A wise man once said “This industry is full of BSDs and nicest watch contests." I have had the luxury of getting inside the minds of some of the most successful and unsuccessful people and brokerages across the globe. One apparent thing that comes out of every conversation is that every broker needs help. This is not an opinion. This is a 100% cold hard fact.
There is not one business relationship I have had in the last three years, where my team was not able to provide a tremendous amount of value. This is the case for publicly traded brokers, start-ups, and everybody in between. I am not writing this to toot the ThinkLiquidity horn. This is written to highlight the fact that there are a multitude of strategies when it comes to the management of risk and trading, as well as running a brokerage in our industry.
Everybody you speak to talks about volume “How many yards are you doing?” This is certainly a great measurement of transactions being processed, but I see so many brokers focusing on nothing but volume. Some of the deals I come across just do not make economic sense, yet brokers welcome them with open arms because it means more volume. Another wise man once said, “Volume does not mean anything if your deals are not structured correctly and you do not manage your risk properly."
The smart brokers are really starting to open up about their struggles and pain points. Fortunately, there are solutions. The most common pain points I have encountered lately are risk, technology, capital and deal structures. These are all areas we have been actively addressing. With the proper structure in place, volume becomes real and tangible profit. My advice would be to quit the volume contest and work on a profit contest. This will help buy you a nicer watch.
