Financial services are essential for a functioning economy. They connect individuals and businesses with those who have money to lend, and those with money to save. Without a healthy financial sector, a society would have a hard time growing or even maintaining its standard of living. Financial services include a variety of subsector, including banking, insurance, and investment services.
A strong financial sector benefits everyone in a country, from the average citizen to large corporations. The stronger the sector, the more a nation’s citizens have money to spend, which leads to economic growth and higher employment rates. The reverse is true as well; if a financial services industry begins to collapse, it can trigger a recession and possibly a depression.
FSI’s primary mission is to promote a healthier regulatory environment for independent financial services firms and their affiliated financial advisors through constructive and effective advocacy. We achieve this by combining our expertise in the legislative and regulatory arenas with grassroots efforts.
Banks are a major part of the financial services industry, providing depository services such as checking and savings accounts, as well as credit facilities like loans and credit cards. They also offer investment services such as brokerage and advisory. Banks and other financial institutions may also provide capital market services, such as underwriting and advising on mergers and acquisitions, or structured finance, which involves creating complex (typically derivative) products for high-net worth individuals.
Another major part of the financial services industry are insurance companies, which provide protection against financial losses from unforeseen events. This can cover everything from death to car accidents to health issues. The payments received from policyholders, called premiums, make up a portion of an insurance company’s income. Insurance also includes services that help people manage their wealth, such as estate planning and retirement planning.
Other important parts of the financial services industry are credit unions, which are member-owned and operated savings and loan associations, and private equity firms and venture capital providers, which supply investment capital to start-ups and early-stage companies in exchange for ownership stakes or profit participation. The industry also includes stock and commodity exchanges, which facilitate stock, bond, and derivative trades.
Finally, debt resolution services are a part of the financial services industry that helps people pay off their outstanding bills and restore their credit, by negotiating with creditors to allow them to settle for less than what they owe. Other specialized financial services include payment service providers, such as Visa and Master Card, as well as global cash transfer and wire service providers. These businesses enable sellers to accept credit and debit card payments, as well as digital transactions through platforms such as UPI.