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Introducing Brokers vs White Label: Which option is the best one?

Author: Rosemary Barnes
23.11.2021

What is the most important task for a brokerage firm entering the financial markets? Some business owners put most emphasis on the technological side of a company. Others understand the legal issues as being the core ones. All aspects matter but nothing works without clients. Success and an extended customer base are interdependent. This said, newcomer brokerage firms should start with the question - what are the most effective steps needed to attract as many clients as possible?

First and foremost, brokerage companies need to think over lead generation approaches - i.e. advertising and marketing techniques, SEO optimization and other instruments. These steps are quite effective in the very beginning. In terms of advanced approaches to maximize your customer base, Introducing Brokers (IBs) and White Label programs are outlined. Let's explore the definitions, top pros and cons, and core features of those strategies to understand which one is the best to follow.

What is the role of an introducing broker?

When a brokerage company is at the stage of how to start a Forex business, owners are keen to get their firm ready to bring in profit. Additional income sources are usually off the table at this moment. Successful companies understand that there is a set of effective approaches to ensure earnings skyrocket.

Introducing brokers partner with primary ones, aiming to bring new clients. The more clients are brought by IBs, the higher rewards are.

Both private traders and corporate clients (companies) are able to perform the role of an introducing broker, while their main goal lies in working with top-rated traders, money managers, financial advisors, financial websites, etc. IBs inform the communities about a primary broker, focusing their attention on the core benefits. When new clients join a brokerage firm, IBs get rewards that usually depend on new client activities.

On top of percentage rewards, primary brokers may offer some fixed bonuses for their introducing brokers.

Furthermore, introducing brokers are frequently confused with affiliates that are working on increasing the customer base as well. IBs and affiliates have some principal differences.

  • An affiliate is involved in the marketing process only. Such partners place links and use different communication channels to welcome new clients to a brokerage company's website. When a user enters a website, an affiliate's work is done.

  • Introducing brokers take different responsibilities. Those partners provide consultation and all the required services, while a primary broker enters the room for the only task - to help a trade be executed. All the other tasks are provided entirely on an introducing broker's side.

Which partnership is best for primary brokers? Affiliates empower traders with information, while IBs are able to build long-term relationships with clients they've attracted. From the viewpoint of benefits for primary brokers, introducing companies are definitely the best solution.

The scope of obligations introducing brokers face

Introducing brokers are responsible for the following tasks:

  • An IB provides clients with up-to-date information that helps solve existing troubles and is adjusted to traders' demands.

  • IBs describe all the services, point out their pros and cons, looking for the best solution right now.

  • Introducing brokers are in charge of marketing assistance. Furthermore, they provide clients with high-end customer support.

  • IBs monitor clients' feedback based on completed trades to understand which aspects demand improvement. Introducing brokers deliver this information to primary brokers.

  • Introducing brokers need to improve their offers constantly so that more traders can join a brokerage firm.

In terms of the scope of IB obligations in general, their task is to solve all the clients' issues to make the trading process exceptionally easy for them.

Software required for Introducing Brokers

When your brokerage business is mature enough and you've decided to implement the IB option, what should be taken into account?

A primary broker should build a clear referral program to let introducing brokers understand which types of rewards they are going to obtain. Rewards are roughly broken down into two categories: fixed ones and percentages. Commissions from trades are more widespread types of rewards. Furthermore, referral programs may include various levels, when clients bring more clients, etc.

The referral system may become exceptionally hard for managing, and mistakenly paid rewards frequently spoil all the structure. What is the best solution to avoid such a problem? Up-to-date CRM systems tailored to brokerage needs - such software helps business owners manage their referral programs.

For instance, B2Core is the CRM solution of the new generation that manages referral programs up to 30 levels. Brokers don't need to keep rewards, payments and invoices under their management as everything is automated.

What is the main idea of White Labeling?

A White Label model differs considerably from Introducing Brokers as this type of service refers to businesses that are ready to pave their independent steps in the Forex market. Such business owners require their own brand and customized features.

Which components are available based on the White Label model?

  • Trading Platform

  • Trader's Room

  • Investment Platform

What are the key specifics of White Labeling?

  • A brokerage company gets access to up-to-date platforms and components, facing no necessity to purchase the license. This is why a WL solution cuts expenses which is exceptionally important for beginner brokers.

  • Brokers using WL connections don't need to run their own trading servers and hire experts to maintain them. All the operations are provided on a primary broker's side.

  • The purchase of White Label components means that brokerage the business gets access to all the updates and improvements. Furthermore, those updates are provided entirely free of charge.

  • White Label solutions are installed by qualified experts who are in charge of all the setups and integrations to ensure brokers everything is working as one ecosystem.

  • Technical support is one more important aspect - primary brokers are ready to solve all the troubles and headaches of companies who have integrated WL components.

This is why White Labelling is among the best options to dip your toe into the Forex market - 63% of beginner brokers prefer to start with WL components.

As well as the independent components, companies offer Brokerage-as-a-Service which means business owners get a turnkey solution with a set of components implemented (trading platforms, CRMs, investment platforms, etc.).

Which components to offer?

The most widespread White Modeling option lies in connecting trading platforms (MT4 and MT5) without a license. Licensed components cost over $100 000 which is too expensive for beginners. A primary broker needs to purchase a license and regularly incur costs for updates and improvements.

The WL model means you will provide services to a broker's clients on your side. This is why you need to be sure that your trading servers are powerful enough. Your customer support level should be ultimately high as well.

On the subject of CRM solutions or investment platforms, these technologies are designed by primary brokers themselves. Companies develop high-end innovative solutions ready to boost FX brokerage businesses and enable their partners to access such components through the White Label model.

Introducing Brokers vs White Label - what should you choose?

At first sight, both options are promising enough; Introducing Brokers serve as a source of additional earning, as IBs claim to welcome new clients to your brokerage platform. As for White Labeling, the new development level takes place as you get an opportunity to build the ecosystem of services available to beginner brokers.

The main advantage of the WL model compared to introducing brokers lies in longer partnerships. It takes about 2 years for newcomer brokerage firms starting with White Label solutions to become independent brokers; this is why every new client is about to become a long partner.

Furthermore, White Label programs are characterized by more flexible revenues and commissions, making it possible to establish different partnership levels.

B2Broker, a world-known provider of White Label programs

When it comes to reliable providers of White Label components, B2Broker is the first name that comes to mind, as this provider of liquidity and technologies is among the world's leading ones. The company offers top quality WL solutions for financial institutions, banks, hedge funds, brokerage businesses, exchanges, and more.

The set of services available on the White Label basis is exceptionally high. It includes:

  • MetaTrader trading platforms (4th and 5th versions) customized to corporate needs and demands.

  • Web-based and mobile versions of MetaTrader 4/5.

  • Sets of trading tools and groups tailored to a specific account type.

  • Liquidity for FX, crypto CFDs, indices, and other financial instruments.

  • Single or multi-level IBs.

  • Investment platform for copy trading, MAM, and PAMM accounts, and much more.

White Label solutions offered by B2Broker are the ideal option to boost your positioning in the financial markets.

You should understand that the Forex market, along with other financial markets, is an industry with no stone walls to hit - the market unlocks multiple opportunities for brokerage companies that are not content with the calmer waters and being satisfied with what they have.

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