Kill the intermediary… at your own risk.
There is a trend to eliminate the intermediaries in all processes and I am doing a platform directly to that end (the unnecessary ones). However I want to value the work performed by qualified intermediaries, especially from my role as a broker, the one I perform until and after the platform is finished. I would like to reflect on the position of the intermediary and share with you some reasons about why it is necessary despite the general disapproval and the trend to kill the intermediary.
Brokers play a vital role in transactions for several reasons, as companies or persons execute large transactions rarely, while an intermediary might be exploring and executing several transactions within a short period or even at the same time at different stages.
Types of intemediary
- Intermediary as a trader. The trader owns the risk taking a position, buying increases liquidity in a market.
- Intermediary as a broker. The broker facilitates the transactions to sell and buy side at a small % fee, it doesn’t take a position and holds no favour to a party of the deal.
Advantages of working with a qualified broker:
- Market knowledge: brokers have deep insights into the market conditions, trends, and pricing, which can help both buyers and sellers make informed decisions.
- Right price assessment: what is the right price to execute a deal? When there is no index and all of them are on a peer to peer basis. Some tools are based on statistical estimations, some are based on historical deal executions. At this point in time there are some characteristics that make the price unique to your market.
- Presenting alternatives: are you really pursuing the right target? Should you recess your objective? There are probably more options to exploit.
- Facilitating transactions: connecting buyers with sellers and vice versa and streamline the process, saving time and effort for both parties.
- Negotiation: on behalf of their clients to ensure they get the best deal possible. They leverage their expertise to navigate through terms and conditions, securing favourable outcomes.
- Legal and regulatory compliance: brokers are not lawyers, however there are used to standard practices in every niche, based on past experience or regulatory reasons.
- Access to networks: intermediaries often have extensive networks of buyers, sellers, and other industry professionals. This network can be invaluable in finding the right match for a transaction. Some sellers turn to buyers at the right price and some buyers turn to sellers at the right price.
- Risk management: brokers help mitigate risks associated with transactions by conducting due diligence, identifying potential pitfalls, and offering risk management strategies.
Overall, brokers bring expertise, efficiency and connectivity to transactions, making them an essential part of many business dealings. A knowledgeable broker is worth a hundred pay-to-play tools. Briefly and in defence of the trader role, sometimes you do not have to make the last penny and just make some money. You might end up full of a cargo with zero value or completely outdated and non-tradable for not letting them take the load to the last mile.
About complex and illiquid markets
Indeed any complex transaction needs more than one intermediary, even many to be successful for both sides and on top of that an intermediary for the sell and intermediary for the buyer, a transaction can be a long term arrangement or show successful over the long term. Sometimes you pay an intermediary to explore options and give you market information even if at that moment you decide to wait and execute the transaction for later on, probably killing an intermediary in an illiquid market is a terrible mistake.
As a buyer or seller of course you owe them a fee to get the best deals out of their portfolio, if you are not willing to pay you will be left with your cargo and owning the losses.
Then what kind of intermediary do you seek to eliminate with your platform? Those who provide zero value added to the transaction only are after a fee to share a contact number or act as gatekeeper instead of facilitators and those who take onerous fees or advantage from sellers and buyers out of a lack of a market development.
If you have some skin in the game you understand this brief essay and the importance of an intermediary!
