Understanding the Financial Services Industry

Financial services encompass a wide range of professions and products. This broad industry includes everything from accounting and tax preparation to insurance, investment management and credit-card networks. There are also a number of different sectors within the financial services industry including deposit-taking, lending of all types and financial leasing; money market and mutual fund brokerage, securities underwriting, and asset management, including pension funds, hedge funds and other collective investments; and other auxiliary financial services (credit reference and analysis, portfolio advisory, research and development, and advisory, intermediation and ancillary financial services).

A healthy financial services sector benefits everyone. It allows individuals to obtain loans for mortgages, cars, education, and other necessities. It provides businesses with capital to grow and expand. It safeguards people’s property and health through insurance, and it creates millions of jobs that pay a living wage.

The most important aspect of understanding the financial services industry is knowing that there are two categories: financial goods and financial services. A financial good is an object you own, like a car or a home, while financial services are all the activities that support and secure those objects.

For example, when you get a mortgage, the money you put down is a financial good and all the services that go along with getting that loan are financial services. This is why it is important for people considering a career in financial services to understand what each sector does.

Banking and insurance are two of the most common types of financial services. Banks offer many services such as checking accounts, credit cards, electronic transfers of money and notary services. Insurance companies provide a variety of protections for consumers and businesses such as homeowners’, life, auto, business and other liability insurance.

Investment banks, on the other hand, focus more on helping businesses raise money. They do this by offering services such as mergers and acquisitions, underwriting debt and equity, and financial restructuring. They also serve as an intermediary for other financial institutions by buying or selling their stock.

There are also a number of regulatory bodies that oversee the various financial services industries. These independent agencies make sure that financial institutions are acting fairly and are keeping their investors informed. Some of these include the Financial Industry Regulatory Authority (FINRA) and the Office of the Comptroller of the Currency.

To keep up with the latest developments in the financial services industry, it’s a good idea to read industry publications on a regular basis. The Wall Street Journal is a great place to start, but there are other reputable financial publications available as well. Many libraries have subscriptions to these journals, or you can purchase them for a very reasonable cost. If you’re serious about a career in financial services, then this is an excellent investment of your time. By staying informed, you’ll be able to make better decisions about your future career plans. In addition, you’ll be able to spot trends and opportunities more easily.