Securities companies offer financial services for stocks, bonds, futures, and options. They provide investment advice, risk management, tax planning, and retirement planning. They offer a wide range of products and services for a fee or commission, including institutional trading, mutual funds, and real estate investment trusts.
A securities company is a business that provides financial services in relation to securities such as stocks, bonds, futures and options. Corporations, sometimes called houses or brokerage firms, are licensed to broker the purchase and sale of securities. They typically offer a wide variety of products and services for which they charge a fee or take a commission.
While a client can contact a public company and communicate their investment choices, most companies offer a personal service that includes a wide range of financial planning. Some companies specialize in certain areas, while others may offer a wide range of options. Financial planning includes areas such as cash flow management, investment planning, risk management, insurance planning, tax planning, and retirement. These services are performed through the products that a securities firm offers to its clients.
Investments are the most common products offered by a securities company. Investments may include the buying and selling of simple securities such as stocks and bonds or more diversified investments such as mutual funds, hedge funds and venture capital funds. In many cases, securities firms will participate in institutional trading, which occurs when they buy and sell securities in large blocks for their clients or the large blocks are part of the company’s managed funds.
The risk management services offered by securities management firms provide clients with the opportunity to transfer financial risk to other entities. Companies evaluate risk through market research which provides a cost versus benefit analysis that allows a company or individual to make an informed decision about its investments. Extremely wealthy clients may be able to afford to take more risk than those who are investing on a significantly smaller scale.
Some securities firms also offer public limited partnerships (RELPs) or real estate investment trusts (REITs). These investment options involve a group of investors who develop and build real estate to generate income. They are often popular with extremely wealthy clients because they offer high potential for growth, income and tax shelter.
Tax planning is another area of financial planning where some investment firms offer advice. The strict laws governing taxes and securities in most countries require securities companies to be aware of this area, so that investors can protect their cash holdings. Tax planning specialists advise clients on how to legally avoid taxes.
Another common service offered by some securities management firms is retirement planning. Firms offer products such as 401(k) plans, profit sharing plans, simplified employee retirement plans (SEP), and individual retirement accounts (IRA) for their businesses and for individual clients. Corporations may also offer insurance investment opportunities such as life insurance and annuities.
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