It’s a bit old school, but cold calling is back, and now it’s moved from double glazing to stock broking, to recruitment, to currency brokerage. Chances are if you are a CFO and do any sort of international business, or even if you don’t, you will have received at some point a cold call from a currency broker offering to reduce the costs of your foreign exchange.
Now, for the most part, foreign exchange is a massive problem for businesses because, firstly, no one really understands it, and therefore, secondly, tends to be ignored. But, if you look at most businesses’ filed accounts, there will be a comment or line regarding foreign exchange losses. It’s not just small companies that don’t deal with this properly either. The FT recently reported that developers in China lost $3bn due to FX exposure.
I myself still take money in from our international customers who pay in US dollars via Natwest, becuase I am not following my own advice. To be fair these are are relatively small payments, but over the past ten years I dread to think how much has been fritted away into the Royal Bank of Scotland coffers.
However, managing FX for companies is really actually very simple.
Never use your bank for large currency transfers because they are a rip-off.
Caveat, you can actually just call your bank and ask them to give you better exchange rates. Or swap to a fintech bank like Starling or Revolut which will give you much better exchange rates as standard.
When I interviewed Anne Boden the founder of Starling Bank, back in 2019, I hailed them as the end of FX fees, but they are still ripe.
But, to caveat the caveat, AML is a nightmare at banks so if you are sending lots of money abroad to random suppliers you may at some point find these transactions blocked.
Also you have no control over the timing of a transaction so it you think the exchange rate is heading in your favour, you can’t set limits to convert automatically.
Plus, even modern banks won’t let you do currency forwards, which are great for locking in the currency exchange rate for upclomding purchases or sales.
All of these things a currency broker can help you out with.
But, currency brokers, especially corporate currency brokers are not regulated in the same way that banks or investment accounts are and there is very little recourse if something goes wrong.
I have been a currency broker; I’ve had my own currency broker, where we set the max mark up at 0.5% and as low as 0.1% and the sad truth is that there is really not that much money to be earned for converting money at those rates.
But, becuase foreign exchange is an OTC market with no central regulation, it means that currency brokers can basically price how they want.
Which is fine if you understand how it works, but a nightmare if you don’t.
So, if you are cold called by a currency broker, be careful, becuase that currency broker will be working on commission.
And commission based brokers, tend to be more expensive than ones that don’t cold call you.
So, in summary,
- A currency broker can help you out with better exchange rates – but only if you know how FX mark ups work – read our guide on how to compare exchange rates.
- Be careful of being offered a great rate and then the rate being more expensive when you actually come to dealing – read our guide to honeymoon exchange rates.
- You can read reviews of corporate currency brokers here, if you need to send a large amount of money abroad or protect your currency exposure.
- If there is even the slightest hint of high-pressure sales tactics or incessant cold calls, run for the hills!
And finally,
Here is a little insight into what happens before you are cold-called by a currency broker. This was posted on Linked in by Orbis Exchange Group. We are not sure if this is a wind-up or a joke, but we sincerely hope it is.
Video transcript:
“Right, good morning, everyone, right this morning, what we’re gonna do, we’re gonna step up and make things happen, we’re to exceed targets not just meet them. Every call, meeting and deal, brings us closer to success. You’re going to sell with purpose today, I’m looking at you you big grumpy melt. You’re going to offer value, you’re going to build trust, you’re going to create some [leading] long-lasting relationships. Turn challenges into opportunities. Every no is going to be, let’s talk again. The only limit is the one we set for ourselves. Let’s smash through the barriers. Stay focused, bring your best everyday, and show them what we are capable of. We’ve got the talent the drive and the energy. And lets’ make some f***** dough.
I feel like throwing a mic at the front.”
Richard is the founder of the Good Money Guide (formerly Good Broker Guide), one of the original investment comparison sites established in 2015. With a career spanning two decades as a broker, he brings extensive expertise and knowledge to the financial landscape.
Having worked as a broker at Investors Intelligence and a multi-asset derivatives broker at MF Global (Man Financial), Richard has acquired substantial experience in the industry. His career began as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson), following internships on the NYMEX oil trading floor in New York and London IPE in 2001 and 2000.
Richard’s contributions and expertise have been recognized by respected publications such as The Sunday Times, BusinessInsider, Yahoo Finance, BusinessNews.org.uk, Master Investor, Wealth Briefing, iNews, and The FT, among many others.
Under Richard’s leadership, the Good Money Guide has evolved into a valuable destination for comprehensive information and expert guidance, specialising in trading, investment, and currency exchange. His commitment to delivering high-quality insights has solidified the Good Money Guide’s standing as a well-respected resource for both customers and industry colleagues.
You can contact Richard at richard@goodmoneyguide.com
