Financial services are a broad category that includes banks, brokers, mortgage lenders, investment firms, insurance companies, securities traders, financial advisors and more. They provide a wide variety of services to individuals, corporations, nonprofits and the government.
A major subsector of the financial services industry, banks provide a wide range of services from accepting deposits to lending money to customers. They earn revenue primarily through fees and commissions, as well as by the spread on interest rates between loans and deposits.
A separate and important sector within the financial services industry, insurance companies offer a variety of services, including life, health and auto policies. They also offer insurance brokerage services, where they act as a liaison between the buyer and seller of an insurance product.
The third major sector of the financial services industry, brokerage companies provide a wide range of services to clients, including selling securities, mutual funds, bonds, derivatives and other investment products. They also offer a range of consulting services, including financial planning and risk management.
The last major sector of the financial services industry, asset management involves managing pensions, investment assets and more. It’s also an area where hedge funds, mutual funds and other types of investments are handled.
Financial services are regulated by independent agencies to uphold transparency and ensure fair treatment for their clients. This helps to protect the public’s interests and increase their confidence in the industry.