While many people think of banks, mortgage lenders and brokers when they hear the term financial services, this industry is much larger than just these three sectors. It also includes credit unions, insurance companies, investment firms and a range of other professional organizations that offer products and services to help individuals, businesses, large corporations, and government entities manage money. The financial services industry also encompasses an array of ancillary services such as debt resolution, global payment networks and credit card services.
The financial services industry is important because it provides a way for consumers to save and invest their money. These investments can help them grow their wealth, purchase larger homes, cars, and other assets that increase the quality of their lives. The industry also allows for loans to be made that can help families and businesses meet their goals, such as paying for college, buying a car, or starting a business.
Without the proper financial infrastructure in place, countries can find it difficult to develop and maintain an economy. This is why governments oversee the provision of many financial services, through licensing, regulation and supervision that vary by country. If a financial system starts to fail, capital may dry up and unemployment rises, which can lead to a recession. This is why many governments have laws and regulations to protect consumers, and some even have dedicated regulatory agencies to oversee certain parts of the financial services industry.
There are a wide variety of jobs available within the financial services industry, and it is up to the individual worker to decide which area best suits their skills and interests. However, some of the most popular positions in this sector are those that involve managing and growing assets for clients. This can include jobs like hedge fund managers, equity research analysts, and wealth management consultants.
Other common jobs in the finance sector are those that involve providing advice and intermediation. These can include jobs such as investment advisory services, tax consulting, and retirement planning. Intermediation is the process of transferring cash from savers to borrowers and redistributing risk. For example, banks take on the risk that borrowers will not repay their loans by pooling deposits from many savers and lending them to multiple borrowers. This way, the bank is not crippled if a few of their borrowers default on payments. Insurance companies provide a similar service by combining cash from many policy holders to cover the cost of a few losses.
Those who work in the financial services industry need to have a wide range of hard and soft skills. Strong math and data analysis are essential, as is the ability to communicate effectively with others. Because most roles in this sector require a lot of interaction with customers, good customer service is also important. Some of the best ways to break into the financial services industry are through internships or entry-level jobs that allow for on-the-job training. It is also helpful to have connections in the field who can vouch for your character and capabilities.