How to run a successful brokerage?
August 17, 2016
Forex trading is often being viewed only through the eyes of a trader, but how about the forex broker? What makes a successful brokerage and, more importantly, how to run it?
To start with, regulation is a must! One cannot succeed in the brokerage business without the broker being regulated by a financial authority. This is very important as regulation comes with specific conditions a broker must fulfil as well as a step by step guide on what to do and what are the steps to follow when business gets tougher.
Successfully managing such a business implies a true understanding of customer’s needs. The broker should be a trader’s trading partner, not simply someone who is offering access to the forex market.
The above statement is critical as brokers are being viewed as a middle-man or intermediary or the only way for a retail trader to access the vast forex market. This is correct up to a point, but if the broker understands that it should be much more than that, then retaining customers and gaining new ones would come as a side effect.
A clean record it is needed for a broker to be viewed as a flawless partner. This means a successful broker cannot have any issues in the past or future regarding withdrawals, funds safety, etc.
Communication with clients is vital as well. Customer support is offered by all forex brokers but the successful one will go the extra mile to make sure client understands the products that are being offered and the risks associated with trading financial markets.
Only a true and sincere relationship between two parties can be the foundation of a great relationship. After all, a broker cannot have any success without clients.
However, many brokers in this business are managing to have more new clients coming in when compared with the ones that are leaving, and this in turn translates into a bigger income stream as money from commissions and other related products are pouring in.
But this is not the way to go if one wants to survive on the long run in this business. Keeping your clients while bringing new ones is the only way a broker can have a healthy and organic growth.
Funds safety is another aspect forex traders are looking for when choosing a broker. Therefore, a successful broker is mandatory to offer segregated accounts as otherwise will not attract sufficient clients to run the business properly.
Knowing the deposited funds are guaranteed (up to a specific amount in many cases, but still), tells a trader the broker is serious and trustworthy. This is a must in any relationship, including the broker-trader one.
In order to attract clients, a broker faces a tough choice: to go through the classical channels, like offering welcoming bonuses, affiliate marketing programs, and other promotional campaigns destined to offer fast growth, or to choose organic growth instead.
To be successful on the long run, organic growth is a must. This requires making sure reputation is solid and spotless, the broker is regulated and funds are segregated, and these alone are enough to start building a performing brokerage business.
SEO (Search Engine Optimization) white-hat techniques are the foundation of solid organic growth and if the business is centered around client satisfaction, there is no impediment to success.
Unfortunately, a lot of brokers chose the easy way in building a client’s base and in doing that they forgot the client is the very essence of any business.
Having a satisfied customer that is not leaving is more important than bringing new clients. The reason for this comes from the fact that if a client is not satisfied and leaves, will spread the word and in the long run the business model will suffer anyway.