Financial services are critical to the functioning of an economy. They enable companies to raise funds and invest in other products. These services also help consumers and producers in securing products and minimizing risks.
There are a number of financial services sectors, including insurance, structured finance, consumer finance, real estate, and banking. Many of the industries are regulated by governments. The rules for these industries vary from country to country. However, they are designed to ensure that the people who use them are not hurt and that the rules are followed.
Insurance companies protect you from natural calamities, business conditions, and accidents. Life, health, and property insurance are the main types. Most consumers understand the basics of insurance.
Financial institutions make loans and credit cards. Commercial banks underwrite debt for the private sector and advise companies on mergers and takeovers.
Investment firms provide advice on investing and managing assets. These firms include brokerage firms, investment advisers, and securities research firms.
Financial market utilities such as stock exchanges, clearing houses, and derivatives are important parts of the infrastructure of the financial services industry. Stockbrokers aim to buy at a low price and sell at a higher one.
Investment management firms oversee the assets of their clients and monitor them to meet their investment goals. These firms often rely on computer-generated models.
Brokers buy and sell securities for their clients. Some firms may even be in charge of providing financial consulting.
Securities research firms maintain a public stance on specific industries. Governments regulate the financial services industry.