Investment & Securities Industry Overview

The investment industry is comprised of a wide variety of sectors and service providers. At the top of the list are the giant asset managers, like BlackRock, a firm managing trillions of dollars in investment assets, an amount so immense that it is more than the Gross Domestic Products (GDP) of Russia, Canada and India combined. Also at the top of the industry are the biggest exchanges, where billions of shares trade hands yearly, along with the major investment banks, those firms that raise money for corporate clients by selling their stocks and bonds to the public. Investment banks also deal in private equity investments and asset management, and they earn immense fees by brokering mergers and acquisitions. Other major categories of investments that are typically sold to the public include master limited partnerships (MLPs) and real estate investment trusts (REITs).

At the same time, however, there are thousands of companies that specialize in specific types of investments that are most often privately held and not sold to the public. Such firms raise capital from wealthy individuals and families, as well as from institutions such as pension funds and insurance companies. These companies may specialize in operations such as hedge funds, private equity and venture capital. The total pool of money invested in these sectors is massive.

Then there are the big firms that provide stock brokerage services. Some of them, like Merrill Lynch, are also investment banks. Others, like Charles Schwab, are primarily stockbrokers that deal with millions of individual customers.

However, the lines have blurred between sectors in recent years. It is common for the largest companies, such as investment banks, operate in multiple segments of the investment industry at once, including some or all of such sectors as commercial banking, investment banking, asset management, insurance, mortgages, financial advisory, venture capital, mergers and acquisitions and more.

The Global Investment Industry: This is a massive, global industry, and in light of the fact that it provides the services that enable companies to have access to capital, it is one of the most important industries of all. The World Federation of Exchanges estimated the total value (market capitalization) of stocks on all of the world’s significant exchanges at $101.2 trillion as of November 2023, with shares available in over 57,650 companies.

After an extremely turbulent environment during the recent recession (late 2007 through mid-2009), the global investment industry has been greatly altered. Many of the best-known brands in the industry failed or were taken over. Lehman Brothers was allowed to fail completely. Bear Stearns was taken over by JPMorgan Chase at a nominal price.

By the end of the painful 2008-09 period, the investment industry, on a global basis, had been through losses, layoffs, scandals, bankruptcies, forced mergers, government intervention, bailouts and/or disappointments on a scale not seen in decades. Then, the investment industry began rebuilding and reshaping its strategy, and thereafter the industry has generally enjoyed robust business in recent years.

More recently, many new challengers have entered the investment industry, in terms of smartphone app-based investment platforms (like Robinhood) and machine-learning based asset management platforms (companies such as Betterment that allocate investment funds according to the consumer’s personal goals and needs). At the same time, investment choices in the form of ETFs (exchange traded funds) have proliferated, and competition among stock brokerages has climbed to the point that many consumers pay no fees at all to make trades. Other technology-driven changes are occurring continually as well, including the emergence of cybercurrency, such as Bitcoin, as an investment option.

The U.S. Investment Industry: Employment in firms that are involved in securities and investments was estimated at 1,084,600 as of September 2023 in America alone, compared to 1,043,600 the previous year, according to numbers published by the U.S. Bureau of Labor Statistics. About 60 million Americans participate in 401(k) investment plans at their places of work as of 2022, according to Investment Company Institute, with assets totaling about $7.2 trillion as of mid-2023. Mutual funds in America held $21.9 trillion in assets as of September 2022, according to the Investment Company Institute.

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