The financial services sector comprises thousands of depository institutions, providers of investment products, insurance companies and other credit and financing organizations. A strong financial services industry is vital to the health of a nation’s economy. It enables free and open trade and investment, and it helps individuals and businesses manage risk and achieve long-term success.
When most people think of financial services, they imagine banking. This is an extremely broad category, though, as many banks offer more than just traditional deposit and withdrawal services. Cashing a check, for example, is a service and so is providing a mortgage. Even a small local financial advisory firm, like a tax preparation company, provides a financial service by helping its clients plan and prepare for taxes.
Similarly, a stockbroker is a financial service and so is a hedge fund. Investment banks, also a type of financial service, help companies raise money through underwriting debt and equity, mergers and acquisitions, valuation, and other consulting services. Then there are professional services providers, a large and diverse group that provides a range of consulting and advisory services, including tax advice, M&A advice, real estate advice, and other risk management advice. They vary in size from small domestic consulting firms to huge multinational corporations.
Financial services firms make money by building their customers’ financial wellbeing, a concept that encompasses everything from managing debt and saving to investing in education and property. When people feel they have control over their finances, they are more resilient against shocks, they spend money wisely, and they are better able to save for the future.