I was born in 1953. To any young person, that was long ago. When I was growing up in the 60’s brokers were highly respected. They were considered astute international business persons with an in-depth knowledge of business. It was a profession of which one could be proud.
I personally have brokered more diamond deals then I can remember. I provided a service in which the buyer, the seller, and I were able to do business and everyone came out of the deal happy. Sometimes I made a lot of money, sometimes a little.
I was respected for being able to find the diamonds my customers needed at the price and terms that would work for them. The sellers respected me because I qualified my customers well and did not ask my vendors to give me their goods unless I felt I had a very good chance of selling their stones for them. As time goes on you develop a reputation for trust, honor and integrity.
Today, I constantly hear the term joker-broker and rarely do I hear suppliers, sellers or gemologists speak of brokers with anything other than disdain. Not only are brokers no longer looked upon with respect, they are now looked upon with disgust!
I cannot speak of other’s experience. I can only tell you of my own. No longer are brokers astute international business persons with an in-depth knowledge of business. Today most brokers I have come in contact with, or have worked with, are nearly clueless of how business actually works.
Brokers do not seem to understand the inherent risks, problems and fears associated with the completion of a commodity deal. I cannot count how many times brokers call me up and tell me they are ‘right’ next to the buyer or seller. Often brokers come to me with buyers and sellers who they do not even know. Yet they claim the buyer or seller is ‘real’. When you ask brokers what due diligence they have completed they usually answer with silence.
How many of you have been put on a conference call with a daisy-chain of brokers? All of them demanding NCND and MFPA’s before they even know your name! The first thing they do is squabble about the commissions and how they will be divided among them. Then one broker, and there is joker slot always one, will not agree with what his share will be and will tell the others that he will not put the seller or buyer forward unless he receives a lion’s share.
If you can get past this nonsense and actually get on the phone with the buyer or seller, you find that the brokers insist that they also be included on the call. Now you have a conference call with six brokers who are bringing the buyer and another five or six brokers who are bringing the seller. If they sat silently, it would be okay, but that never happens. What you end up with is the Tower of Babble.
Brokers rely heavily upon an NCND and MFPA. In reality, they are only as good as the amount of money you want to spend to enforce its performance. If the buyer/seller is not honest, you will not be paid. It does not matter that you have an NCND and MFPA. Lots of luck enforcing your NCND or MFPA in Europe or Africa.
Think for a minute. Once the buyer and seller know each other, they can easily cancel the deal momentarily. The buyer or seller can go back later and restart a deal sans the brokers. Even if one of the parties is honest, the other party can come in under a different company name and the honest buyer or seller will not know that it is the same party he was dealing with. In my humble opinion, an NCND and MFPA are useless.
This reminds me of a (almost) true story. There was once a group who got on a plane to Africa. They were going to do a large diamond deal. Among them were five brokers for the seller and four brokers for the buyer. They sat in the economy section. In addition, there were the buyer and seller who sat in the first class section. Of course flying the plane was the pilot and co-pilot.