The benefits of using a FX broker
In this blog post I’m going to discuss the top 5 advantages of using a Foreign Exchange (FX) broker for doing business overseas. This information is targeted towards businesses who import or export into international markets, and private individuals who looking to exchange money for property transactions or invest in business opportunities abroad.
1. More money for your money.
The most obvious benefit of using an independent FX broker is getting a better exchange rate. These brokers use the same banks that we all do but because of the volume of currency they trade they’re able to give you a better exchange rate than your bank. Depending on the amount of currency you exchange this saving can soon multiply into thousands of Pounds. Money that is much better off in your pocket than the bank’s.
2. Strategic advice.
When you contact your bank and ask them to change currency pairing, (e.g. Pounds to USD) they will give you the exchange rate for that day and process the transaction. Independent FX brokers are in a position to give you strategic advice which the mainstream banks don’t do unless your doing huge volumes, i.e. Millions per day. For example, you contact the FX broker and say you need to change ten thousand Pounds into Euros. They may ask you to wait a day or two if the market is likely to move in your favour. This means more Euros for your Pounds and ultimately more profit in your business or a large saving on your property purchase abroad.
3. Dedicated dealer.
Mainstream banks don’t offer a personal service where you deal with one dealer. A FX broker will assign you to a dedicated dealer who will take the time to understand your business and its needs in order to give you the best advice possible. Mainstream banks aren’t geared up to provide this service whereas FX brokers employ dealers who spend hours and hours monitoring the volatile FX markets so that they can give you as much or little information as you require.
4. Trust and accessibility
A good FX brokerage will not only assign you a dedicated dealer, as I’ve mentioned in point 3. They will give you added value of coming out to see you at your business premises on regular basis. This means they keep abreast of your business needs, you can put a face to a name and importantly they can adapt with you as your business changes and grows. It’s all about relationships and trust at the end of the day, having a personal relationship with a dedicated FX broker means they are more likely to work closely with for future requirements.
5. No Fees or hidden costs
Generally FX brokers only make money on the trades they do, by making a very small margin. Similarly to the banks we use. However, unlike the banks, the more reputable brokers won’t charge an admin fee. Although admin fees can be considered small anything from approximately £15-£35 pounds per transaction, they can soon add up. If you’re a company that exchanges currency on a regular basis, having the cost of an admin fee on every transaction can soon become a costly exercise.
Next week’s post will explain the different types of FX trades you can make and the benefits of each.