Financial Services Industry (Explained: All You Need To Know)

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What is the Financial Services Industry?

What’s important to know about it?

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Let me explain to you what the Financial Services Industry is all about and why it’s important!

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What Is The Financial Services Industry

The financial services industry is a broad term referring to companies providing different types of financial services to their clients, such as lending, brokerage, investing, insurance, accounting, and other related services.

In other words, the financial services industry refers to “services” being rendered by organizations, financial professionals, and firms.

For example, a bank will offer financial services to its clients by allowing them to open various types of accounts, perform transactions, move money, and so on.

An investment firm will provide financial services to its clients by analyzing the market and providing investment advice.

It’s important to nuance the financial services industry with financial products.

The financial services industry are companies that provide financial services through their professionals whereas financial products are different types of financial instruments or goods that are sold by the financial services companies.

For example, an investment broker offering advice to clients is in the financial services industry but the investment instruments the client eventually purchases are financial products. 

Keep reading as I will further break down the meaning of the financial services industry and tell you how it works.

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Why Is The Financial Services Industry Important

The financial services industry is probably one of the most important industries in any given economy.

Financial services professionals and organizations offer a variety of financial services to individuals, businesses, and governments allowing them to manage their finances and money.

The financial services industry can be broken down into subcategories, such as banking, investment banking, lending, corporate financing, real estate, insurance, personal investing, tax management, and more.

Individuals and companies need different types of financial services to manage their money, and their investments, control risk, and acquire things.

Leading companies in the financial services industry are some of the largest and most well-known companies in the world.

For example, JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo are some of the largest companies in the United States offering financial services to individuals and businesses.

In essence, companies and professionals offering financial services are those that help guide individuals and businesses in managing their money, assets, and financial products.

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What Does The Financial Services Industry Include

The financial services industry is a very large grouping of different companies and firms offering financial services to individuals and businesses.

The financial services industry includes a variety of financial organizations, such as banks, lending companies, financing companies, real estate brokers, insurance companies, accounting firms, investment firms, tax service organizations, and any other organization offering services related to the management of money and assets.

The banking industry represents the pillar of the financial services industry as many financial activities and processes are handled by banks.

Investment services are also a very important sub-category of financial services as it is composed of firms and professionals that provide guidance and advice to others in investing their money, managing risk, and achieving financial objectives.

Insurance services refer to the companies that provide advice in managing and mitigating different types of risk, such as disability, property loss, death, or other.

Accounting services relate to the industry providing advice on how to record financial transactions, document various financial activities, produce reports, comply with regulatory standards, and provide useful financial information about individuals and businesses to others.

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Financial Services Industry FAQ

What do financial services mean?

Financial services refer to different types of “services” offered within the finance industry.

You can divide financial services into different types of businesses, such as money management, insurance, banks, credit cards, accounting, consumer finance, corporate finance, stock brokerage, investing, asset management, currency exchange services, and more.

What are some examples of financial services?

Some examples of financial services include:

• Commercial banking
• Investment banking
• Foreign exchange services
• Investment services
• Insurance services
• Angel investments
• Credit card services
• Debt resolution services
• Insurance underwriting
• Reinsurance 
• Custody services
• Advisory services
• Venture capital
• Hedge fund management
• Wire transfers 
• Structured finance
• Mergers and acquisitions
• Private banking 

What are the four main types of services offered in the financial services industry?

The four main types of services offered in the financial services industry are banking services, investment services, tax and accounting services, along with insurance services.

Banks help you hold on to your money or get access to more money through loans.

Investment services help you trade financial products and achieve your financial goals.

Tax and accounting services help you document your financial transactions, report on them, and make better financial decisions.

Insurance services allow you to protect your financial assets against different types of risk.

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Takeaways 

So there you have it folks!

What does the financial services industry mean?

In a nutshell, the financial services industry refers to different types of services offered to individuals and businesses ranging from money management, investing, lending, banking, insurance, accounting, tax, and related services.

The financial services industry should be distinguished from financial products as they are not the same thing.

The financial services industry refers to organizations, firms, and professionals providing different types of services, advice, and consulting to others.

Financial products are those products and instruments that clients end up purchasing to achieve a specific end.

Now that you know what financial services are all about and how it works, good luck with your research!

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