What is Financial Advice?

VIDEO: Anna Sofat, financial planner at Addidi Wealth, explains what financial advice is and why you need it. 

Holly Black 12 August, 2019 | 1:47PM
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Holly Black: Welcome to the Morningstar series, "Ask the Expert." I'm Holly Black. With me is Anna Sofat. She is Financial Planner at Addidi Wealth. Hello.

Anna Sofat: Hello, Holly.

Black: So, we're here to talk about financial advice today. What is financial advice?

Sofat: I think it probably in its purest form is advising on financial products and financial services. I think probably there are two roles within the industry. There's financial planning, which is very much about constructing, designing a financial plan for an individual to get from point A to point B. It's like a business plan for an individual. And then, you have financial advice, which is much more product and transaction-focused. I want a pension, so I need some advice to tell me which is the best pension for me to set up. Or I need a mortgage. And typically, financial advice is in relation – and in fact, this is the regulated financial advice in relation to those products and transactions.

Black: So, I can read on the internet about financial products. I can read Morningstar. Why would I come to you for help?

Sofat: I think why would you go almost anywhere and seek an expert's help in some ways, because unless you are a serious DIY investor or interested in personal finance, you have the time and the inclination to develop the knowhow to know what's best for you and work through those, it's often quicker, easier and cheaper in the long run to pay an expert to help you. So, it's like going to a gym effectively and getting yourself a personal trainer versus doing it yourself. So, in a way, when you're doing it by yourself, you're working your way through the dark. And hopefully, you're going to find your way to the other side, and it'd all be hunky-dory. But finance and money is such a big part of your wellbeing, your personal wellbeing, because actually I think it pays to pay somebody else that you can hold to account that can sit alongside you as an independent advisor and help you basically get from point one to point two.

Black: Now, your firm is quite focused on helping women in particular. Why is that?

Sofat: Well, twofold, really, because much of the industry hadn't catered for women clients and women wealth is increasing rapidly. The industry is waking up to that and paying attention. So, we are beginning to get a lot more, I suppose, targeted marketing at us. And I was ahead of the trend. I spotted it quite a long while ago. I think there is a need for financial planning, financial advice for women. The vast majority of women don't engage with the industry. It wasn't designed for them. And so, to have somebody who can actually understand their need and fine tune their service proposition to them, yeah, I think why not.

Black: And do women have different financial needs than men or is it just that they're not engaging?

Sofat: Both actually, I think. I think there is – they do have different needs. They have different lifecycles. They have different priorities. They have a different way they think about money. So, I, I'd have to say, do get tired when I'm when I'm told, you know, what's the difference? Financial products are financial products. Whereas you look at every single industry, and you look at the advertising industry, they spend a huge amount of time targeting women, whether that's in beauty space, almost any product out there, they have a different approach to selling that product to a man and to a woman. Why should we be any different?

Black: Well, thank you so much for your time.

Sofat: Thank you, Holly.

Black: And thanks for joining us.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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About Author

Holly Black  is Senior Editor, Morningstar.co.uk


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