Financial Services

Financial services is a broad term that encompasses such financial instruments as checking and savings accounts, retirement accounts, mortgages, credit cards, mutual funds, financial management, safe deposit services, and various types of consumer loans. This site is a source for information for all types of financial services and offers information on wealth management, investment banking, asset management and business banking services to clients.

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Financial Services - Info
The term financial services refers to the business of providing services related to various financial needs, including checking and savings accounts, retirement accounts, mortgages, credit cards, alternative investments such as mutual funds and other securities, financial management, safe deposit services, and various types of consumer loans both secured and unsecured. Sometimes financial services can also refer to the distribution of retirement accounts, trust funds, and inheritance funds. Financial services can cover such a wide variety of things that it can be broken down into subcategories that would take up a long list.

Several different types of institutions provide the financial services including banks, credit unions, mortgage companies, finance companies, savings and loans, and building and loans, although the latter is not as popular as they were many years ago. The biggest majority of banking is conducted at banks, savings and loans, and credit unions. Mortgage companies and finance companies are different in that they do not offer full financial services, but instead, are specialized non-banking services. The same holds true for credit card companies who are called in the financial world “non-bank banks” meaning that they do not offer the services a full service bank does but still fall under the jurisdiction of the Banking Commission.

Sometimes insurance companies provide financial services such as mortgages and retirement savings plans. These types of services are becoming more common as everyone tries to enter the financial market in order to get a cut of the monetary gain it offers. On the other end of the scope, banks are attempting to enter the insurance market, so everyone is looking to get a piece of the pie. With insurance companies entering into banking and banks entering into the insurance industry, the financial services market is definitely becoming quite diversified to say the least. It can be difficult sometimes to figure out where to go when you are looking for certain types of financial services. What you need to do initially is figure out what your financial needs are, both short term and long term. What your financial services needs are can all depend on if you are single, have a family, are close to retirement, etc.

Full Service Banks
Up until the past twenty years or so banks always offered a variety of financial services, while savings and loans and credit unions limited their offerings to savings accounts and mortgages. In fact, many people avoided the commercial banks for those services because the credit unions and savings and loans were in a position to offer better rates than their commercial competitors were.

When the financial markets talk about full-service financial providers, it means that the financial institution has an entire line of financial services that include all or most of the following:

Checking accountsSavings accountsAlternative banking (Stocks, bonds, mutual funds, securities)Financial managementFinancial advisorsCredit cardsMortgagesConsumer loansSafety deposit boxesFinancial management of special accounts such as retirement, trusts, and inheritance

Until the late 1980s and 1990s, savings and loans and credit unions provided savings accounts of various types and mortgages but not much else. Regulations under the Federal Savings and Loan Corporation (FSLIC) and the National Credit Union Association (NCUA) prevented them from offering the same services as a commercial bank initially, but as needs changed, so did regulations. Although they still do not operate under the Federal Deposit Insurance Corporation (FDIC), they are insured under their separate charters and provide the same services as commercial banks, with one exception: loans usually have a lower interest rate and savings accounts usually pay a higher interest rate. That doesn’t mean, of course, that is always the case because there may be special provisions that commercial banks have that allows them to charge a lower interest rate for certain customers, or perhaps a special consumer lending program. This is always worth looking into, even if that takes a little time and some careful research. Especially for young families who are considering buying their first homes or any people on a budget who are considering major purchases.

Mortgage Brokers and Mortgage Servicing Companies
Of all the financial service providers, these companies probably have the most minimal involvement in the financial market. They are different in that a mortgage broker processes mortgage applications and then places them with a mortgage servicing company whose job it is to handle all of the mortgage-related financial needs of the homeowner such as paying the taxes and insurance on the property out of the mortgage payments as well as processing the payments.

