The financial services industry includes all companies and individuals who help people with their money. It encompasses a broad range of businesses, from insurance to banking to investing. The industry is vital to New York City and to the world, and jobs in it can be very rewarding.
The industry typically thrives when interest rates increase moderately rather than rapidly, and when there is a good balance between enough regulation to keep consumers’ money and their rights safe, and not so much that it stifles innovation by making it too expensive for firms to offer new products. It also performs well when there is a strong global economy, and when consumer confidence and spending power are high.
A financial services company can be any kind of business, but some common types include:
Banks – Accept deposits from individuals and businesses and offer checking and savings accounts, and lending funds to those who need them. Banks also provide investment banking, which assists private and public companies with mergers and acquisitions, underwriting debt and equity, and asset management. They may also provide payment services, including credit card machine networks and international wire transfers, as well as financial leasing.
Insurance – Assist individuals and companies with financial risk management by providing life, health, property, and liability insurance. This industry also includes reinsurers, which sell insurance to insurers themselves to help them cover catastrophic losses. Insurance agents and brokers represent different insurance carriers and shop around for the best policies for their clients.
Brokerage – Buy and sell securities for their clients, usually with the assistance of an analyst who researches specific companies and industries. It can also include prime brokerage, which provides a more specialized type of service to high-net-worth individuals and institutions.
Private banking – Provides banking services to high-net worth individuals and families, typically with an exclusive type of product and service that is not available at other banks. It can also include wealth management, which helps individuals manage their assets.
Financial market utilities – Facilitate stock, derivative, and commodity exchanges and systems like real-time gross settlement systems and interbank networks. They can also include clearing houses, which settle trades between two parties that are not yet final.
If a country’s financial services industry breaks down, it can pull the entire economy down. This is why it’s so important for governments to maintain a stable regulatory framework and support the industry whenever they can. The financial sector is a huge driver of economic growth and prosperity, and it can help make the world a better place. This is why it’s so critical that we continue to build a robust, innovative, and diverse industry with opportunities for everyone to succeed. And it starts with young people: the future of our financial services sector depends on them. The more they understand about how to manage their money, the better off our society will be. The right education can prepare them for this exciting and rewarding career.