Financial services are the professional firms that provide the products and services underlying many aspects of our economic lives, including savings and investment, credit, debt management, insurance, and the redistribution of risk. This industry covers all sectors that touch the financial life of individuals and businesses, from banks to credit unions, credit-card companies like Visa and MasterCard, payment networks and systems (like Square) and a range of other innovative tools.
There are four main areas of financial services:
Banking services — provide deposit and lending products such as checking accounts, savings accounts, and retirement plans. Financial institutions also offer commercial banking services, which involve underwriting debt and equity for companies to fund their operations, mergers, and acquisitions. Consumer finance — credit card services, mortgage lenders, and personal and student loan providers. Private banking — provides exclusive banking services to high-net-worth individuals and families. Financial services firms also provide investment management — manage assets such as real estate and securities for clients to meet their investment goals.
The financial services sector has seen major disruption from big tech and online players, which have a huge advantage over established firms in their ability to innovate faster. As a result, many traditional firms have had to make large investments in revamping their digital platforms and offerings. For example, Apple is introducing its own credit-card service with rewards programs and Amazon has plans to bring Amazon Pay in-store, potentially cutting into interchange fees that account for about $90 billion in annual revenue for credit-card issuers and networks.
Entry-level jobs in the financial services sector are generally well-paid, and a variety of career paths exist as you gain experience. The industry is highly competitive, however, and there is often a high turnover rate due to job dissatisfaction. As a result, it is important to find a firm that invests in its employees and offers a supportive culture to help you advance your career.
Whether you’re an experienced candidate looking to make a change or just starting your career, it’s important to understand how financial services work. While it may be tempting to compare one firm to another, it’s helpful to first consider your unique needs and how complex your financial situation is. For example, are you a saver who wants to retire early or do you need to balance multiple goals like saving for college or buying a home? Your answers can help determine how much and how frequently you need to interact with a financial services provider. Additionally, it’s important to remember that even if you don’t pay a financial professional directly through an annual fee, they may still be getting paid through other channels like by the payments built into the prices of their products or services. For example, a flat fee for investment advice could be hidden within the price of annuities or mutual funds.