When you think of the financial services industry, you likely think of banks, brokers and mortgage lenders. However, this huge market sector is so much more. It includes the entire world of investment banking, asset management, insurance companies, securities traders and investors, Wall Street and more. It also provides small businesses, large corporations and even nonprofits with the financial tools that they need.
This massive industry touches nearly everyone in one way or another, and it’s important for the country’s economic health and standard of living. The sector’s growth is tied to the success of other industries, as virtually every business uses financial services for not only its own needs, but also to finance its customers’ purchases and operations.
Getting into the financial services industry can be difficult, but it is not impossible. Many companies promote from within, especially if you have a solid network. You can also start in an entry-level position to build your skills on the job, and many firms offer specialized training programs to help you advance quickly. New technology is introduced in this field seemingly every day, and you can expect to be learning and expanding your knowledge base as you move up the ranks.
Banks provide essential financial services, from accepting deposits to lending money. They pool money from depositors and then lend it to individuals who need the funds, acting as middlemen between those with excess capital and those who need it. Other financial services include credit unions and mutual funds, which offer investments, insurance products and loan processing. There are also brokerage services, which buy and sell securities on behalf of clients, and prime brokerage, which is a bundled service for high-net worth individuals.
Other sectors in the financial services industry include asset management, which manages assets like real estate, stock portfolios and investment portfolios, as well as the credit markets, which underwrite debt or equity for private or public entities that need to raise capital. Mergers and acquisitions are a part of this industry as well, along with structured finance, which develops more intricate investment products for high-net-worth individuals or institutions that require special needs.
The final sector of the financial services industry involves the insurance industry, including life and non-life insurance, reinsurance, insurance brokerage and agency, actuarial and risk assessment services. It also includes pension fund management and custodial, depository and trust services; payment and money transmission services (including foreign exchange, wire transfer, clearing and settlement); financial leasing; and debt resolution and other auxiliary financial intermediation services. There are also global payment providers such as Visa and Mastercard, as well as stock and commodity exchanges. There are also consolidated financial conglomerates, which are banks that offer multiple lines of business and invest heavily in other sectors. In the United States, these consolidated banks are a product of the Gramm-Leach-Bliley Act of the late 1990s, which removed the Glass-Steagall act and allowed them to offer investment, commercial banking and insurance services.