This paper provides an overlapping generations model to investigate the role of decentralized intermediaries in buffering aggregate shocks. Such buffering mechanisms are implemented through cross-generational risk sharing and profit accumulation. Market power, potential profits, and contractual arrangements are vital to profit-driven financial intermediaries to provide participants insurance against aggregate shocks. In market equilibrium, aggregate shocks cause the value of the agent’s wealth to fluctuate. Our intermediated contracts alleviate this adverse effect and are complementary to financial market transactions. Although there exists efficiency gains from our decentralized intermediation, the gains are not as great as what Allen and Gale (1997)'s centralized bank achieves. In view of financial regulatory policy, adequate market power is required to induce intermediaries to provide the Pareto superior financial contracts.