Personal account managers are used as a way of attracting new FX / CFD / Crypto / BO traders but are they working for you or the broker? Should you be listening to what they have to say?
What is an Account Manager?
Personal account managers are used by the brokers as a way to attract and retain their traders. The benefit of a personal rep, someone who is there to take care of your account needs, answer your questions and help you get started is unquestionable. What is questionable is the lengths to which some account managers and brokers will go to make you deposit more, and lose more.
I think it’s understood that their main goal is to convince you to buy whatever product the broker is selling, be it CFD, FX, Crypto or even binaries. That’s OK as long as you know it and you don’t believe they will make you a rich guy. They can tell us all about trading and why this broker is the best but should they really be offering us tips, advice, and signals? The manager works for the broker, the broker makes money when you lose so there is a clear conflict of interest in a manager helping you to win. The casinos don’t let the dealers help the players, do they? You can’t ask him if you should hit, or split or double down can you? Then why is it OK for your manager to tell you what and how to trade?
To truly understand why and when an account manager is a good or bad thing you have to understand what an account manager is there for. The manager is there to help you and monitor your account, not to trade for you. The manager should be there as a liaison between you and your platform. He or she should help you get signed up, they should help you with your documentation and identification, they should explain the bonus terms and conditions, make sure that you understand what assets and types of trading they offer, how different types of orders work and other similar stuff. They are not there to pressure you into making deposits, they should not be offering to trade your account, they should not be offering trading tips or suggesting you use a managed trading account. If they are doing any of that, there is something very wrong and you should rethink whether or not you have chosen a good broker.
Account Managers Are A Good Thing, Right?
Account managers can be a good thing for both the broker and the trader, don’t get me wrong. The broker needs them to help retain clients and get them to trade. The clients need them to answer questions, give help and provide support. An account manager that operates within some boundaries brings advantages to both parties, making sure clients are comfortable with trading real money, which means they will keep using the broker. The manager should show you the ropes, and maybe give new traders a little push if they need it, but the line is crossed when they start to give out trading tips and to pressure the client into doing something he doesn’t want.
Before taking any tips, regardless of the source, you have to ask yourself: is this person qualified? It takes a certified investment adviser to provide trading or investment advice, which is not the same thing as being regulated as a broker. Without such certification, it is illegal for brokers and account managers to give advice, provide tips or signals and especially to trade your account.
The problem is that there are no set standards among brokers. The very term is confusing. A manager, by definition, should be able to “manage” your account or have some active role in your trading decisions. A change in status to account representative or liaison would be better. Along with that, regulation should include no tips or advice, the manager should be there for informational purposes only. You can ask them questions, use them for a reference and for educational purposes. They should be able to help you with account verification, making deposits and withdrawals but not to give you tips. If they want to tell you how to trade they should get licensed to be an adviser and look for a new job.
Know The Risks Of A Managed Account
Account managers can be intrusive and step out of their boundaries, but there’s something that can be even more destructive: having your account fully managed by the broker or by a third party agent. Basically they take care of all your trading and promise a 10% – 50% return monthly saying that all you need to do is invest and let them do the hard part of trading. It might sound good but it isn’t, because, in reality, you won’t get that kind of return. Sure, maybe they will give you some in the first weeks or months but in the long run, such a managed account is not the way to go.
Third-party managed accounts work along these lines: a company, signal service provider, etc. claim they have a close-to-perfect trading robot or a team of experts, pro traders and whatnot. Then they try to convince you to allow their robot to trade your account. That software (or the so-called team of experts) will be in control of your account, hence the term “managed account”. Unless you have solid – let me say that again: solid proof of their performance, I would say stay away, especially if they are reluctant to give you clear information about how their robot works or how exactly will their team manage your online trading account.
There’s also the possibility that the broker or third-party agent may have good intentions and not looking to do you harm but you are not in control and this is a risk by itself. Let me tell you a little story:
A few weeks back I met one of my old high-school friends. I haven’t seen him in a long while so I was very pleased with the reunion; we talked about the old times, we laughed, we talked about cars and motorcycles and then he said: “Dude, let me ride your bike”… no, no, no that’s simply not possible. Nobody rides my bike but me. “Ok, then let me take your car for a spin”. The thing is that I get a little soft when I see old friends so I figured it wouldn’t do any harm if he would drive it… so I handed him the keys.
