Financial services are a broad term that covers all kinds of activities in the financial sector, including banking, investment management, and insurance. A variety of companies provide these services, but they all share one common characteristic: the need to build trust with customers and regulators.
The most important aspect of financial services is that it helps consumers make informed decisions about their money and investments. By doing so, they can be more confident about their savings and loans. In addition, it allows them to spend their hard-earned money with confidence.
Banks, insurance companies, brokerage firms and credit card companies are all financial services businesses that offer a range of products and services for customers. They earn revenue through fees, commissions, interest rates and other methods.
This industry is regulated by governments to ensure that all of these businesses operate responsibly and safely for the good of their customers and the economy as a whole. They also work to encourage consumer trust by making sure they follow rules, such as not selling products to children or providing misleading information.
In the United States, there are a number of agencies that regulate the financial services industry and oversee the practices of providers and consumers. Depending on the country, these agencies can be local, state, or federal.
Commercial banking – The foundation of the financial services industry, this service includes the handing of deposits into checking and savings accounts, as well as lending money to customers. About 10% of a bank’s deposited funds are required to remain on deposit to be insured by the FDIC, while the rest is available for loan purposes.
Personal banking – The personal bank offers all of the same services as a commercial bank, but it also offers specialized products and services tailored to its customers’ specific needs. These include home mortgages, auto loans and credit cards.
Insurance – This service provides protection against a wide variety of risks, such as fire and theft, that would otherwise result in large financial losses. This includes life insurance, health insurance and disability coverage.
Advisors – This service is used by both individuals and organizations to help them with a range of different financial tasks, such as evaluating investments, providing valuation services, assisting in real estate endeavors, and more.
Brokerage – This service is used by both individuals, who shop around for a variety of investment opportunities, and organizations, which are looking for assistance with the management of their assets to meet specified goals.
There are many ways to enter the financial services industry, from traditional education to a mix of on-the-job training and experience. A degree is often not necessary for most roles, but it can be helpful for certain positions like investment portfolio managers and advisors.