What Is The Financial Intermediary And Its Role

1. PROMINENCE CLIENTS TRUST MANAGEMENT www.prominenceclienttrust.com

2. What Is The Financial Intermediary And Its Role A financial intermediary is an institution specialized in mediating between the two figures involved in a loan or private financing. The intermediary is in charge of establishing the relationship between the physical or legal person that requires the funds and the figure of the saver. Funds will be raised in the short term, through deposits or checking accounts, while private financing will be carried out in the long term through loans, shares, etc.

3. The intermediary, in this way, will be dedicated to channeling the savings of those who have the funds towards the financing of those who request it, so that an economic relationship is established between the two without them having to be in contact.

4. The benefit that the intermediary will receive for carrying out this mediation function will come from the difference between the interest requested from the financing applicant and the interest offered to the saver. This is equivalent to the financial intermediation margin.

5. Main functions of the financial intermediary: In addition to the main function of mediation between the two parties involved in the financing, there are other functions that have been added over time:  It enables the fund market to be activated, channeling savings toward investment.  Reduces the risk of assets thanks to the diversification of the investor's portfolio.  It covers the financing needs with the saver's investment, activating the business fabric and contributing to the growth of companies.  Know and analyze the trends in the financing market to get private financing and the needs of borrowers and investors.

6. What types of financial intermediaries exist? There are currently two types of financial intermediaries Bank intermediaries: It is made up of private banks, savings banks, and credit cooperatives. Its main offer for applicants for financing are loans and credits while for savers they offer, as a service, the collection of deposits. Your main asset is money. Non-bank intermediaries: It is made up of a wide variety of entities whose main asset is not money but stocks, bonds, promissory notes, etc. Nor do they carry out exclusively banking services. Within this group we can find:

7.  Insurance companies, whose main assets are insurance policies. Thanks to these policies, they can offer compensation in the event of the insured event (accidents, natural catastrophes, etc.).  Private pension funds, whose objective is to offer a complement to the pension received by the State in exchange for the periodic contributions of the users.  Investment funds, which allow users access to Stock Market assets in exchange for their contribution. In this way, access to the stock market is improved.  Official Credit Institute (ICO ), an entity that acts under the supervision of the Government, offers to finance sectors with the greatest need.  Mortgage credit institutions, whose main function is to grant mortgage loans.

8. Taking into account the functions carried out by the financial intermediary, it is important to emphasize that it is a more professionalized service, although more expensive since it works with commissions.

9. The advantages that can be obtained by working with an intermediary will be different depending on the type of entity or company with which you collaborate, so it will be essential to know their conditions from the beginning and thus avoid surprises related to prices, service, or the product.

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