A mortgage servicing company may also offer homeowner loans or refinancing options to its own customers at a rate that is below industry average, contingent upon the individual homeowner or lender regulations. Although banks, credit unions, and savings and loans are also legally permitted to make mortgage loans, the majority of people utilize the services of a mortgage company for any number of reasons. The most common one probably lies in the fact that many home buyers, especially first time home buyers, do not have the cash outlay to afford both a down payment and closing costs, so they tend to lean toward government guaranteed loans (FHA, VA, Sallie Mae, Ginnie Mac and others). In most cases, commercial lenders are not interested in financing government-backed mortgages, so it leaves the buyers with having to seek the services of a mortgage servicing company.

Another reason homebuyers may choose a mortgage servicing company is that they are working closely with a realtor who has good relations with that lender, thus increasing their chances of mortgage approval. Another reason may be applicants under the first time buyers’ program since more funds seem to be available with mortgage servicing companies than banks. Mortgage servicing companies are focused on just that: mortgage services, and will often take that extra step in finding financial services solutions for those who might not be having any lucks going through regular banking institutions.

Loan and Finance Companies
The financial services that are offered by loan and finance companies are limited to loans and for the most part, loans to risky borrowers at an interest rate that is frequently substantially higher than the rate charged by banks or credit unions. Usually these lenders cater to those whose credit is less than perfect, even poor, so they have to make up for the risk factors by charging a higher interest rate. In this way, they hope to recap the majority of the principal on the loan before it goes into default. Of course, the bad part of the line of thinking is that the higher rate of interest may be a financial strain on the borrower, but he doesn’t question it because he needs the funds. His hope is that his finances will change to allow him to repay the loan easier, but that doesn’t always happen.

Although loan and finances companies make more unsecured loans than banks, those that are secured face a more stringent policy on late payments than do those at banks. Their policies on foreclosure and repossession tend to be stricter, and they tend to take collection action quicker than banks and credit unions. It’s difficult to determine the reasons for that unless it is the difference In the type of loan officers they hire or perhaps the fact that within a finance company there is not usually a difference person who approves a loan than the one who collects on it, and as such, the loan officer/collector wants to protect his investment in the loan in case it is his approval. After all, no one wants to admit they made a mistake in approving even one loan. Though it happens all of the time, finance companies will often take every precaution to make sure that the loans they provide will be paid back in full, and in a timely manner. Though these types of financial services can be costly, they do provide a service in that they can often help people get started building credit, or can help people rebuild their credit.

Insurance Companies Offering Financial Services
With so much profit to be made in the financial services industry, it’s little wonder that insurance companies are joining the bandwagon. No longer does your insurance company only service your insurance needs, but it is now possible that the same company that insures you may also finance your house or your car. Many of the larger companies like Nationwide and Prudential now have divisions that service both mortgage and auto loan needs. Over the past several decades, the practice has become more common as consumers demand one-stop-shopping, a place where they can handle all of their financial services in one stop. Of course, that still hasn’t shown its face yet because insurance companies haven’t begun offering checking and savings accounts or personal loans.

In addition to mortgage servicing, many insurance companies have also entered into the retirement planning business, allowing customers an opportunity to open an annuity account for retirement. Certainly, it takes away from the bank’s business, but no more so than banks selling insurance takes about from the profits of insurance agents. Some insurance companies even offer financial planning so that a customer can plan during his working years for the day he retires and has less income on which to live. With the economy in a yo-yo state, and insurance being a luxury for people when times are hard, it’s little wonder the insurance industry felt the need to branch out into the financial market.

Though not completely a financial service, insurance companies have always offered policies that had a growth value to them. Known as whole life policies, you pay more for the policy earning dividends, and thus providing a financial benefit in the form of a loan or cash surrender value.

Alternative Banking
The term alternative banking refers to the investment banking areas of mutual funds, stocks, bonds, and securities. Some banks handle this through in-house financial advisors and others have a complete division that is designated for this purpose. Others may have an in-house brokerage division. However they choose to handle it, the facts are still plain to see: alternative or investment banking involves an exchange of non-liquid monetary units. On the other hand, some people choose not to do their investment banking with a bank, but prefer the services of a stockbroker instead. Who is more qualified? That question is difficult to answer and must be taken on an individual basis. Some banks have only financial advisors who handle the transactions, and more than likely utilize the services of a stockbroker when a customer wants to buy or sell securities that he holds in his portfolio.

