Broker Flexibility – Am I just a Number?

broker flexibility

In the earlier "How Important is the Broker?" section, we explained why bigger doesn't always mean better when it comes to safety of your clients' money. The same holds true when looking for an FX firm that is flexible in working with their IBs.

Just like a client might make the mistake of assuming that the largest brokerage firm on the block will be the best place for him or her to trade, an introducing broker might erroneously conclude that working with a big company will prove most beneficial for his or her referral business. This misperception is what causes many IBs to switch brokers at some point or another in their careers. Even though an agent is free to move to whatever brokerage firm he or she desires, doing so usually deals an agonizing blow to his or her business, as many clients will not find it convenient to transfer their accounts to another broker.

Think about it. Every Forex IB has a unique way of doing business and may require a certain degree of flexibility from their brokerage company at a given point in the relationship. The problem is that the larger a brokerage firm becomes, the more it tends to operate under an economies-of-scale model. As a result, it may be more cost effective for the organization to treat each referring broker as a number under a one-size-fits-all approach. This might make it impossible for an IB to continue doing business with a large and inflexible brokerage firm.

In conclusion, it is crucial for the agent to have a detailed discussion with a specialist from the broker he plans to work with and explain (in detail) the specific needs of his or her business before signing up. If the brokerage firm cannot or is not willing to accommodate his or her special needs, then the size of the broker becomes a moot point.

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