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Financial services encompass a variety of businesses that deal with money management. These include many different kinds of organizations such as banks, investment companies, credit card companies, insurance companies and even government programs. Financial services can also refer to the services and products that money management organizations offer to the public.
Banks are one kind of financial services organizations. Banks generally function by providing a sheltered and secure place for people to store their money. Usually, banks will invest their clients' stored money for the bank's gain, while paying a small amount of interest to those who keep their money in savings or checking accounts.
Banks often provide a variety of financial services, including the issuance of loans, mortgages, checks, and credit cards. Some banks are known as private banks and offer services only to those who have a high net worth. Generally, private banks will offer a broader range of services to their clients than other banks.
Investment services, another type of financial service, generally deals with helping individuals and other entities invest their money in stocks, shares or funds. These services usually offer financial products for investors to buy, such as mutual funds. Usually, money invested with an investment service is managed by the service for the gain of the individual investor or a group of investors. Additionally, they may render professional advice to investors in exchange for payment.
Insurance brokers or agents are companies or individuals that are hired to find appropriate insurance plans for their clients. Insurance providers offer plans which are designed to defer liability for the risk of loss from one entity to another in exchange for a predetermined amount. This makes the second entity, typically an insurance provider, liable for any losses accrued by the first entity, typically an individual or company. Thus, a person will pay a health insurance provider, for example, a recurring fee so that the provider will be responsible for the payment of medical bills should that person fall sick or injured.
Credit card companies are financial services companies which provide lines of credit to consumers in exchange for interest paid on the money consumers borrow when they charge a purchase to the card. The card company pays for the purchase, but it does so by essentially issuing a high-interest loan to the purchaser.
Other kinds of financial services include expert advisory services, where a financial expert will offer financial advice to clients, private equity funds, venture capital investors or angel investors.