Many people associate Financial services with Wall Street and the stock market, but there is a lot more to the industry than trading stocks and bonds. The finance sector includes credit unions and banks, brokerage firms, consumer-finance companies, insurance companies, accountancy companies and investment funds. It also covers companies that provide debt-resolution services, credit card networks and international payment systems.
The financial sector is crucial to a country’s economy, and the health of that economy reflects directly on consumers. When the financial sector is strong, it usually means that the nation is growing and that individuals have more money to spend on goods and services. However, a weak financial sector can bring about a recession and even depression, as seen in the Great Recession of 2008.
Those who are seeking employment in the finance industry may find that it is easier to find work than in other sectors. The financial services industry tends to promote from within based on merit, so those with the right skill set can quickly move up in their career. Additionally, the industry is constantly changing and evolving to keep up with new trends and technologies.
To stay competitive, financial services companies must understand their clients. For example, they must know when customers are likely to make important life decisions like getting married or buying a home, and then be ready to offer them products and services that are relevant to that moment. Additionally, financial services companies must be able to anticipate the needs of their clients by analyzing data such as their engagement with other products and their spending habits.
These companies typically offer intermediation services, which means they help channel cash from savers to borrowers and redistribute risk. For instance, banks allow depositors to share the risk of lending by putting their money into loans and then pooling it with other loan holders so that they are not crippled if a few borrowers default on their payments. Insurance companies do the same by offering policies to cover various risks.
The Financial sector also includes companies that provide payment services, such as debit and credit cards, to retailers. These companies usually charge a percentage of each transaction as their fee. Finally, there are also debt resolution services that negotiate with creditors on behalf of borrowers to help them pay less than they owe. For example, Rocket Money helps struggling borrowers resolve their debt for a fraction of what they owe. These services can be extremely beneficial for consumers that are struggling to keep up with their debt. However, it is vital to weigh these options carefully and choose the best one for your personal situation. If you are unsure of which service is right for you, consider working with a professional financial adviser that can guide you through the process and help you achieve your goals.