A Beginner's Guide to the Financial Services Industry

Types of Businesses and Careers in the Financial Services Industry

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The financial services industry plays a vital intermediary role in the world economy as it moves money from entities with excess funds to those with a need for funds. It includes firms that are engaged in activities such as investing, lending, insurance, securities trading, and securities issuance. Its clients are individuals, businesses, nonprofit organizations, and agencies of government.

The industry as a whole encompasses and integrates numerous components and services in interlocking and codependent parts. Bank deposits provide the capital for bank loans. The sale of stocks and bonds to investors supports the operations of businesses and governments who issue those stocks and bonds. Insurance contracts help to pool and manage risks.

Types of Businesses in the Industry 

It is not an exhaustive list of businesses or services that contribute to the industry by any means, but the financial services industry usually encompasses companies in one or more of the following lines of business:

  • Banking
  • Insurance
  • Securities brokerage or financial advisory services
  • Investment banking
  • Securities trading
  • Investment management or money management
  • Securities analysis
  • Financial planning
  • Wall Street

A broader definition of financial services can include employers and career paths in regulatory agencies and securities exchanges, public accounting firms, financial information services, and financial consulting. 

Defining and Learning More About Financial Services Industries 

The North American Industry Classification System or NAICS has replaced the old U.S. Standard Industrial Classification system, also known as the SIC, as the final word in defining industries. NAICS provides in-depth detail on the various financial services in the industry under Code 52. You can also find finely-grained definitions of each sector within the industry at this source. 

Careers in Financial Management

There is a potential source of confusion regarding careers in finance. When people discuss finance or financial careers, they might be referring to the financial services industry, or they might be referring to the finance function that is common to all business enterprises in every industry. The finance function in itself can be one of many possible career paths within the financial services industry.

The finance function and financial management encompass a variety of job categories. A common misconception is to equate these fields with accounting, but, in fact, degrees and professional certifications in accounting are not necessary for most jobs in financial management.

Careers in financial management fall into these 3 broad categories for the most part: corporate controllerinternal audit, and corporate treasury. Also, see our discussion of careers in accounting and auditing and our explanation of what a financial analyst does. These are, of course, components of the financial services industry but they stand apart in some unique respects, particularly in the areas of education and certification and actual job duties.