The Financial Services Industry
Financial services are all the activities that businesses, governments and individuals engage in to obtain, manage and grow their money. They include the issuing of stocks and bonds, lending money and accepting debt repayments. Financial services also include investment management, accounting, credit rating and risk resolution. They are an important part of the economy, and their health is vital to overall economic growth.
Most people think of banks, brokers and mortgage lenders when they think of the financial services industry. But the industry is much more extensive than that. It includes insurance companies, stock and bond traders, private equity providers, venture capital firms and even hedge funds. It also encompasses financial advisory services, tax filing and compliance, credit card networks and global payment systems.
One of the most well known subsectors within the industry is insurance. This provides protection against unforeseen events, such as death or injury (life, disability income and property insurance), as well as against liabilities such as lawsuits and debt.
Other important subsectors include depository institutions, such as commercial banks and savings and loans associations that accept deposits and lend them out to borrowers. They provide banking services such as checking and savings accounts, and they offer other products like mortgages, loans and credit cards. These institutions also provide brokerage services, which connect buyers and sellers of securities (stocks, mutual funds and shares) in exchange for a commission. They also offer asset management, which invests assets for their clients based on their goals and risk tolerance.