If you are new to the Forex trading industry, you might be wondering about which Forex model to choose to establish and grow the brokerage business. We are essentially referring to IBs (Introducing Brokers) and Abs (Affiliate Brokers). These two are among the most popular Forex models. Both models include the aspect of referring potential Forex traders to potential brokers, their potential approach, compensation structure, etc.
Read on to learn more about which Forex model is better.
What Are IBs or Introducing Brokers
An introducing broker (IB) forms a partnership with a brokerage with the objective of bringing in new traders. By bringing in new Forex traders, the IBs can earn commissions based on the traders’ Forex trading activity. Essentially, IBs establish lasting relationships with potential clients. They also offer personalised customer support, provide education, and training on trading insights.
Potential Advantages of IBs
Here are some of the potential advantages of IBs:
- IBs can earn long-term commissions from the trades of their referred clients.
- IBs can help establish strong client relationships, which can further establish higher retention rates.
- IBs can provide extra services, such as crucial market insights to add value.
Potential Challenges of IBs
Here are some of the potential challenges of IBs
- IBs need ongoing engagement and support for traders
- The earnings of IBs depend on the trading volume of clients.
What Are Affiliate Brokers or ABs
Compared to introducing brokers, affiliate brokers are exclusively focused on digital marketing, along with lead generation. Typically, ABs refer potential clients to brokers through online campaigns, including content marketing and social media campaigns. Unlike IBs, Abs don’t focus on maintaining effective client relationships, but they earn commissions based on performance, such as the cost-per-acquisition model.
Potential Advantages of ABs
Here are some of the potential advantages of being an affiliate broker:
- ABs can earn immediately through upfront commission structures.
- ABs don’t need to manage clients or support them after referring them to brokers.
- ABs can integrate highly scalable digital marketing tactics.
Potential Challenges of ABs
Here are some of the potential challenges of being an affiliate broker:
- The revenue of ABs depends on the number of newly acquired traders.
- ABs don’t earn recurring income from the client’s long-term trading activity.
- ABs tend to have less control over client retention and engagement.
ABs vs. IBs – Key Responsibilities
When it comes to the key responsibilities of IBs, they are responsible for bringing in new clients and providing them ongoing support. IBs are also responsible for educating Forex traders. On the other hand, ABs are responsible for establishing a solid online presence and engaging potential traders. They also generate leads and drive traffic.
Final Thoughts
When it comes to the growth of forex brokerage, both affiliate brokers and IBs play important roles. With that said, if you are deciding between the affiliate and IB models, you might want to select the IB model for establishing long-lasting client relationships and earning great commissions, too. On the other hand, if you are a digital marketer, you might want to select the affiliate model for faster and performance-based earnings.
