Anna Sofat, Addidi founder on providing financial advice and wealth management specifically for women

In our latest CEO interview, we talk to Anna Sofat, founder of Addidi, a financial advisory and wealth management business for women.

Anna Sofat, thank you very much for talking to the Good Money Guide today. We’re going to have a chat today about Addidi, why you set it up, what you do there and who you do it for.

Shall we start by you just telling us why you set up Addidi?

Of course. I suppose there were two key reasons. On a personal basis, I had been in the corporate world, and I suppose twice in my corporate careers, I’ve been in a place where it didn’t quite sit easy with my values system and how the business was being done or people were behaving in business.

The first time, I was very young and very junior, and so in some ways, I wasn’t directly involved, and I could watch and see what was happening and appreciate it wasn’t what I liked or what felt good for me.

The second time, I was senior and I wouldn’t say I was in the middle of it but certainly being influenced to a large extent by it. And I decided to leave. I think at that point really, at a very instinctive level, I felt that I couldn’t commit to another corporate.

So setting up by myself was the easiest route, the easiest option in some way, because I could be in control again, and I felt I’d lost that control over my own destiny, if nothing else. 

The second one, is why I decided to focus on women, was because I recognised that women in general were very poorly served by the wealth management industry. I worked for a business which had provided a service proposition for women by women, so I understood their needs and I understood what the marketplace wanted. I understood the target market.

And at a commercial level, I also understood the numbers involved. So in 2008 when Addidi was launched; there were probably about 15% of advisors who were women. Probably less than that were female investment managers.

So the wealth management industry hadn’t really woken up to the fact that within a decade, more than 50% of the wealth would be controlled by women, that there were already more women millionaires under the age of 44 than men. So it was a space that I knew and understood and where it made commercial sense. The two came together pretty well.

What sort of women clients do you generally have? Do they come from all sorts of backgrounds or do they tend to be from one industry in particular?

In some ways, they are quite wide-ranging, but there’s probably three key segments that we look after. So there are women entrepreneurs, and we understand that marketplace pretty well. We’re business owners and can understand the pain of growing a business, as it were, so we can empathise with them. Also because we run Addidi Angels, so we fund businesses as well. From both perspectives, it’s a space that we have come to know and understand, and to serve well. That’s the first segment.

The second are professional women. Again, probably because they were predominantly who I looked after in my previous role, and because we’re in the city. We’re right in the middle of many of professional women who need help. In the early days, we were one of the few if not the only wealth manager focusing on women.

The third is high net worth women. There’s a common theme that they have independent wealth. They want to manage or have control over their own money. So rather than delegating it to other family members, they want to be involved and they’re looking for a trusted home.

What do you think attracts them to Addidi, other than the fact that you cater for women? Is there anything else that you think attracts people to Addidi that makes you stand out within the industry?

I mean we’re often told when people have looked at our website that it’s very non-wealth management style in the language we use, maybe the imagery we use. We don’t bamboozle people. We use plain English.

We don’t have a hard sell approach to looking after clients.

We speak their language, and when they come here, they feel they’re understood, that they’re not just a number.

When do you think women should start approaching wealth managers? Do you think people should wait until they’ve accumulated wealth before approaching a wealth manager, or do you think people should start talking to advisers early on in their careers?

I suppose there are two different elements. You’ve got wealth management businesses that just manage wealth, and realistically, to approach them, you probably are looking at several hundred thousand pounds’ worths of investments, for it to make sense for both sides.

Then you’ve got financial advisory and financial planning firms, who also have a wealth management side to them. So pretty much like Addidi. We’re an advisory business first, and wealth management is just part of one of the services we offer, part of the sort of overarching advisory service.

I think it differs because it’s not about how much you have to invest because you’re going to have funds under management. It’s about, do you need financial advice and if so, are you willing and able and want to pay fees that will provide value for that advice.

We have some people who are high earners, some who are not, who actually just need a financial plan. Sometimes, they need an ongoing financial planning service and sometimes, they don’t. But do they need advice and they need a financial plan.

I say that all businesses have business plans, and I suppose my ambition is that all individuals should have a financial plan from quite early on. As soon as they start making money, they should be thinking about a financial plan for themselves.

Looking at the wealth management industry, we talk to quite a few CEOs, we tend to go to quite a lot of offices, and it’s generally a male-led industry.

Do you think there’s something that puts women off entering the wealth management industry, and what do you think can be done to attract more women into the wealth management field?

