When people think of the financial services industry, they may picture banks, insurance companies and mortgage lenders. But a healthy financial services sector includes so much more. It provides individuals with loans for homes, education and cars, helps people save for retirement or major purchases, safeguards their property from loss and accidents through insurance policies, drives economic growth by promoting investment and savings, and employs millions of hardworking, well-paying employees.
A healthy financial services sector also enables businessmen to maximize their profits by providing them with sufficient funds to expand their production. This, in turn, leads to a growth of the capital market and a boost in the economy as a whole.
Besides depository institutions (which accept deposits and offer checking and savings accounts), financial services also include securities firms that trade stocks, bonds and other securities; asset management firms that manage investment portfolios on behalf of clients; credit-card companies; and global payment systems such as wire transfer and currency exchange. In addition, the sector encompasses debt-resolution companies and financial data providers.
Lastly, the category of financial services also contains things such as private equity firms and venture capital providers that supply investment capital to promising young companies in exchange for ownership stakes or profit participation, and family offices that provide wealthy families with investment and wealth management advice. Other subsectors of the industry include reinsurance, which is insurance sold to insurers themselves to protect them against catastrophic losses; and personal lines insurance underwriters, who underwrite individual health, life and auto policies.