Financial services are the industries and businesses that deal with money, capital, and investments. They encompass a wide range of companies like banks, credit unions, insurance agencies, and investment firms. Financial services are a vital sector of the economy because they provide funds for businesses and consumers, which helps them grow and succeed. Financial services also help regulate the economy and protect investors.
The definition of financial services is vast and encompasses everything from loans to securities. However, it’s important to distinguish between financial goods and services. A financial good is an asset that provides a service, such as a mortgage loan or life insurance policy. A financial service is what goes into providing a financial good, such as the underwriting process for a mortgage or the administration of a life insurance policy.
Examples of financial services include:
Investment banking – Provides advisory and capital raising services for companies in mergers, acquisitions, and restructuring.
Brokerage services – Buys and sells stocks, bonds, mutual funds, and derivative instruments on behalf of clients.
Private banking – Provides banking services to high-net worth individuals.
Advisory and wealth management services – Provides guidance on financial planning, retirement planning, tax planning, estate planning, and other wealth-related matters.
Financial services companies invest in their employees by offering tuition reimbursement and on-the-job training. Many also promote from within based on merit, so those with a lot of ambition and talent can move up quickly in their careers. They’re also known for encouraging professional development, with new tools being introduced frequently to improve efficiency and performance.