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What Is Financial Services?

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Financial services is a broad sector that impacts everyone in big and small ways. And while you probably think of bankers and hedge fund managers, financial services touch small community banks and even nonprofits, too.

This guide will help you understand what the financial services industry is (and isn’t!), the different types of financial services, and how to pursue a financial services career.

Financial Services Overview

So, what is financial services? Financial services are “everything that touches money,” says Ryan Duitch, president and CEO of Arro. While it sounds like that includes everything and everything that has to do with your finances, that’s not exactly the case.

Financial services isn’t the same as financial goods, but the two are often thought of as the same thing.

A financial good is a product, such as a mortgage or insurance policy. It’s like any other object you purchase or possess (like groceries or clothes), only it’s related to your finances. Financial services are what help you secure the product or support its purchase. So, everything that goes into securing your mortgage (like the inspection and appraisal) is a financial service.

Duitch offers this example using cryptocurrency. “Receiving a token is not a financial service. It’s a good. The crypto company that facilitates storing and owning the token is a financial service.”

Types of Financial Services

Financial services has a broad definition because the sector is, well, broad. It includes anything from banking to negotiating insurance rates to processing a credit card transaction. However, when most people think of the industry, they usually think of the following types of financial services.

Commercial Banks

While commercial banks provide financial goods, they also offer many financial services. For example, your checking account is a financial good but depositing money in the ATM is a financial service. Other financial services include issuing credit cards, electronically transferring money, and notary services.

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Investment Banks

Unlike commercial banks, investment banks focus on helping businesses raise money. The kinds of financial services investment banks provide include mergers and acquisitions, restructuring, underwriting debt and equity, and investment management

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Investment Services

Investment services differ from investment banks in that this financial service is offered to individuals. This category includes things like hedge fund management, advisory and wealth management services, and retirement planning.

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Insurance is part financial good and part financial service. As a financial good, an insurance policy protects you. If your house burns down, your insurance policy will help you rebuild and replace items. Likewise, a life insurance policy can provide financial security for your family when you die.

But the insurance industry is also a financial service. The brokers who search for and negotiate rates and the underwriters who create the policies are providing a financial service.

>>MORE: Best Paying Jobs in Finance

Real Estate

Real estate is also a financial good and financial service. The property you purchase is a good, and everything that goes into supporting that purchase (getting a mortgage, insuring the property, inspecting the home) are financial services. 

Other Kinds of Financial Services

Outside of these “traditional” categories are financial services that can’t be neatly categorized because they are small or new. Some of these include:

  • Cryptocurrency
  • Buy now, pay later
  • Angel investment networks
  • Credit card networks
  • Consumer credit counseling
  • Payment recovery

Why Financial Services Is Important

Whether we’re talking about an individual, a company, or even a country, the importance of financial services cannot be understated.

The financial services industry ensures money keeps flowing, which keeps economies functioning. For example, most people rely on a loan when they buy a car instead of paying for it outright. While a car loan allows you to spread payments out over time, it also means you have more cash on hand for necessities like car insurance or groceries as well as more cash for discretionary purchases, like clothing or vacations.

If you paid in full for the car instead of using a loan, you’d still have to pay for the necessities but there’s a chance you’d cut back on discretionary purchases because you have a lot less cash on hand. Taking the loan keeps more money in your pocket so you can spend it elsewhere. Those companies, in turn, take that money and use it to grow their business, say purchasing additional stock from a vendor who then has more cash on hand to hire more employees to make more products — and so on and so on.

This additional cash flow is what helps economies grow and flourish.

Financial Services Careers

Even if you only focus on the commonly thought of sectors, there are still nearly endless careers in financial services. Some job titles are obvious (investment banker, loan officer, real estate agent), but others may not seem as apparent.

For example, Duitch notes that PayPal is a financial service because it processes money. So, someone working in customer relations or dispute resolution for PayPal is working in financial services. Likewise, a person in marketing or business development also works in financial services.

>>More: Popular Careers in Finance

It’s also important to note that not all financial services companies are for-profit ventures. There are just as many nonprofits that are part of the industry. Many community-based nonprofits provide financial counseling services or money management advice.

All that said, if you’re considering a job in the financial services sector, you should consider what the role is and how it fits into your overall career plan.

Duitch points out that while there are thousands of job titles across the industry, “not all pave the way for you to grow in your career.” For example, if you want to become an investment banker, working as a teller at a community bank may not help you achieve your goals.

Pros of Working in Financial Services

If you’re considering a career in financial services, here are a few of the pros you can look forward to.

Part of Something Bigger

Nearly all parts of the financial services sector contribute to the overall local, national, and even global economy. No matter how small or large the company (or your role), working in this sector helps keep the economy moving and growing. “Without a strong financial services sector,” says Duitch, “the economy can only go so far.”

Great Proving Ground

“If you can hack it in financial services, you can work in a lot of places,” says Duitch. Because the industry plays a vital role in everyday life, you’ll often develop excellent interpersonal skills. From selling a product to solving complex financial issues, you’ll have an extensive set of transferable skills that will help you go anywhere you want professionally.

Cons of Working in Financial Services

Like any career, working in financial services comes with its share of cons. Here are some of the downsides to consider.


While stress is often role-dependent, it’s not uncommon for people in some financial services jobs to work 16 to 20 hours a day. Work-life balance may not be possible in these positions, and burnout is a real possibility.

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Many financial services and products are subject to regulations. While these regulations exist to protect consumers, they are often a reaction to something negative happening in the economy (think: the 2008 recession). As a result, regulations can hamper growth and innovation.

Likewise, some financial services are so cutting-edge that there are no regulations — yet! Cryptocurrency is a good example. It’s so new, governments are still trying to figure out what it is (a security? an investment?). And because of the lack of regulation, the crypto market has run into problems. 

There will likely be new regulations for the cryptocurrency sector, and ultimately that could change how crypto services are sold and marketed, changing the entire industry.

>>MORE: Is Finance a Good Career Path?

Consumer Distrust

From the largest and most common financial services (venture capital) to the smallest (community-based banks), many people distrust the industry, often with good reason. Though some businesses look out for their customers, not all do. As Duitch says, for many companies, “It’s about finding a way to make as much money as I can.”

How to Get Into Financial Services

Depending on the specific career path you want to pursue, a degree is not always necessary. While it will help you move up the career ladder, a successful career in financial services often relies more on your interpersonal skills than your education.

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That said, for many positions, you’ll need a mix of hard and soft skills to enter the field.

Math and data analysis are two of the most important hard skills you need. You don’t necessarily need to be able to perform calculus, but you do need a strong foundation in the basics. For example, you should be able to read complex financial documents, then analyze, interpret, and present that information to help others make decisions.

As for soft skills, many jobs in the financial services field involve working with others, which often requires tact and grace. Possessing strong collaboration and teamwork skills will serve you well.

One other great way to start your career in financial services is by enrolling in a free Forage banking and financial services virtual job simulation. You can experience what it’s like to work in one or all of these financial services sectors and build the skills you’ll need to land the job you want.

Which Career in Finance Is Right for Me? Quiz

Take our quiz to figure out which career in finance could be right for you based on your interests and preferences. It’s completely free – you’ll just need to sign up to get your results.

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Rachel Pelta is the Head Writer at Forage. Previously, she was a Content Specialist at FlexJobs, writing articles for job seekers and employers. Her work has been featured in Fast Company, The Ladders, MSN, and Money Talks News.

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