Types of Financial Services
The finance industry provides a variety of economic services. These businesses include credit-card companies, banks, and credit unions. Among others, financial services providers include insurance underwriting and reinsurance companies. The following is an overview of the different types of financial services available. If you haven’t heard of some of these types of businesses, be sure to read up on them to better understand their roles. Then, choose a career path that works for you.
Investment banking
The investment banking industry is divided into several sectors, each with its own type of banker. There are three main product groups: mergers and acquisitions, structured finance, and securities underwriting. Depending on the type of industry and client, investment banks may specialize in a particular area. The industry groups also focus on specific financial products, such as equity, debt, and derivatives. The industry bankers usually work with executives from companies in their particular sector.
Investment banking activities can be broadly divided into buy-side and sell-side activities. The sell-side includes activities such as trading and facilitating transactions. The middle-office functions focus on supporting revenue-generating processes, such as treasury, risk management, and accounting. Back-office positions focus on compliance, human resources, information technology, and accounting. The roles of these positions vary greatly. Most investment banks have one or more of these positions.
Investment management
The goal of investment management differs from investor to investor. For many, this means achieving financial goals. Some investors want to grow their money, while others just want to park their funds for a short period of time. Whatever the objective, effective investment management ensures a return that exceeds inflation. To achieve these goals, the investment manager evaluates income tax and other factors, including inflation. This process helps clients protect their hard-earned money.
Generally, investment managers focus on meeting investment goals for clients. The clients may be individuals, companies, endowments, and government agencies. Institutional investors may include insurance companies, pension funds, and nonprofits. Investment managers are also responsible for managing money on behalf of individuals. Some investment managers specialize in specific asset classes. Investment management may be a career choice if you’re passionate about working with money. However, investment managers also handle a wide variety of financial investments.
Insurance underwriting and reinsurance
Innovations in technology, data, and process management are redefining the way insurers underwrite and price insurance and reinsurance risks. These enablers can increase operational efficiencies and support risk selection while enabling underwriting professionals to become exponential. Underwriters can leverage AI, digital advances, and alternative data sources to develop and deploy new skills and transition to new roles. They can also leverage data to develop new products and services that address customer needs and market conditions.
Insurance underwriting is a vital part of insurance management. This process helps insurance companies identify and assess risks associated with insuring different types of risk and set premiums. Underwriting uses statistical analysis and data compiled by actuaries to determine what level of risk a policyholder is willing to accept. By evaluating risk, insurance companies can accurately estimate premiums and charges. This approach ensures that premiums are paid according to risk.