source: here
In today’s Executive Interview we speak to
Juan Jutgla, founder and CEO of a new forex and binary options
consultancy based in London, UK, named Better Way FX Consulting. Mr.
Jutgla has been working in the FX industry since 2010, having worked on
senior positions at Leverate and X Open Hub. He shared with Forex
Magnates his views on starting a brokerage, FCA regulation, marketing
and social media among other topics.
How did you come into the FX business, was it a chance encounter, or did you specifically want to get into it?
I began my career working for financial technology vendors in the
banking industry and moved to the FX industry in 2008 as I wanted to
work in a market which was less affected by the crisis. I’ve been in the
FX industry for over five years, during which time I’ve held senior
roles at Leverate and X Open Hub.
How did you come to the decision to start your own independent consultancy?
Over the years we have gained a vast amount of experience working
with brokers, banks and vendors from across the globe and have a
thorough understanding of broker requirements in different regions.
Increasingly, we realised that many brokers and vendors could benefit
hugely from independent advice and guidance – whether on the technology
side, business development, market positioning or liquidity provision
side. There is often a better way of doing things in certain parts of
their business which they are currently unaware of. Most managers get
absorbed by their daily tasks and responsibilities, leaving no time for
further improvement and optimization of the business – improvements
which can impact profitability and sustainability.
Which companies are you targeting with your services?
I believe that our key target market will be medium-sized brokers,
who normally don’t have the budget, the time or market connections to
hire qualified professionals in-house to develop certain critical
aspects of their business.
Running a successful brokerage involves (amongst many things)
building knowledge about different international markets, developing new
business strategies for specific markets, as well as understanding the
relevant financial regulations and legislation.
The broker also has to
manage relationships with clients, vendors, suppliers, liquidity
providers, money managers, IBs and White Label partners. It’s a complex
role – selecting the right products alone can be a minefield – and we
can help brokers to make more informed decisions, particularly in areas
in which they have little experience.
Whilst Better Way FX Consulting provides consulting services for
established brokers and vendors, I am also launching two separate
initiatives which are aimed at helping start-up brokers.
We have noticed that your solutions are MT4-based. How do you feel
about offering alternatives to MT4? On this note do you see any
alternatives to MT4 gathering speed? Which ones?
There are very good platforms out there but I don’t think there’s
anyone in the market who can truly compete head to head with MT4. There
are several things you need to consider when developing a competitive
platform, in terms of technology, features, business model and pricing.
Currently I believe there’s no alternative to replace MT4 as a market
leader. The industry is certainly moving towards brokers having
alternative platforms to MT4 but these are as additional platforms and
not to replace MT4. MT4 has rooted itself too deeply in the market to be
replaced just like that. Unless there’s a dramatic shift in the forex
industry, in my view, MT4 will dominate the market for many years to
come.
How would you make sure then that despite
having all the necessary tools at his disposal your client manages to
retain uniqueness in such a rapidly evolving business as FX?
We can provide a client with very competitive conditions in terms of
liquidity and technology. However, the fact that you have a Ferrari
doesn’t mean you are going to win the race. You need to be a good
driver, too. Ultimately, the success of the broker’s business will
depend on how he manages and markets his organization and how he
services his clients.
What is your opinion on B booking?
B Booking is a profitable model if you count on good risk management
tools, good dealers and if your market is what I call the ‘tourist’
traders – traders who come in and out of the industry relatively quickly
leaving 500% or more of their CPA – but it is not for the professional
or sophisticated, more serious retail traders who make up the
established forex market.
To attract tourist traders you need a massive investment in
marketing. The client take on process must be optimized, you also need
IB functionality within your back office and to keep your CPA as low as
you can.
The sophisticated or professional traders will come if you have good
execution and a competitive offer. Of course, you can choose to service
both markets at the same time, B booking the shorter LTV clients whilst
having different risk policies for the more sophisticated ones.
Ultimately, a combination of excellent risk management tools and
experienced staff on the trading desk will make the difference with a B
booker.
How would you recommend FX brokerages divest their opportunities?
Slow FX markets can cause volumes to dwindle – how can a company survive
for a protracted period of time?
We believe that one of the secrets of today’s forex brokerage
business is to keep costs low, and focus on balancing the ratio between
acquisition and profit per client. There is less and less room for
inefficiencies in any aspect of the brokerage business; liquidity,
maintenance, operations, staff and marketing costs.
This has to be
accompanied by very careful investment decisions. There’s no room to
make mistakes on wrong strategic moves or expansion plan failures. The
market is more and more saturated, and the end customer is increasingly
sophisticated, so the broker has to be able to adapt to sudden
variations in volumes without jeopardizing the business itself. You can
only achieve that by controlling your cost and profit structures.
