Menu
1. Introduction
As a a small, non-interconnected firm as defined under the rules of MIFIDPRU, Smith Square is only required to comply with the FCA’s Basic Requirements. This document constitutes the firm’s policy in this area.
Smith Square recognises that remuneration is a key driver of behaviour for all firms and individuals. Therefore the implementation of appropriate remuneration policies and practices helps to ensure appropriate outcomes and reduces the likelihood of harm from occurring.
The requirement is that all firms ensure that their remuneration policies and practices do not remunerate or assess the performance of staff in a way which conflicts with their duty to act in the best interests of the firm’s clients.
2. Risk management and risk tolerance
The firm’s Remuneration Policy is consistent with, and promotes, sound and effective risk management. The firm’s Remuneration Policy sits alongside other control documents, including but not limited to the firm’s: procedures and Compliance Manual, conflicts of interest register, product governance policy and training, appraisal and monitoring programmes.
The firm’s Remuneration Policy has been structured in accordance with the FCA’s MIFIDPRU Remuneration Code: basic remuneration requirements. The proportionality principle allows for the firm’s remuneration policy to be proportionate to the size, internal organisation and nature, as well as to the scope and complexity, of the firm’s activities. This means that the content and level of detail of this Policy reflects the facts that:
Consequently the firm does not have a separate Remuneration Committee – the partners consider the current structure to be appropriate based on the principal of proportionality given (1) the low risk nature of the firm’s business (2) the small size of the firm and clear visibility of behaviour and contributions to the organisation (3) the transparency of the process for determining remuneration and its outcome and (4) the firm having no external investors.
The firm’s Management Board fully acknowledges its responsibilities including its overriding responsibility to ensure that the firm’s remuneration policy:
The firm believes that its Remuneration Policy is fully aligned with the firm’s clients and that the success of the firm and subsequent payment of variable remuneration is correlated to the quality of advice given and the achievement of the firm’s clients’ objectives. The firm’s stakeholders are the firm’s members and employees themselves with no outside stakeholders, and this self-ownership concept ensures that variable remuneration will only be made where the interests of the firm, its clients, its stakeholders and its members are fully aligned.
3. Supporting business strategy, objectives, values and long-term interests of the firm
All decisions in relation to the remuneration of all staff are made and approved exclusively by the firm’s Management Board, with no input from external consultants. Overall firm and specific staff remuneration is determined with reference to a number of factors including, but not limited to, the performance of:
The firm’s principal risks, a detailed analysis of which is undertaken within the firm’s risk register, include operational, financial and reputational risks and the firm’s operational and compliance infrastructure has been specifically developed to mitigate these risks. All variable remuneration payments will only be approved after careful consideration of all of the above factors and of the individual’s performance against their annual objectives by the firm’s Management Board.
The Management Board takes account of the firm’s regulatory and working capital requirements when determining partner remuneration and is able to make retentions to capital accounts if deemed appropriate or necessary.
4. Avoiding conflicts of interest
The firm has in place a number of existing procedures, specifically within the firm’s Compliance Manual, which are structured to avoid and manage conflicts of interests, including but not limited to: material interests, outside activities and compensation, treating clients fairly, gifts and benefits and detailed procedures on managing conflicts of interest. All decisions regarding remuneration will be taken in consideration of the long-term interests of the firm, its staff, members and clients, specifically in the context of identifying and managing all potential conflicts of interest.
Specifically, no variable remuneration is awarded to members of the management body who do not perform any executive function in the firm. There are no employees at the firm employed exclusively in risk management or compliance roles. Therefore the oversight of these staff members’ remuneration rests with the Management Board as described above.
5. Remuneration policy for partners (LLP members)
All partner remuneration comprises a share of the profits generated by the firm. This is divided into three components:
The bonus pool is allocated on a discretionary basis by the Management Board.
The criteria on which the Management Board decides the award of this variable bonus pool remuneration is as follows. The Management Board takes account of each partner’s performance in three areas:
Annual objectives are agreed with each partner covering these three areas of contribution and the partner’s performance will be assessed against the agreed objectives. The partners believe that this basis for assessment gives appropriate balance to current-year revenue generation, the quality of advice and execution provided to clients and work focused on the longer-term development of the firm’s capabilities, brand and reputation (including in areas such as governance, compliance and culture).
A key element of the firm’s policy for assessing contribution to revenue generation is that almost all client relationships and transactions involve more than one partner and individual revenue targets are not used. The partners believe that this encourages an approach which emphasises collaboration and the quality of business done.
Each partner has an ownership interest in Partnership Units which also encourages collaboration and an interest in building the longer-term value of the business. Additional Units are allocated from time to time to recognise a partner’s growing contribution to the broader value of the firm. All partners have invested capital in the firm, providing a strong incentive to contribute to the management of risk to the firm’s capital and reputation. From time to time additional capital is contributed by partners to reflect the firm’s requirements as it grows, including through the partial long-term retention of bonus and/or Partnership Units profit allocations.
The firm does not currently make a general deferral of annual bonus payments to either partners or employees. The partners believe that individual partners have sufficient capital at risk in the business to incentivise longer-term thinking and risk management.
6. Remuneration policy for client-facing employees
Each team member is remunerated through a base salary and a discretionary bonus determined by the Management Board. Bonuses are determined based on objectives set under the same three headings above as for partners but recognising that staff below partner level fulfil only a supporting role in relation to revenue generation. No revenue generation targets are set for employees and their bonus allocation and eligibility for promotion is assessed principally on the basis of the quality of work done and overall contribution to the development of the firm.
Employees receive benefits in line with market norms, including life and critical illness insurance, private medical insurance, subsidised ClassPass membership and participate in an Auto-enrolment Pension Scheme. Fixed remuneration for the year ended 31 March 2025 was £654,000 (31 March 2024: £505,000) and variable remuneration for the same period was £175,000 (31 March 2024: £250,000).
Smith Square Partners LLP, Byron House, 7-9 St James’s Street, London SW1A 1EE, is an independent corporate finance advisory firm authorised and regulated by The Financial Conduct Authority.
Contact us | Legal notice | Privacy policy | Cookie policy | Complaints policy | Remuneration policy | Copyright 2025