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.
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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.