Financial services are the activities involved in storing, managing, and lending money and providing credit. This sector of the economy is a crucial component of the overall economic health of a nation and its citizens. It enables businesses of all sizes to grow, and it provides individuals with more spending power. A weak financial sector typically indicates a slowing economy, which negatively impacts everyone.
Financial services providers, such as banks and insurance companies, help channel cash from savers to borrowers, redistribute risk, and add value for investors by aggregating assets and monitoring investments. They also offer protection against risk of loss or damage, such as through mortgages and car insurance policies.
In the consumer market, financial services provide individuals with loans and credit cards, as well as investment opportunities through mutual funds and stock markets. They also provide debt resolution for people with outstanding bills, such as a debt management company that negotiates a lower payment with creditors to help alleviate debt woes without damaging a person’s credit score.
To ensure the integrity of the industry, financial services are heavily regulated to safeguard consumers and promote transparency. Regulatory bodies, such as the Financial Industry Regulatory Authority (FINRA), govern different sectors of the financial services industry, while independent agencies are designated to oversee and uphold the standards set by these regulators. In addition, employees in this field are required to obtain professional liability coverage and keep up-to-date on industry regulations that affect their specific role.