Making the most out of converting your money

Currency conversion is a critical issue. David Johnson, director at Halo Financial, explains how to get the best deal.

Currency conversion is a critical issue. David Johnson, director at Halo Financial, explains how to get the best deal.You are looking at moving your staff to another country and there is no doubt you have too much to do and too little time to do it in.That may not be the way you think while you are waiting for the eternity that some visas take to arrive, but once you have the visa, clocks accelerate, days shorten and everything takes forever to happen.It is no surprise that, for many, the decision about transferring money into the new currency is lost in the melee.In fact, it is perfectly understandable that your inevitable foreign exchange requirement tends to be seen as a hassle. Everything is a hassle when you have endless ‘To Do’ lists.But currency transfers are often thought of as a hassle because, in the past, banks have made the process fiddly, inflexible and far too expensive.With the right help, you can exchange currencies in a way that offers you an opportunity to enhance your wealth or, at the very least, to minimise your costs.Choose your sourceThe first rule is, don’t use your bank. High street banks offer limited facilities for these kinds of international transfers and those facilities are still inflexible, cumbersome and expensive.Instead, choose a good foreign exchange broker; a broker that holds the Authorised Payment Institution accreditation from the Financial Services Authority. That affords you the peace of mind that the broker you have chosen is financially stable because they have to meet a level of capital adequacy, that their owners have had to meet the FSA’s ‘Fit and Proper’ test and, crucially, that they have to hold your funds in a secure account.All measures designed to ensure your money is safe. You can check any brokers’ accreditation on the FSA website: http://www.fsa.gov.uk/register/psdFirmSearchForm.doChoose a broker who explains things in straightforward language. You have already had to learn a whole new language in dealing with containers for your removals, dealing with specific visa terms and meeting all manner of migration criteria.Do you really want to have to assimilate yet more jargon? Of course you don’t, so speak with the person who will be dealing with you and make sure you understand the process without having to ask the same question half a dozen times.Choose a broker who can offer:
  • Forward contracts so you can book your currency at the right time and agree a delivery date in the future
  • Overnight orders so you can make the most of the volatility that happens outside UK trading hours
  • Jargon-free market updates so you can keep abreast of the changes that affect your money
  • A single point of contact rather than a call centre. Need I say more?
If you choose well, your broker should help you make your currency transfer process more focused on your needs, far more flexible and ensure you can exchange your funds at a time and at an exchange rate which suit your requirements.The key elements are that exchange rates move constantly throughout the 24 hour day, so the most attractive rates can come and go in the blink of an eye and at a time which is most inconvenient.An experienced dealer should ensure you have all the relevant information at your fingertips to determine the best time to capitalise on exchange rate volatility and when you do decide to transact, they should get you a rate much nearer to the wholesale (so-called interbank) rates than a bank can provide.Overnight coverSavings from good timing and tight pricing are only part of the benefit of using a broker rather than your bank. Missing an exchange rate because you just happen to be asleep is also a thing of the past when you have access to automated market orders.When foreign exchange traders are still busy on the far side of the world during your beauty sleep, the exchange rate that matters to you can still be moving.That may be positive or negative but, through the use of automated orders, you can protect against the negative and take advantage of the positive movements.These orders are set to target pre-determined exchange rates to ensure you never miss an opportunity and they mean you can manage the risk of adverse market movements.Timing is the keyForeign exchange markets are active 24 hours a day and are the largest trading market in the world. So volatility is assured. Taking advantage of that volatility is a real boon to those migrating because it is a one-off opportunity to add to your wealth.The flip side is that poorly timed or unplanned transactions can be very costly, but it is a hidden cost. To identify the potential for gain or loss, consider the sterling – Australian dollar exchange rate over a year.The highest (most attractive for those moving to Australia) that this exchange rate reached over the year from 1st October 2011 to 1st October 2012 was A$1.6350 and the lowest level was A$1.4550.So someone migrating to Australia from the UK with a financial pot of £100,000 had opportunities to arrive with A$ 163,500 or A$ 145,500 or any amount in between.  That potential A$ 18,000 saving would pay most people’s removal, visa and travel costs or buy a car upon arrival. And that saving is a matter of nothing other than timing the transfer of that £100,000 to best effect. That is what a good broker can do for you.Essential toolJust as international removals is a process best carried out by a specialist and tax advice for your investment plans is only to be trusted when it comes from a tax and investment expert, so the assistance of a currency market expert is a necessity when you are moving funds internationally.How and when you make your transfers and the tools you use to achieve those ends are decisions best made with the help and assistance of a specialist in foreign exchange. Halo Financial is a foreign exchange brokerage, providing specialist foreign exchange services to businesses and private individuals worldwide. For more information on Halo Financial and their services, visit their website: http://www.halofinancial.com/relocatenews

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