The financial services industry plays a vital role in the economy. It helps people secure loans for homes and cars, save for retirement or education, and protects their health and property with insurance. It also helps companies expand and grow, providing jobs to millions of people. However, the industry is not without its challenges. People with a career in financial services often work extremely long hours, and many find themselves stressed out. In addition, some financial services workers have trouble finding a good work/life balance. The pros of working in financial services include a high salary, excellent benefits, and the opportunity to relocate easily.
The industry comprises a wide range of organizations that provide both goods and services. Some of these are depository institutions, including banks and building societies; credit unions and credit cooperatives; credit-card issuers and payment processing companies; securities brokers and dealers; mortgage banks and companies; financial intermediation firms; and asset management companies. The sector also includes nonbanks such as investment agencies and stock market brokerage firms.
Financial services providers channel cash from savers to borrowers and redistribute risk. For example, a bank accepts deposits from savers and lends the funds to borrowers. This enables the bank to make a profit by charging interest on deposits and paying it to its loan-holders. In addition, by pooling the risk of several borrowers, insurance companies can offer coverage at lower costs than they would for a single person.
Some of these entities offer a service called debt resolution, which helps people with outstanding bills and credit issues. A third-party company can negotiate with creditors to allow a borrower to pay less than what is owed, which may help to restore their credit and keep them from defaulting on their loan or credit cards.
Another type of financial services provider is an asset management firm, which invests in assets for a fee. These firms are usually for-profit, and their investors are generally wealthy individuals and corporations. These investors pay the firm to manage their assets and provide them with advice. In addition to managing assets, these firms can raise funds by issuing shares or bonds and sell them to the public.
Other financial services firms are involved in credit-rating agencies, which assign ratings to borrowers and lenders and help them make decisions. They also provide research and information on market trends. Some of these firms are for-profit, while others are nonprofits that serve a social purpose.
Many of these companies are regulated, which requires extensive paperwork and supervision. Some of the regulations are designed to protect consumers from unfair practices and to foster trust between providers and customers. Others are intended to ensure that the financial system is stable and well-functioning, which are important goals for a modern society. In addition, some of the regulations are intended to encourage innovation and entrepreneurship in the industry.