What Are Financial Services?

Financial services are a crucial part of the economy, enabling people to make large purchases and provide loans and investment funds to businesses. This sector encompasses a wide variety of jobs and careers, from bankers to debt counselors, and includes everything from private banking to credit card networks and global payment systems.

A strong financial sector is a hallmark of a robust economic climate, and it’s also necessary for businesses of all sizes to function properly. When the financial industry is healthy, consumers have more money to spend, and this typically leads to increased sales for businesses and individuals alike.

What Are Financial Services?

Financial services encompass all aspects of managing money, from deposit-taking to lending of all types. The broad category also includes securities trading and market intermediation, as well as asset management (including pension fund management), credit reference, analysis and advice, and all other auxiliary financial services.

The financial services industry is a powerful driver of the success of other industries, and it’s also a key contributor to the world’s economies. Because of its importance, many governments regulate and supervise different parts of the financial services market. The specifics of how this is done vary by country, but generally speaking, regulatory bodies ensure that financial service providers adhere to a set of rules and regulations.

Careers in the financial services industry often require a combination of hard and soft skills to succeed. Those with the right mix of technical and interpersonal skills can advance quickly in this fast-paced industry. Depending on the position, a degree may not be required, and a successful career in the field can be achieved through internships and other entry-level opportunities.

In addition to retail and commercial banking, which provides a range of traditional services like checking accounts and mortgage loans, the financial services industry also includes brokerage firms that buy and sell securities on behalf of clients. This includes equities, derivatives and debt securities. Additionally, financial services firms often maintain research departments that provide investors with insights and public stances on specific securities.

Another important part of the financial services industry involves insurance. This category of services covers a wide range of protections for individuals and businesses, from life and health insurance to property and liability coverage. This segment of the industry is an essential part of any economy, as it allows individuals to take on risk without having to completely drain their personal savings or rely on government aid.

The final component of the financial services industry consists of asset management companies, which handle pensions, insurance assets, hedge funds and mutual funds. Increasingly, these companies are being combined with brokerage firms, as the needs of consumers and businesses change. For example, many people have both an IRA and a brokerage account, and it’s becoming more common for people to work with wealth managers who can offer advice on both of these segments. This is especially true as the baby boomer generation nears retirement age.