What are the types of financial services?

What Are Financial Services?

Financial services can be defined as the products and services offered by broad range of businesses that manage money, including credit unions, banks, credit card companies, insurance companies, accountancy companies, consumer-finance companies, stock brokerages, investment funds, individual managers and some government-sponsored enterprises.

These institutions facilitates transactions of goods and services in the economy, allocates funds to finance productive investments and reduces risk by investing funds to well monitored investments.

Top 7 Types of Financial Services

Here are the main types of financial services for you to consider:

Banking

It includes of handling deposits into individual bank accounts, which they in turn then lend or invest with the goal of making a profit on the difference between what they pay depositors and the amount they receive from borrowers. They administer transfer of funds from payers to recipients and facilitate transactions and settlement of accounts through credit and debit cards, bank drafts such as checks, and electronic funds transfer. Facilitate trade of securities, foreign exchange, and derivatives. They also offer advice or invest funds on behalf of clients, who pay for their expertise.

Insurance

Financial services that help individuals transfer risk of loss are known as insurance companies, By paying into monthly or annually premiums which acts as a safety net and covers costs of some large expenditures which are often unforeseen.

Advisory

From due diligence, valuations and litigation support to restructuring underperforming businesses, are some of the skills and expertise a financial advisory firm offer to people guide them in the right direction when making financial decisions.

Wealth Management

It’s an investment advisory services which includes financial planning, portfolio management and a number of aggregated financial services offered by a complex mix of investment banks, asset managers, custodial banks, retail banks and financial planners

Mutual Funds

It’s a type of financial services wherein money from various investors is pooled together and invested in a portfolio of instruments. Mutual funds are an excellent means of investment for people who do not have the time or the expertise to study the markets in depth before making investment decisions. The funds are generally managed by well-qualified fund managers, and it is always prudent to check the fund manager’s background before investing in a fund.

Brokerage firms

They are financial institutions that help you buy and sell securities. They act as the middle man between the buyer and the seller. Depending on the brokerage firm type you choose, you can either make your buys and sales via telephone, internet, or smart phone. Brokerage firms generally charge per buy or sell order. These firms can provide customers with financial planning services as well as consulting services.

Mortgage Companies

It is a financial institution that originates and funds loans in their own name. While most mortgage companies serve the individual consumer market, some specialize in lending options for commercial real estate only.

Final Words on Types of Financial Services

The term “financial services” comprises of wide variety of specialized offerings. The institutions providing financial services must have a good image and the confidence of its clients. Quality and Innovativeness of services are the focal points for building credibility and, gaining the trust of the clients.