I am often told by property professionals that their customers do not need the services I offer - that currency exchange, FX and the movement of money for their UK house purchase is something their buyer (or seller) already has in hand.
I used to think that made sense ~ one was dealing with affluent, globally mobile individuals and families and, for one thing, the topic of money, liquidity and transmitting funds might be deemed a private matter, and for another, it seemed perfectly plausible that the client might already have a robust way of handling their currency dealings and that this explained why currency was rarely discussed with UK agents (between client and agent).
After working with HNW professionals and families buying houses for over a decade I have become convinced that a foreign buyer not 'bringing up currency' is not indicative of a level of sophistication on the part of the client that precludes to opportunity to refer a trusted brokered, but rather, it is because personal financial services, let alone tailored personal foreign exchange services, do not exist in the same way overseas as they do in the UK - I immediately acknowledge how Imperialist that sounds...but I have anecdote after anecdote to back it up!
Furthermore, I theorise that specialist currency services are not quite mainstream enough for individuals within the property sector to confidently speak to their value, and are usually presented and represented inconsistently across the industry, often by ill-equipped and ill-disciplined operators who think they're in London's version of Woolf of Wall Street but are actually only facilitators of electronic bureau de change services. Ego and sales patter have almost entirely eclipsed the tremendous value a specialist currency company can offer the wonderful world of property.
I firmly suspect that 'high-net-worth' clients buying in London tend not to ask agents whether they have any contacts who can assist with currency because they don't even know that such a niche set of services exists, not because they already have it catered for ~ and the majority of agents that might have thought to suggest a company like Moneycorp or HiFX or FC Exchange have been so put-off by the inelegance of those who 'sell FX' that it is no wonder they aren't inclined to suggest referring their client to someone.
Hence, I want to touch briefly and without much fan-fair on how a London based property agent working for either the buyer or the seller, might establish whether there is merit in connecting their precious client with someone like me and a firm like mine, Prime Cap.
1 ~ How will you be funding the purchase?
A simple question and one that any UK resident would be asked straight away when buying a house.
Is it by some sort of borrowing arrangement? Mortgage? Cash? SPV?
My guess is that clients quite quickly reveal (although 'reveal' makes it seem like it is something they might otherwise be inclined to conceal...) that some or all of their capital is 'back home' and therefore likely in a currency other than GBP Sterling.
Straight away therefore you have the opportunity to ask whether they have considered using a personal currency or money broker to quickly and securely bring funds into the UK.
You're no doubt looking out for the chance to suggest other professional services firms like mortgage or tax advisors, so include currency in the tool kit of resources...and, I would argue, it is far more likely that your foreign client has a vacancy in the currency exchange space anyway.
2 ~ Dear Mr Client, do you know how quickly your foreign currency can be made liquid and realised as Sterling?
For many high-net-worth clients their capital, although accessible, will be in some sort of vehicle (ha, no not a Porsche...although maybe/partly). That could be something as simple as a trust (particularly for US residents) or other instruments and assets.
Releasing the capital might not be instant, so, it is worth asking your client to elaborate on the turn-around time from the point of instruction (to the trustee or fiduciary manager) to when the foreign currency might be ready to send to the UK - the reason you might want to steer a discussion in this direction is because you can then incorporate the idea of locking in a rate of exchange before those funds are in fact liquid.
Almost all clients exchanging money and not using a currency broker, which is almost all clients, 'take what they are given' by their bank on the very day their money is exchanged.
This means they have no idea what the foreign currency cost of their UK purchase is until they ask their bank to debit their account. This needn't be the case. A non-bank like Prime Cap can lock in the rate of exchange at any time and for a period of up to 18 months. Not only does this enable the client to be specific when they tell their bank, trustee or fiduciary manager home much to liquidate from their holdings, but, it means the foreign currency cost of a property does not go up; period (as they say in the US).
As well as helping your customer out, introducing this type of offering helps an agent because it qualifies their customer. If a client has engaged a currency broker then, to a greater or lesser extent, you can infer that the client is serious - even more so if the type of contract outlined above is utilised because it means the client is committed even before contracts might be exchanged on a property.
