Having positions closed on a margin, positions not opened or closed due to slippage, rollover costs, technical issues on the trader’s side and deposits not being released which causes a margin call are all critical concerns of many traders that brokers should take into account, says Leverate’s Adinah Brown
Obviously, in a vacuum it is clear what lies at the heart of traders’ wants – no fees, good technical solutions, a wide variety of instruments and no spreads. But realistically, more wizened and reasonable traders will be looking for other hallmarks of value to keep them trading with a brokerage.
Efficient deposits and withdrawals
The regulations around deposits and withdrawals are challenging. The verification process for deposits and obscurity around where funds can be sent, creates much pain for those involved.
It is no exaggeration to say that the majority of internal disagreements are between sales / retention staff and back office about allowing deposits or withdrawals. Nothing loses a client quicker than a rejected deposit, especially when needed to prop up margin or repeated issues with withdrawals.
This is similar to the issue above. Often the initial sales agent will make the conversion and the eager trader begins trading. For a first time trader, there are many potential pitfalls that the trader can unknowingly fall into, and this lack of knowledge will cause them to blame the broker.
- Having positions closed on a margin call
- The impact of swaps on the account
- Positions not opened or closed due to slippage
- Rollover costs
- Technical issues on the trader’s side
- Deposits not being released which causes a margin call
- Rolling stop losses that don’t engage when the platform is closed
- Positions not opening at the price set
- The impact of volatility on opening positions
Inexperienced traders will believe that the broker is at fault. The best way would be to warn these traders up front, but brokerages are not desirous of swamping beginner traders with problems and dampening the desire to trade before they get started. Whilst no good solution presents itself, this is a prevalent issue that brokerages should know are likely to lose clients.
A “friend” on the inside that can get things done
Even experienced traders don’t properly understand the model and responsibilities of a brokerage. This can lead to complaints against a broker for an issue that the broker is not responsible for.
Having a friend on the inside that the trader trusts (and who can “get something done”) is invaluable for these situations. Most traders can be very agitated and abusive if they feel they have been cheated and won’t care about the reasons, no matter how reasonable. While traders are seldom willing to walk away with a loss, they will put their faith in a friend that is sympathetic.
But the friend needs to be able to have the ability to deliver a good solution.
If this then occurs a second time, the trust is there, as well as the leverage. The client knows that the insider can and will create a good solution if possible, and this unique relationship will make leaving the firm less likely. The trust means that the client is now more accepting of a solution, even a not-so-great-one.
The right instruments
No real news here. If you don’t have the kind of instruments someone wants to trade then they will go elsewhere. Brokerages need to be abreast of the requests received from traders and potential traders and be willing to quickly make them available.
A word of advice for management is to spend time talking to support and retention staff often to get feedback on what traders want. As your public face, they are in direct contact with clients and see issues and trends surface well before it filters down to management. Creating real dialogue with the support staff will give you the chance to hear what clients want and address it before it becomes an issue.