The CPA Certification for an Older Person (#206)
/In this podcast episode, we discuss whether it makes sense to pursue a CPA certification later in life. Key points made are noted below.
The CPA Firm Promotion Track
The first issue is the promotion track in CPA firms. They want to hire younger people straight out of college and put them on a path that gets them a partner title by about the age of 35. A partner is then required to retire by around age 62 to 65, which creates new partner positions that can be allocated to those people who are on the normal promotion track.
This early start right out of college is important, because the new recruits don’t yet have any major impediments that might deflect their attention from the job. So, they have no mortgage, and probably no children. That means they can work long hours, and are more willing to move if the audit firm wants them to.
Let’s say that you are 10 years older than the normal accounting major going into an audit firm, which would be 32 years old. At this point, it would be reasonable to assume that you’re paying a mortgage, and there are kids to pay for, so going back to school full time is not a realistic option. Instead, you have to attend college at night to pick up the required accounting and auditing classes. Figure on about six years to do this. So by the time you’re 38 years old, you’re just ready to take the CPA exam and apply to jobs at audit firms.
Let’s say that you’re hired. You arrive at the audit firm at the age of 38 as a staff auditor, and you’re looking at a promotion track that will put you in the partner position about a dozen years later, at the age of 50.
So let’s explore some issues that might come up. First, at the age of 38, you’ve put down roots in the local community and the kids are in a school that they like, so it’s not overly reasonable to expect that you can move somewhere else if the company requires it.
That can block further promotions, and especially the final promotion to partner, since they may only have a partner position available in a different city.
Working Hours
The next issue is working hours. Energy levels are highest when you’re in your twenties, and go down from there. A reasonable question to ask is whether you want to go through the grind in your 40s to make partner, doing 60 to 80 hours per week. That can also put a lot of stress on your marriage.
The Dropout Rate
Another consideration is that, on average, the dropout rate in audit firms, especially among new staff, is about 20% per year. So you also need to consider the probability that you go through all of this work, and then wash out within a couple of years of starting the job.
The Pay Scale
And finally, there’s no pay boost for an audit staff person, just because you’re older. The same pay scales apply to everyone, so it’s possible that you’ll take a pay cut to become an auditor, in hopes of making back the lost wages if you become a partner. And not many people make it to the partner position. Even if you make it, the retirement age is likely to be 62 to 65, so there are far fewer years than usual for earning a significant amount of money.
Final Thoughts
If the intent is to get the CPA in order to just have it on your resume, then focus on getting in two years at an audit firm in order to qualify for the certification, and then move on to a corporate job. However, in that last case, prospective corporate employers will still look at your job title at the audit firm when figuring out how qualified you are for a management position. If you only worked two years for an audit firm and then got out, then that’s not enough for a more senior corporate management position.
In short, getting a late start on a CPA can be difficult. Job prospects are not as good, and the amount of time left in your career to earn much money is greatly reduced. This is not an easy decision to make.