3 ~ Money means money.
I said I would only provide three points...so this one combines two elements - what is the financial incentive for the client and what is the financial incentive for the agent?
A motivated currency broker will always save your client money - always.
Truth be told, there is no way of knowing how much money we can save your client until the exchange of the currency is done. This is because the main bench-mark for undercutting and saving a client money on the rate of exchange is the institution the client might otherwise use.
So, the amount we can save your client (dear Mr Agent) depends on what their bank or other broker would have 'charged'. At Prime Cap we want to make sure a) the customer trades through us and b) you get thanked by your client for introducing us because are margin was so much better (and our service too) than the competition.
I am not coy about saying that the saving we can offer might be anywhere from 0.1% to 7% of the total foreign currency amount the client is exchanging. Effectively this means we give back this sum to the customer - this sum that would have been paid to another institution had the exchange been conducted elsewhere.
So, if your foreign client is buying a £1,000,000 home in the UK and their bank is charging them 5% 'in the rate of exchange' then they would be paying/sending (based on the currency GBP to USD rate of exchange) $1,382,200.
That 5% is quite literally the fee for using their bank - there are other way's of describing it, but, put simply...it is a fee.
Prime Cap has the ability to undercut that fee by up to that 5%. We could exchange the currency at 'cost' and save the customer $69,100 - but we wouldn't make any money ourselves.
I make quite a song-and-dance about Prime Cap being 'independent' and able to tailor our rates. What I mean by this is that, unlike many 'factory firms', we do not have a 'house price'. We do not have a minimum margin or percentage that our brokers, stakeholders,
marketing team etc. need to achieve before they get paid. Each broker choses how to price their clients' transactions. If a broker wants to apply no fee at all then it is up to them - and it is not unheard of for some of our more senior brokers to do just that in order to cement good will.
This approach is nearly unique in our industry and it means we can be agile enough to tailor our offering to the client and the circumstances - making us ferociously competitive. It also means that our brokers work totally alongside our referral partners with a truly transparent and collaborative (rather than combative) modus operandi, which brings me onto the second element of this point three...
In a crowded market place businesses like Prime Cap have to standout both for the quality of their service and for the commercial appeal of their proposition. What I mean by commercial appeal is that many if not all of our competitors offer property professionals a cut of whatever fee might be applied to the client's transaction - a percentage of the 5% I mentioned earlier.
In my experience this cut represents a conflict of interest unless the client is being offered the most competitive rate of exchange to begin with.
When I worked at Currencies Direct - I was the chief sales point of contact for the 400 or so affiliates CD worked with in France - we used to pay a commission to those who referred to us. It became apparent that some agents were only interested in what they would make out of any referral. They couldn't care less about what the client received. This ended up meaning that agents (called Immobilier in France) would change their currency provider like the wind, and currency providers would offer ever increasing percentages by way of commission. Gradually the competitiveness of the margin offered to clients would widen in order to accommodate agents' slice and to keep them referring.
In my view this is totally the wrong way round.
At Prime Cap we will not be beaten on price... literally...we will sell the currency at no mark up at all if it means we can be assured the client will use us. We do this because the relationship with the referrer and the confidence we want them to have in us is incredibly important. If we do not win the deal then no-one in the process gets anything...so, being prepared to undercut has to be at the forefront of our strategy.
Our partners may not get big remunerations, but they will always get one on every referral because we will not lose a trade through greed or pricing too widely.
So, the take away from this veritable diatribe -
If you are not working with a currency company then your client is almost always leaving money on the table.
Choose wisely and carefully when selecting which currency company to refer.
The way a trade is priced - and the transparency with which a company is prepared to discuss their pricing strategy - are significant if you want absolute confidence that your client's best interests will be served.
Just because your client doesn't bring up currency, don't assume there is not a valuable referral to make...you stand to gain and so does your client.
We've a lot more case-studies and FAQs on the Prime Cap website.