The Different Types of Financial Services
Financial services, also known as the finance industry, is a broad term that includes many different businesses that provide financial products and services. It is a vital part of the economy and plays a critical role in helping individuals and companies make and manage their money.
The financial services sector provides a variety of services that include investment advice, credit cards, and mortgage loans, among others. It also includes a range of companies that deal in insurance, securities, and mutual funds.
Banking and insurance are the most common types of financial services, but there are also many other sectors that provide these services. For example, an asset management company might handle pensions or hedge funds. In addition, many companies are now conglomerates that offer a wide range of products.
Banks – A large bank might provide checking accounts, savings accounts, and credit cards to its customers, as well as lending services for small businesses. It can also help with cash management, payroll and tax preparation.
Brokers – Brokers sell investments on behalf of their clients, as well as financial consulting. They can buy and sell stocks, bonds, and other securities.
Securities research – A brokerage firm’s securities department is responsible for researching the stock market and making recommendations to its clients. It can also assist traders and investors with specific issues, such as mergers and acquisitions or public offerings of stocks, called IPOs.
Private banks – Banks that provide banking services to high-net-worth individuals. These institutions can require a minimum net worth to qualify for their services, as well as a specific list of assets that can be covered by the bank’s policies.
Family office – An investment and wealth management firm that focuses on the needs of families or small groups of wealthy individuals. Its financial plans are often tailored to the client’s lifestyle.
Advisory services – This sector consists of firms that service the needs of their clients by employing financial advisers who are experts in the field. These professionals may be able to recommend investments and strategies that suit a client’s goals and risk tolerance.
Personal lines of insurance – This is an area that is dominated by agents and brokers, but it does contain underwriting and reinsurers, too. This type of coverage is used mainly by individual consumers.
Reinsurance – This is another type of insurance, but it is sold to insurers themselves to protect against catastrophic losses. It is an alternative to traditional insurance, and can be purchased by corporations as well.
Investment banks – A type of financial firm that provides investment and consulting services to its clients. These firms can be found in many countries around the world and serve a variety of industries, including government agencies.
Financial services is a lifecycle-based industry, so the most effective way to serve customers is to understand what products and services they need at each phase of their lives. Using data about their customer’s engagement with other products, spending patterns and other indicators, a bank can anticipate when an important life event will occur and prepare the right product or service to meet that need.