Careers Career Paths Retail vs. Institutional Financial Clients Share PINTEREST Email Print Hero Images/Getty Images Career Paths Finance Careers Technology Careers Sports Careers Sales Project Management Professional Writer Music Careers Media Legal Careers US Military Careers Government Careers Fiction Writing Careers Entertainment Careers Criminology Careers Book Publishing Aviation Animal Careers Advertising Learn More By Mark Kolakowski Mark Kolakowski Mark Kolakowski is a business consultant, freelance writer, and business school lecturer. He has been an investor and market watcher for 40 years. Learn about our Editorial Process Updated on 08/29/19 The financial services industry has a broad range of individual and business clients all of which fall into one of two categories—retail or institutional clients. The terms "investor" and "client" are interchangeable because financial advisers primarily offer investment advice, guidance on profitably maintaining those investments, and advise on cashing in and cutting investment losses. Defining Retail The term retail implies mom-and-pop stores as well as mega-chain grocers. However, as far as financial service firms and their clients are concerned, only the mom-and-pop operation would be considered a retail client because it is typically run by an individual or family and is a small business. The mega-store, because of its size, would be considered an institution. The term institution pertains to larger clients such as banks, funds that maintain investment portfolios for others such as pension funds, insurance companies, and large retail establishments. Often large retail, institutional clients will be part of a national chain and provide their employees with investment opportunities and retirement plans. A retail client can be an extremely wealthy individual or a small, successful business. The financial assets of retail clients can extend to the tens of millions, so small by no means translates to a penny-ante or low portfolio valuation client. Institutional Clients Most financial advisors in financial services firms have only retail clients. Institutional clients are usually serviced through a separate institutional sales force. Similarly, certain lines of business and job functions are typically organized in a retail division based on client orientation. In addition to financial advice, other financial service categories include financial planning. The predominant distinction between retail and institutional clients is the volume of trade and the types of investments in which they engage. An insurance company that sells whole life policies that build cash value over time does so by investing a portion of your premiums. Large institutions - banks, insurance companies, pension funds, mutual funds, and exchange-traded funds (ETFs)—buy and sell securities for their investment portfolios. You then borrow against the growth of those portfolios, often tax-free. An insurance company has an ethical and professional responsibility to invest your premiums well but safely. If it regularly takes on high-risk investments and its policyholders consistently lose money, it may face closure due to client loss. On the other hand, minuscule returns on investments will also result in lost clientele. Institutional clients are often bound by their own service to clients. A small business, in contrast, has few employees and obligations. Bottom Line Retail clients tend to buy in round lots, or 100 shares. They do sometimes purchase less than 100 shares, even just one share in some rare cases. Institutional clients, on the other hand, tend to buy and sell thousands of shares at a time. Both retail and institutional investors invest in stocks, bonds, futures contracts, and options, but only institutional investors tend to trade in swaps and forward markets. Because of the different investment goals and practices associated with each type of client, the financial advice provided to retail clients will be completely different from the financial advice provided to institutional clients.