The financial services industry can seem incredibly complex. It’s easy to think of banks, brokers and mortgage lenders as separate entities, but the reality is that these institutions are all part of one massive industry. This sector includes everything from credit unions and small businesses to Wall Street and large corporations. It also encompasses the booming stock market, which is a barometer of economic health; if there is hectic activity in the capital markets, it indicates that companies are able to acquire funds and boost production, and thus reap more profits at the end of the day.
Financial services are not only essential to the economy, but they’re also a vital way for people to save for major purchases and for businesses to grow. The industry provides free flow of money in the marketplace and liquidity, which allows the economy to expand and helps companies be better able to manage risk.
The first financial service is insurance, which is a form of saving for the future. It’s also a way to minimize risk, as insurance covers the cost of unforeseen events. The second financial service is investment services, which include brokers, traders and advisors. These individuals help people invest their money in stocks, bonds, mutual funds and real estate, among other things. They can also provide advice on personal finances and retirement planning. Other financial services include asset management, which manages pensions and insurance assets, as well as debt resolution and global payment providers like Visa and Mastercard.