The financial services sector is a key driver of the economy. It provides financial services to people and corporations. This segment of the economy is made up of a variety of financial firms including banks, investment houses, lenders, finance companies, real estate brokers, and insurance companies. The financial services industry, leads the world in terms of earnings and equity market capitalization. Large conglomerates dominate this sector, but it also includes a diverse range of smaller companies.According to the International Monetary Fund (IMF), financial services are the processes by which consumers or businesses acquire financial goods. For example, a payment system provider offers a financial service when it accepts and transfers funds between payers and recipients. This includes accounts settled through credit and debit cards, checks, and electronic funds transfers.Companies in the financial services industry manage money. For instance, a financial advisor manages assets and offers advice on behalf of a client. The advisor does not directly provide investments or any other product, rather, they facilitate the movement of funds between savers and the issuers of securities and other instruments. This service is a temporary task rather than a tangible asset. A mortgage loan may seem like a service, but it's actually a product that lasts beyond the initial provision. Stocks, bonds, loans, commodity assets, real estate, and insurance policies are examples of financial goods.The financial services sector provides the free-flow of capital and liquidity in the marketplace. When the sector is strong, the economy grows, and companies in this industry are better able to manage risk.The banking industry is the foundation of the financial services group. It is most concerned with direct saving and lending, while the financial services sector incorporates investments, insurance, the redistribution of risk, and other financial activities. Banking services are provided by large commercial banks, community banks, credit unions, and other entities.Banks earn revenue primarily on the difference in the interest rates charged for credit accounts and the rates paid to depositors. Financial services like these primarily earn revenue through fees, commissions, and other methods like the spread on interest rates between loans and deposits.A person can individually access financial markets like stocks and bonds through investment services. Brokers—either human or self-directed online services—facilitate the buying and selling of securities, taking a commission for their efforts. Financial advisors may charge an annual fee based on assets under management (AUM) and direct several trades in the pursuit of constructing and managing a well-diversified portfolio. Robo-advisors are the latest incarnation of financial advice and portfolio management, with fully-automated algorithmic portfolio allocations and trade executions.Hedge funds, mutual funds, and investment partnerships invest money in the financial markets and collect management fees in the process. These organizations require custody services for trading and servicing their portfolios, as well as legal, compliance, and marketing advice. There are also software vendors that cater to the investment fund community by developing software applications for portfolio management, client reporting, and other back-office services.Private equity funds, venture capital providers, and angel investors supply investment capital to companies in exchange for ownership stakes or profit participation. Venture capital was especially important to technology firms in the 1990s. Much of what goes on behind the scenes in the making of big deals is attributed to this group.Insurance is another important subsector of the financial services industry. Insurance services are available for protection against death or injury (e.g. life insurance, disability income insurance, health insurance), against property loss or damage (e.g. homeowners insurance, car insurance), or against liability or lawsuit.Wealth management advisory provides solutions to a wide array of clients ranging from affluent to high-net-worth and ultra-high-net-worth individuals and families. It is a discipline which incorporates structuring and planning wealth to assist in growing, preserving and protecting wealth, whilst passing it onto the family in a tax-efficient manner and in accordance with their wishes. Wealth management brings together tax planning, wealth protection, estate planning, succession planning and family governance.Private wealth management is delivered to high-net-worth investors. Generally, this includes advice on the use of various estate planning vehicles, business-succession or stock-option planning, and the occasional use of hedging derivatives for large blocks of stock.Economics is a social science concerned with the production, distribution, and consumption of goods and services. It studies how individuals, businesses, governments, and nations make choices about how to allocate resources. Economics focuses on the actions of human beings, based on assumptions that humans act with rational behavior, seeking the most optimal level of benefit or utility. The building blocks of economics are the studies of factors of production like capital, land, labor and trade. Since there are many possible applications of human labor and many different ways to acquire resources, it is the task of economics to determine which methods yield the best results.Economics can generally be broken down into macroeconomics, which concentrates on the behavior of the economy as a whole, and microeconomics, which focuses on individual people and businesses. Economics is the study of how people allocate scarce resources for production, distribution, and consumption, both individually and collectively. Two major types of economics are microeconomics, which focuses on the behavior of individual consumers and producers, and macroeconomics, which examine overall economies on a regional, national, or international scale. Economics is especially concerned with efficiency in production and exchange and uses models and assumptions to understand how to create incentives and policies that will maximize efficiency. Economists formulate and publish numerous economic indicators, such as gross domestic product (GDP) and the Consumer Price Index (CPI). Capitalism, socialism, and communism are some key types of economic systems.Sources- Various, Britannica, Wikipedia..
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