Basically, financial services are the activities and products that enable individuals to acquire consumer goods, save money and earn investment profits. Some examples of financial products include checking accounts, credit cards, loans and insurance. They are also used to transfer funds electronically.
In the past, many people had to handle financial services themselves, but with the advent of technology, consumers have been given a variety of ways to engage in financial transactions.
A good example is the stock market. Brokers and investors try to find stocks that will sell for a high price. They might even buy commodities or lease high-value assets.
A similar but lesser known example is the derivative market. These derivative products provide higher yields. Some examples of this are structured finance which develops complicated products for high net worth institutions.
One of the most important sub-sectors of the financial services industry is insurance. Insurance is not just a safety net, but a way to generate savings. It can protect against property damage, death or injury.
There are many different types of insurance. A broker will shop around for insurance policies, whereas an agent represents an insurer.
Another type of financial service is the mortgage. Banks and other lending institutions offer a range of mortgages to both consumers and businesses. In addition, a number of community-based nonprofits offer advice on managing money.
These institutions can also provide insurance to companies. These services might not be as exciting as a new car or a new house, but they can provide a valuable safety net.