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The following guest post is courtesy of Jens Chrzanowski, Regional German Director at FCA regulated broker Admiral Markets UK.
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This week we’ll be taking a closer look at one of the most difficult elements in the communication strategy of financial brokers: providing clear information but not overselling your product. Brokers must lead their clients in the right direction, but must try hard not to ‘cheerlead’ too much, or mislead in the way they do so. It’s a fine art.
What is Leading?
‘Leaders’ consistently draw attention to their strengths. But it’s a double-edged sword. Would you really put your faith in someone who just says “great, great, great” to everything?
I’m not saying that our industry should employ SWOT analysis, or adopt a balanced scorecard in advertising, but the addition of some more facts, a clear and easy-to-understand overview of charges and prices would be a really good idea. As I mentioned two weeks ago in my column for LeapRate, sometimes I’m really German…it’s just my nature! As a German trader, I love seeing a single, detailed ‘price list’, where I can find information about all charges for deposits and withdrawals and everything else. Simple, factual and clearly presented.
All brokers have the ability to clearly list their charges and terms on their webpage. It’s not an exclusive club. But the real value lies in displaying this information in an easy-to-read, accessible manner, offering a simple overview that any client can see at a glance. That’s what I call transparency.
That’s not meant as a deterrent – that’s just seeing everything from the client’s view, which is true leadership!
What is Misleading?
Unless brokers find a more balanced position, the reputation of our trading industry cannot possibly improve.
Many European regulators are currently considering applying far stricter regulations on brokers—which is a result of having too many examples of clients being mislead in the past. But it’s not just about regulation. My article here two weeks ago was about “fake news” in our industry and how to deal with it. The fact of the matter is that if brokers were more clear with the offers they make to their clients, fake news wouldn’t be such big thing.
For instance, is it really that helpful to advertise using terms like “spreads starting with…”, if this “starting with” rate is not at all realistic? Surely not.
What is Cheerleading?
Cheerleading is when a company’s advertising is full of “fireworks”. By that I mean that they overemphasise every aspect of their services. Perhaps they do so by simply pointing out the benefits and opportunities of trading, without also listing the risks and pitfalls. Or perhaps their website contains no information about important topics that may help their clients, such as risk management, or what might happen to Forex spreads after market events. These companies may do a very good job of attracting people but, in the long run, they’ll most likely cause their clients a lot of frustration.
The concept of “doing a good job and talking about it” is at the heart of any good marketing strategy, but a good broker will know that they shouldn’t over-do it! Okay, attracting new clients can be very hard for brokers, but holding onto loyal clients for a long time is even harder and that must be their priority. To achieve this, they must be more clear in their messaging and find the right balance.
Not every offer will make all traders happy at once, that’s the nature of business. Brokers should always remember that traders have the power to choose who they trade with and there’s definitely no shortage of brokers out there.
See you next week!
Do you have feedback, concerns, requests, maybe even compliments? I’d love to hear. Please contact me via: [email protected].
Trading on margin carries a high level of risk, and this article should not be seen as advice or solicitation to buy or sell, but written for informational purposes.