At SendMoneyHome we always advise our users to shop around to get the best foreign exchange rate for their money, and this nearly always involves utilising an FX Broker who offer far better exchange rates and service than your Bank.
John Beddell, MD at TorFX, and one of our featured providers, has put together a list of key points that will prove invaluable when undertaking research in the money transfer industry. Adhering to these points will put you on the right path to getting the best value for money and the potential to save thousands in your selected currency each year.
1) Make sure you are dealing with a well established company with a five year track record.
2) Check the company’s annual report and accounts. They should be able to provide this.
3) Are they members of trade associations such as the UK Money Transmitters Association?
4) Don’t be afraid to ask questions to satisfy yourself that you are dealing with a decent company. For example, how many employees do they have? (you are much safer dealing with a larger, professional organisation rather than a small company or start up) Do they give information about their directors and company officers on their website?
5) Only deal with brokers who operate segregated client accounts. They should be able to provide a letter from their bankers confirming this.
6) Is your broker transparent about what the exchange rates they offer. For example, are they willing to offer you a fixed spread from the interbank rate? Larger FX brokers will probably have access to the interbank rate (the rate at which banks trade large blocks of currency with eachother), and should be willing to guarantee to add a fixed margin to that rate whatever the market is doing. That helps you to know you will always be getting a good deal whenever you trade.
7) Is your broker FSA regulated, or in the process of applying to become authorised? (all money transmitters are now required to be authorised by the FSA as of November 1st 2009, but established companies have until April 2011 to become authorised).
8) Does your broker offer market analysis specific to the currency you are interested in?
9) If you ring around to compare exchange rates, make sure you are being quoted a "live trading rate" and not the "interbank rate". Some brokers will quote the interbank rate in order to persuade you to register, only to then explain that the actual exchange rate you can acheive will not be quite that good.
10) Sign up for email updates to get a feel for how proactive your broker is, and how impartial the advice.
John states that,
The most important thing to remember when choosing a broker is that your money is secure when being held in an account and whilst it is being transferred so it is imperative your broker is fully regulated and maintains a separate individual client account for you. Furthermore the added benefits of an FX Broker are that they are currency professionals, therefore make sure your broker is working in your interest and is providing you regular updates on currency movements etc. that he feel may be beneficial. Don’t be afraid to discuss your needs, by developing a relationship you can be sure your money is in trusted hands.
For more information please visit www.sendmoneyhome.org/torfx and see how you could save money. Alternatively please call one of the team on +44 (0)207 100 5644.