We went for a ride around town, not a lot of traffic, a sunny day, nice music… all cool and I figured it wasn’t such a mistake letting him drive the car. But I had spoken to soon: when we got to the parking lot while trying to parallel park, he clipped the front rim on the curb. Thankfully it wasn’t that bad, just a scratch, and in about a week I almost forgot it was there… almost. The main problem I have is that now my rim is scratched and I had nothing to do with it. I mean, if I were driving – fine – I bought the car I can scratch it, but someone else doing it… arghhh! To me, a managed online trading account has a lot of similarities: if the manager will blow it, he’ll shrug his shoulders and say “Sorry, the market was rough” and what can you do… after all, you are the one who said it’s ok for him to manage the account. In fact, I would blame myself more than the account manager: why did I think that someone else would take better care of my money than I would? Sure, maybe the account manager is an experienced trader, but this doesn’t mean there are no risks.
It is a known fact that brokerages don’t like winning traders because those winnings come out of their pockets, so why would you believe that an account manager given to you by the brokerage will make his employer lose money? Or why would you believe that the broker will offer you a managed account that actually makes you money and makes them lose money? Maybe there are brokerages and account managers who really want you to succeed… they can’t all be bad, but make sure you choose wisely. Do you know how experienced they really are? Do you know how careful they will be with your account? People have a tendency to be careless when the thing they are handling or “managing” is not theirs, just like in my car story above.
Online Trading, Blackjack and the 5 of Spades
Often the broker is the Casino and the account manager is the dealer, so here’s another metaphor I like to use: let’s assume I’m in a casino, and I’m playing my hands against the house. The dealer represents the house, and you’re taking the first turn. Now, you don’t know how to play jack, so the dealer offers you a deal: I’ll play your hands instead of you, and I guarantee you’ll make 20% of your investments. Well, you’re happy, and you’re agreeing without asking questions. The game starts. You get a 9 and a King, you couldn’t be happier. Now the dealer plays your cards, but he decides it’s not enough and is looking for 21. Oh man, the look on your face when the 5 came out. The house takes it all. Letting the broker manage your account is a bad idea and something you should be avoiding. The shadier the broker is, the more money you’ll probably lose with the managed account. Regulated AND Trusted brokers would not offer you a managed account, and your account manager will not provide you tips. It’s all about you, and you’ve got the advantage over the house, so take it with both hands, learn to trade and remember what we’ve talked so far, plus this:
Even experienced traders lose. That statement is as true as “The sun comes up every morning”. To always win in Forex, CFD, Crypto, Binary, etc, you’ll have to know the future and if you know the future, you don’t need to manage trading accounts. Something can go wrong with his strategy or market conditions can change drastically and the account can go south. Maybe he will recover the losses but maybe he won’t or maybe you will decide to stop before he can win your money back.
So far we assumed the guy in charge of your managed account is well-intentioned… but what if he wasn’t? I am sure you know how many scammers roam the Internet and the trading world. Every day I get junk emails from “millionaires” who want to share their secrets with me for a few bucks or even for free if I join their “recommended” broker. I’m not saying that all account managers are scammers or that all managed accounts will lose money, but many of them boast their skills and present themselves as true market wizards when in fact they know less about trading than a guy who just finished our Trading Primary School.
The Bottom Line: I’ll Drive My Car, I’ll Trade My Account, Thank You!
I might not be the best driver in the world, but at least I know that when I’m driving I do my very best to protect the people in my car, other traffic participants and my car. I can’t say the same about anyone else who would drive my car and the same goes for my trading account. No one cares more about your money than you and although trading is risky in all of its forms, I’d rather risk my money than letting others do it.
The way your account manager treats you is a great way to know if the broker is legit or not. A bad broker will use the manager to take advantage of you, get you to trade more, lose your money on the tips he gives you and then ask for more deposits. A good broker will use the manager to help you trade by giving you tools and information and providing some support but they will not give you tips, advice or trade your account for you. Learn to drive, accept guidance from others but NEVER let them touch the steering wheel and never let them manage your real-money trading account.