with this: middle management don't want to do these things and want to focus on their "targets" or in the parlance of our times KPIs. Or, and more importantly, middle management will just lie about what is going on, to protect themselves (nobody is going to report to the CEO that their department is losing lots of money). So consultants are brought in to find things out: because they have little incentive to lie.

There are times consultants are brought in because they are experts, people like IT consultants who actually have some specific skills. However, most junior consultants are straight out of uni, and thus have no expert skills. What these people do have is the ability to check things - just like auditors.

And that is the crux of almost all graduate entry professional jobs - you're a gloried checker. Lawyer, accountant, IBD, consultant - all just checking stuff. Not that there is anything wrong with that, in fact, thank god it is that way.