Most forex affiliates dream of moving to the next level, which is being an Introducing broker. This is partly due to the fact that an Introducing broker business is perhaps just one step short of starting your own forex brokerage. Highly rewarding, although requiring a lot more efforts, the key to building a successful introducing broker business cannot happen overnight. Unlike a forex affiliate business, it takes a lot more time, efforts to build up a credible reputation in the markets and if you have a moderate budget to spare it could speed up your efforts.
What is an introducing broker any way?
The concept of introducing broker was initially envisaged as forex trading became more and more mainstream and a popular alternative form of investing in the financial markets. At the outset, forex brokerages generally engage in a forex affiliate marketing channel in order to drive more clients to their forex brands. Forex affiliate marketing made it easy for just about anyone who is Internet savvy to write, recommend as well as place banners on their websites or blogs and get compensated every time they send a depositing or an actively trading client.
While forex affiliate marketing is quite straight forward, Introducing broker isn’t. Webmasters aside, there was another niche that turned out to be a great fit for the forex brokers as yet another additional channel to drive more customers. You might have come across your neighborhood investment firm. These small to mid-size firms primarily deal in small investment products such as government bonds, fixed deposits, short term loans and so on. The concept of Introducing brokers was primarily set up for such investment firms, who could offer a wider range of financial trading products to their clients, thus making for a win-win situation for both the forex broker as well as the investment firm.
This concept soon picked up and now competes on the same level of popularity as that of forex affiliate marketing.
Is an Introducing broker business right for me?
The answer could be a yes and a no. For those experience in the financial markets and the resulting jargon and calculations being an Introducing broker is a no brainer. It is a different story for those just starting out on the other hand. Let’s look at some of the key parameters required in order to be successful as an Introducing broker.
Experience and Knowledge
As an introducing broker one comes across a lot more technical jargon and concepts that one usually doesn’t get to see as a forex affiliate. Without the proper knowledge and experience it would be tricky to set off as an Introducing broker.
Compensation and Negotiation
As a forex affiliate, you are primarily presented with two or maybe three types of affiliate compensation models. Namely, Cost-per-acquisition, Revenue Share or a Hybrid model that comprises of both. If you have no experience on the kind of traffic you bring then it would be a major hindrance to the performance as an Introducing broker. On the other hand, forex affiliates who know the potential of their traffic can easily negotiate a custom Introducing broker deal that would make it a profitable venture.
For new affiliates just starting out in the forex niche, it always helps to start slow and stay low. Meaning, experiment with a few forex brokers and take the risk of varying your affiliate compensation models. This way, over time you get a fair idea on the kind of traffic you send, which would eventually help you to negotiate a decent Introducing broker deal.
Customer communication and Marketing
What makes it easy to be a forex affiliate is that your job is done when you send the traffic to your forex broker. But with an introducing broker, that is when your job just starts. Most successful Introducing brokers make it a point to establish clear lines of communication with their clients. After all, being an introducing broker is in a way setting up your own ‘business’ so to speak. This also involves other factors such as having a strong marketing plan in order to ensure a steady flow of investors.
Introducing broker tips
To set up a successful Introducing broker business one needs to understand the ins and outs of the business. Below are a few tips to help you out.
Most IB relationships are usually made on a B2B level. However, even an individual can start off as an Introducing broker, although be prepared to show a lot of paper work especially in aspects of money laundering. It does help to set up an offshore business (if you start seeing good results as an IB) as revenues can turn out to be quite big in a short span of time.
Be sure to communicate with your clients clearly and also maintain a level of transparency. The last thing you want to do is to get greedy on the commissions. Think of your venture as an established business and build your marketing strategy on those same lines.
The first word that comes to mind at the mention of Introducing broker is rebates. However, there are many other ways to attract new clients; forex rebates are just one of them. Take the time out to scout the competition and ensure that you stand out from the crowd.
Most IB agreements require a certain level of commitment. In other words, most forex brokers require a minimum number of actively trading clients in order to achieve the negotiated commission levels. This is where the concept of an introducing broker vastly differs from forex affiliate marketing. So make sure that you have enough ways to bring in the clients in order to reach your compensation targets.
Introducing broker – A rewarding experience
Being an introducing broker can be both exciting as well as highly rewarding and almost sets you on your path to financial freedom. It takes a lot of efforts and individuals need to shift their mode of thinking to the next level as compared to a forex affiliate. The commitment and involvement needed can be exciting as well as taxing at the same time. But at the end of the day, the fruits of the labor of being an introducing broker is definitely well worth to be relished.