Choosing the services of a stockbroker, though you will pay a commission for the transactions, will guarantee you the expertise of someone who knows the fluctuations of the market and can professionally advise you of the correct move to make. If, on the other hand, your bank employs stockbrokers who are experienced and knowledgeable in the stock market and its fluctuations, you are quite safe with the services of your bank or financial institution. This does not pertain to the foreign currency market, however; that market is totally separate from alternative banking transactions and does not require the expertise of a stockbroker. One can buy and sell in the FOREX market by taking classes that teach you the process and by following the trends before you invest any time or money.

Foreign Currency Exchange (FOREX)
Though not a part of the financial services market as we know it, this market still bears mention. The foreign exchange market, or FOREX as it is better known, involves buying foreign currency when the exchange rate is at its lowest and selling when it is at its highest, thereby earning a healthy profit on the deal. For the newbie, this is easily accomplished by following the market before you ever make the first investment and taking training to find out how the market works, how to follow the trends, how to use software and charting to assure that you receive results in real time, and basically, just concentrating on what you are doing and going with the trends.

If you don’t need a stockbroker to trade in the foreign currency exchange as stated above, how do you know what to trade and where do you do it? The foreign currency exchange in today’s market is a big venture on the Internet. You can easily learn all of the tools of the trade before you make your first purchase. With online training, presentations, and other tools, the new trader can be assured of making the right decision with his very first purchase. The site even shows the exchange rate for that day, so that there is no question about what to keep and what to sell. For the new trader, there is also a mini account requiring only $250, thus not a great loss if you fail. However, if you succeed, you’ll be on your way to higher currency trading. Unlike securities, the currency market is much more stable.

Stocks, Bonds, and Securities
Another form of investment in financial services, and probably the most well known, is stocks, bonds, and securities. Unlike foreign currency exchange, this market is quite volatile and unstable. It’s a market that can be doing great one day, and crash overnight as it has done several times during its history. Unless one can afford to lose money in the markets, this may be a market from which to stay away. Of course, there are some stocks one can always count on to earn a dividend and sell at a decent price, that being utilities such as gas, electric, and water. People always need those comedies, and no matter how bleak their financial position at any time, they cannot do without them.

Some securities have done fairly well consistently over the years, but you must follow the trends in the market to know what those are. That means listening to the reports on the news, reading the business section of the paper, and following the reports published by each stock exchange market. This is no guarantee that you won’t suffer a loss; however, you will at least be knowledgeable in the market and be able to make an informed decision concerning the choice of stocks, bonds, and securities. When it comes to the bond market, keep in mind that high-risk bonds have a higher rate of return, so you have to weigh that against the potential risks. All of it is based upon research and following the market trends before investing any money. That is the common sense method of handling any investment opportunity, and the more research you do before you take the final step, the better your chances are of suffering minimal loss in the event of a market crash.

Checking and Savings Accounts
This topic is deliberately at the end, not because it is of the least importance, but to show you the point of all of it. Many people make their living in the financial services market, and if they don’t make money, there is no money to put in a checking or savings account, so thus, their importance is diminished. Not only that, if one is not doing well financially, the minimal amounts that you can deposit in the bank means you will pay for the privilege of having a checking account at most banks, and you will be unable to maintain the minimum balance to earn interest on a savings account. On the other hand, if you follow the suggestions for investments and how to assure that you won’t take a loss in the securities markets, you will be better able to remain financially sound, and therefore have the best accounts your bank has to offer.

Another thing to remember about checking and savings accounts is that banks are always in competition with one another, so do not think because one requires a minimum balance of $1,000 for a free checking account that every one has the same policy. In fact, with all of the competition there is for the banks to gain or maintain customers, more banks are offering free checking accounts with no minimum balance requirements, and if you are a student or senior citizen (usually defined as 50 and over for this purpose), you may qualify for a special free account. It doesn’t mean your checks are free and that you won’t have to pay overdraft charges, but it means there is no account servicing fee or service charge for maintaining your account.


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