In terms of a broader context, financial services are those that are provided by the finance industry. These services are provided by a variety of companies, from credit unions to banks and insurance companies. Here are some of the different types of financial services. In addition to the above mentioned, there are also investment advisors, discount brokerages, and insurance companies. The services they provide are a very important part of a person’s financial life, and it is imperative to know about the type of service they offer.
Investment banks
There are two types of investment banks: buy-side and sell-side. Buy-side investment banks specialize in the financial products and services needed by institutions to make investment decisions. The sell-side focuses on market-making and trading, while buy-side investment banks work to provide financial advice to private equity firms, unit trusts, and life insurance companies. The buy-side covers other types of transactions, including mergers and acquisitions, credit and equity issuance, and restructuring.
Discount brokerages
In the financial services industry, discount brokerages are companies that offer trading services to investors. They are generally cheaper than full-service brokers and offer lower brokerage charges. Although discount brokers do not offer investment advice, they do offer a number of useful services, including apps that track the status of portfolio holdings. The main disadvantage of discount brokerages is that they do not provide investment advice or recommendations. Rather, they provide an avenue for traders, but do not provide wealth management advice.
Insurance companies
Insurance is an important subsector of the financial services industry. They provide protection against injury, death, and property loss. Insurance policies also cover liabilities and lawsuits. There are several types of insurance companies, including direct insurers and insurance intermediaries. Agents represent insurance carriers while brokers represent the insured. A broker shops for insurance policies on behalf of the insured, while an underwriter assesses the risk involved in insuring clients. Underwriters also advise investment banks about the risks associated with lending to certain clients. Reinsurers sell insurance to insurers, protecting them from catastrophic losses.
Investment advisors
The RIA industry is growing at an accelerated pace, with US banks and wealth management firms focusing on building their wealth management businesses to expand client relationships and generate fee-based revenue. These banks and financial services companies are exploring M&A to advance their wealth management ambitions, particularly within the fast-growing segment of registered investment advisory firms (RIAs). Large RIAs are rapidly approaching institutional scale, with 15 of the top retail-oriented RIAs exceeding $20 billion in client assets by 2020, compared to eight of the largest retail-oriented RIAs of 2016. The average size of the top ten grew by 2.4 times in the last four years.
Payments systems
Payments systems are the technical infrastructure that enables commercial and financial transactions to take place seamlessly and efficiently. These systems connect a country’s financial activity to the global economy, and are maintained by the country’s central bank and government regulators. National payment systems are a collection of institutions and technology-driven processes that facilitate commercial transfers between buyers and sellers. These systems are based on a country’s banking and financial history, as well as its communication and technology platforms.