The Financial Services Industry

(1.5 Credits)

The financial services industry touches all of our lives and has been going through a continuous transformation since the deregulation that began in the early 1970's. That evolution has accelerated in recent years as more and more pressure has been brought to bear by various stakeholders in the industry who have divergent goals and agendas. Those invested stakeholders include clients, investors, employees, regulators/politicians and the public at large. Overlaying all of this change has been rapid technological advancement that has had a direct impact on how the industry delivers its services, meets expected equity returns and manages the risk inherent in that delivery. This Course is an Advanced Finance Elective where THINKING not MEMORIZING is what it is all about. This course is a survey course. It provides a broad overview of the financial services industry and of the forces that are continuing to change it worldwide. That change/evolution has resulted in a confederation of sometimes integrated products and services within a multi-product firm. It has also resulted in individual stand-alone businesses within those same integrated financial firms, or in boutique, stand-alone, limited product firms. The course focuses on four big questions: (1) Why and what kind of services are provided by participants in the industry? (2) Who develops, provides and regulates those services? (3) How are they likely to be executed or modified in the future? (4) What skills (both technical and ""soft"") are required for an individual to succeed in the industry? Our approach will be to examine each of the principal businesses in which various financial service firms have been involved, including: raising capital; financial advisory; broker/dealer positions; sales and trading; proprietary investing; managing the assets of others (both institutions and individuals) and risk management. Throughout, there are a number of overarching themes. Among these are: the interplay of politics, regulation, globalization, and technology; the emergence of shadow banking including private equity and hedge funds as both critical clients and potential competitors for the major investment banks; the search for new, high-margin products and whether that process has reached its limits; and the changing relationships among the different groups within a financial service firm. By the end of this course each student should be well versed in the functioning of the industry, be able to understand the financial press and associated economic commentary, be aware of the types of skills necessary to thrive in this industry and have a new perspective on the global financial system.