The term “Financial services” can seem all-encompassing—after all, the industry encompasses anything that has to do with money. It encompasses banking, investing, insurance and more. It can even include community-based nonprofits that provide counseling services or money management advice. But while it’s true that financial services encompasses everything that touches money, it’s also important to understand that there are distinct categories of jobs within the sector.
In particular, it’s critical to separate financial services from financial goods. A financial service is a temporary task that helps you achieve your goals, like an investment or mortgage loan. A financial good, on the other hand, lasts beyond that initial provision and is something you own. This could be a stock or bond, an insurance policy, or real estate.
Before the 1970s, each sector of financial services stuck to its specialty. Banks offered checking and savings accounts, credit unions provided personal loans, and mortgage companies offered home loans. But as consumer demands changed, it became necessary for some sectors to offer more than one product and companies began merging to become financial conglomerates.
These days, it is common for banks to offer investment products, credit and insurance alongside their standard deposit and borrowing offerings. But while these mergers can open up new opportunities for consumers, they can also create confusion and redundancy. In addition, they often lead to a situation in which companies have the same name and look similar but offer different services—think AIG, an insurance company, and AXA, an investment firm.