Understanding the Financial Services Industry

Financial services

Financial services is a broad term that covers many different fields of work, from the basics of banking to the complex world of investment management. It includes a variety of professionals and products, so it’s important to have an understanding of the role each one plays in the larger financial ecosystem and in your own finances.

Banks – Provide checking, savings and other financial services for individuals and businesses, such as money transfer and currency exchange. They also accept deposits and make loans to borrowers, often with interest.

Insurance – Offers a variety of products that protect against catastrophic losses, such as health, life, home, auto and renter’s insurance. They can also help with mortgages, investments and retirement planning.

Investment firms – Sell stocks, bonds and other securities for customers with specific goals. They can also advise on mergers and acquisitions, initial public offerings (IPOs) and other transactions.

Asset managers – Provide services to high-net-worth individuals and institutions, such as managing investment portfolios of real estate or securities. They might also work with pension funds or fund of funds.

Financial advisors – Give advice to clients on a wide range of topics, from investments and retirement planning to valuation and real estate opportunities. They can also provide tax planning and legal and regulatory services.

Conglomerates – Companies that are active in several different areas of the financial services industry. A universal bank is a common example, but they also include insurance, investment and brokerage companies within their holding companies.