Since you specialise in helping companies
to obtain an FCA license, how long does it normally take to obtain it?
Which are the most rigorous elements of the procedure?
License processing timings have changed since the FCA replaced the
FSA as the new regulator over a year ago. The FCA has not yet announced
its revised authorisation service standards, which were due to be
published last month. However, they currently suggest allowing six
months to process a complete application and state that it can take up
to 12 months from the receipt of an incomplete application.
There are a number of rigorous elements involved with the procedure
including corporate governance (demonstrating that the firm is organised
to be run effectively) and financial resources (providing evidence that
the appropriate amount and quality of financial resources have been
injected into the firm). In addition, the individuals running the
brokerage need to demonstrate their suitability to run the organisation
in terms of propriety (no criminal records) as well as knowledge and
experience of the financial sector in the UK.
To avoid unnecessary delays, the application pack needs to be
submitted as complete, with all the appropriate application forms,
business plan and financial projections included. It’s not a straight
forward process and applicant firms must be able to demonstrate they are
‘willing and ready’ to become authorised, which means they must be
prepared to invest time and resources into the application process.
Which would be the jurisdiction under which you would regulate a binary options company – gambling or financial? Why?
Financial. Binary options may look like a gambling product because
you are actually betting on the market to react somehow, but it’s
actually a financial product in my view. There is a betting component in
any trading activity, that’s why it’s so attractive.
In terms of marketing – which is the most
efficient marketing channel currently used, and what are the latest
trends in the clients acquisition processes?
Marketing efficiency is always measured as a combination of factors
and channels. Each of them acts in synergy to optimize lead conversion
in terms of time to deposit and CPA.
Forex marketing is very much like a
football team, where you cannot win by having just one star but need a
combination of good players performing at a relatively high level
throughout the tournament. Marketing is the same; you need multiple
channels performing good numbers in the medium to long-term to be able
to attract clients and increase conversion with the least cost possible,
making a marketing structure sustainable.
The sales teams also have a crucial part within the marketing process
and the clients’ LTV. In order to optimize these channels and make them
work in favour of the broker’s target market and goals, you need to
have a good marketing manager, with a clear understanding of the target
audience, their purchasing behaviour, the market regulation and
competitor landscape.
How essential do you think is the direct sales tactic for on-boarding forex clients? What about BO clients?
With regards to forex clients the direct sales should be more for
support and assistance (retention and upselling) while in Binary Options
the direct sales approach is not only necessary, but mandatory.
In my experience, there has been a shift in direct sales tactics used
to on-board forex clients. Aggressive sales techniques which used to be
prevalent in the industry are no longer deemed acceptable.
Clients
often relate pushy sales techniques with fraud and suspicious behaviour. The starting point now for attracting clients should be good
marketing activity and developing a positive reputation in the industry.
What’s then far more effective for FX traders is to have a professional
and personable account manager. The focus is no longer on the hard sell
but on providing excellent customer care and this then leads to strong
client retention.
What do you think is the best use of social media for forex companies? Should it be used more as PR or for advertising purposes?
Both. Social media is simply another marketing channel, and to be
most effective, needs to be integrated with other aspects of marketing
such as advertising and PR. It’s important to focus on sustained
awareness and keep a steady dialogue with clients and potential clients
to ensure that you are front of mind and that they are aware of your
capabilities and successes. A stop-start approach is not an effective
use of resources. If you begin to use social media or PR, then make sure
that you commit to it to ensure a regular flow of communication.
Did you have a chance to visit the recently organised online iFX Expo? What are your impressions?
Yes. I think it’s a great idea to give people access to the events
if they are unable to attend in person. It widens the reach for the
exhibitors and helps to educate a wider number of people about the
latest trends in the industry.
Tell us more about your Smart Broker Solutions venture?
Smart Broker Solutions is a sister company to Better Way FX
Consulting – it’s a complementary business which will be launched in
time for the iFXExpo in Cyprus. My business partner on this venture has
been in the trading industry for many years and between us, we have a
thorough understanding of broker and trader needs.
We have come up with a
compelling solution to help start-up brokers to have all the necessary
components for a quick, convenient and affordable way to set up a forex
brokerage.
My business partner and I are both native Spanish speakers. We see
the South American/Spanish speaking market as being core to our
business. It’s a real benefit for clients in these areas to tap into our
expertise whilst knowing that we also share their culture, mentality
and speak their language.
We haven’t even launched or marketed the solution but have discussed
it with a number of companies in our wide network and already have four
clients (most Spanish speaking) waiting for contracts. We believe this
is the solution that Money Managers, IBs and existing White Labels are
looking for.
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