The finance industry – still bringing in the money
Since the global economy crashed in 2008, you would think that it has not been a happy time for the financial industry. Indeed, things have been difficult but this has not stopped the industry from getting large amounts of money from clients. It’s an industry that is still bringing in the cash, despite all the catastrophes that have occurred.
One of the biggest benefits that the financial industry has is the belief in its own survival. You only need to follow professionals like Glenda Wynyard on Linkedin , and across social media, to understand how positive this innate ability to self-preserve can be, for any organisation.
The consistency of the financial industry
It’s true that finance professionals take risks. You only need to look at the last worldwide financial crisis to see that this is the case. However, the financial industry does do one thing consistently well; it retains its revenue levels. It has also kept the costs of turning savings into investments at a steady rate for more than a century. One of the biggest factors in helping the industry maintain its cashflow is the development of new, and more complex, products.
The increase in size of the financial industry
Over the years, the industry has grown significantly. This growth has been accompanied by the introduction of more complicated, less transparent, products. This has certainly had its benefits as more individuals and businesses gained access to finance that they were previously excluded from, helping economies to grow. However, this growth and the use of riskier practices, is also what contributed to economies crashing as the financial crisis took hold.
However, complex strategies still form an integral part of the financial industry. Today, high risk income boosting strategies such as private equity are being used to ensure that the money keeps coming in. These less well-regulated and less transparent practices can provide huge financial returns which makes them a popular investment option. Clients approach banking industry professionals to help them negotiate the complexities and make the most of the opportunity. However, as with previous income-gaining creations, there is a level of risk which can result in investors making large losses.
This is not a danger that threatens the survival of the financial industry. It’s ability to evolve, and create new products means that it can survive these types of losses and continue to attract investment from customers. It’s been following the same path for over a century and the journey has worked in its favour.
The fact is that the financial industry is difficult to understand. It’s products are often complex and not transparent. Keeping things this way means that finance professionals can persuade customers to acquire investment advice, even when they do not actually need it, and invest in products that attract high levels of risk. As long as the financial sector believes in itself, and maintains its level of authority, it seems certain to be able to keep the money flowing in.