The FX Market by nature is Laissez-faire. It’s a 24/7 market too, so even when you turn off the lights in your office you still have to compete. Separating yourself from the pack of eligible brokers is a challenge, but it’s an absolutely necessary undertaking if you want to capture market share. How to capture market share? Marketing. How to market? Now there’s the question. Do you put out ads, target geographic hot spots? Well this probably isn’t setting you apart from other brokers who are doing the same thing. A personal connection to potential traders is a much more persuasive angle. What better way to get a personal connection than bring on a team of Introducing Brokers that will shout your name from the top of the hill, shake some hands, kiss some babies, to bring in business to you? Most marketers in retail FX like to shift from fixed marketing costs to performance based marketing so that the better the campaign is, the more you pay out, which is fine since it’s all tied to your profit margin.
That’s why Introducing Brokers are so valuable in FX. They offer a service, more traders, for a % of margin. IBs tap into their mutually exclusive network and bring you access to markets and traders that you never thought possible. Certainly not possible with a few Forex Magnates ads, or any targeted plays on MyFXBook. On paper, the idea of an IB is pretty straightforward, but like almost anything valuable in this world, it gets much more complex in practice.
IBs, just like brokers, are very competitive with each other. They constantly look to bring on traders, and other IBs they can recruit and train. They also look to work with as many brokers as manageable so they have more access to brokers and thus a larger offering to potential traders. Influential IBs are very nice to have because they bring an entire network of IBs under them who bring on even more traders. The simple concept of IBs bringing you business in exchange for commission of trades gets a lot more complicated at scale. With so many types of IBs and many types of brokers, finding good fits is challenging. Growing your IB team gets even harder to figure out when you have to product an effective payout model.
Building your IB team may seem like it takes a lot of elbow grease, but sometimes you just need to put yourself in the shoes of the IBs. They don’t go for any broker who wants to take them on. They need to be unique, too. Just like you do! They have their own set of priorities, benefits they look for in working with Brokers, and they also have issues with scale.
There are processes you must put in place, marketing messages you need to shape, and a culture you must cultivate in order to attract the guys and gals who can bring you more business.
You know IBs are valuable, but if you’re having a hard time standing outside of the pack, it’s worth coming up with a sound strategy. We’ve seen brokers who are great and not so great with IB relations. If you need help, contact us.