I’ll start by saying that there are more women are entering the industry. If you look at graduate entry level or more junior roles, there are probably as many women as there are men.

So it’s not lack of talent or ambition.

It’s what I call the sticky middle.

Women come into the industry but they leave. I think the average age apparently is about 38. They leave for basically two reasons probably.

One is that sticky middle. To get through from middle management to senior management requires probably quite a lot of sacrifices in terms of who and what they are, in terms of how they operate and do business.

That sticky middle is the DNA of the industry. It’s the DNA of the business and it’s been built up over decades. It’s male-dominated, it’s hard sells, it’s target driven. It’s very much about the bottom line.

You’ve got to be pretty ruthless and ambitious to navigate that stickiness, no matter how much of a desire this is from top management to have more diversity.

That sticky middle needs to be understood and you need support for women, and other ethnic minorities. It’s coming through and there are now many different initiatives to help them. Whether that’s sponsorship, mentorship, women’s networks, but without understanding that DNA, it’s very difficult.

Many women, get to that middle-rank and they look at the sacrifices they have to make to get through it. Many of them self select out. It’s not a glass ceiling as much as they just say I don’t want to make those sacrifices.

When I was pretty junior, looking at that middle, I said “if this is what I have to do, it’ll kill who I am”.

You’ve recently launched the Are You In? movement. Can you tell us a little bit about that. What it is and who it’s for?

For much of my career within wealth management and the financial advisory business, I’ve ignored what the industry does, done my own thing, and been very much outward focused.

Most of our work has been with women outside the industry. It’s been on the client-side of things.

Then about 15-18 months ago, we were looking at how we push forward, particularly as, you know, more than 50% of the wealth will be owned by women. How can we change this industry to make it more diverse and women-friendly?

It occurred to me that I can talk all I want to, to clients, but without some changes and recognition of change in the industry, it’s going to take decades, centuries.

We looked at the industry, that sticky middle is all about behaviours.

It’s about individual behaviours, which then add to corporate behaviours. And that at a very granular level, if we all undertook to look at our own behaviour and made some commitment for change, then actually, maybe we can have a bottom-up approach to the problem, rather than top down.

There’s been a lot of top-down behavioral change. Some of it has had some success, like the 30% Club, for example, but it’s still going to take centuries to get to real equality.  That was recognising that little actions by lots and lots of people might be one way of going about bringing change in the industry.

If people wanted to get involved in the movement, how do they sign up?

There is a website – Are You In? movement or there is the Are You In? pledge.

There are five pledges, we ask individuals to commit to one or all five. It’s about everyday decisions and changes. There is one about being authentic to yourself, because in the corporate world, it doesn’t pay necessarily for you to be authentic, but it comes at a high cost to individuals.

It’s about being a beacon for good practice. So they’re very much everyday pledges and behaviours, which I hope will resonate with people working within the industry, and for them to empower them and say look, you could be the change you want to see.

You don’t have to moan and groan because change isn’t happening.

You can start by making those changes.

Let’s talk a little ab a bit more about you and your experience running the Addidi business. What have been the best and worst moments that you have found most satisfying and most challenging over the 14 years?

I suppose the best have been the freedom to run with ideas, to set the vision for the business, to set the standards for the business, and know that you can deliver it right throughout the business. To know you can improve on people being open, transparent, honest, and doing a good job. It’s that freedom, to be able to set that standard and the future vision for the business.

I think the main challenge has ben to attract really good advisors. Because many really, really good advisors go and set up their own business. We’ve ended up training our own because it’s easier to recruit people and then train them into Addidi’s way of doing things. That’s been hard.

In the early days, it was juggling resources and ambition about the amount of money we wanted to spend on initiatives and marketing or future development of the business, investment in the business.

In some strange ways when I look back, when did raise money, through equity for the launch of Addidi, but beyond that, it’s all been self-funded. Probably with hindsight, I ought to have looked at taking on debt to have grown Addidi quicker, but the business has had very solid growth.

And finally, is there anything that you can recommend for people to look at that can help them improve their understanding of financial planning and wealth management and make more of their money in general?

Two books come to mind. For those who want to understand investments particularly and the investment world, there’s a book called Smarter Investing by Tim Hale, and it’s a very easy, down to earth read. It talks about the basics of investments. And actually, if you just do that, if you like the Vanguard approach, that’s all you need in some ways.

The second one is more to do with understanding if you’re focusing on better money habits or better financial plans for yourself. Where you need to understand your money values, your money habits, because often, it’s said you’ve learnt your money habits by the time you are six.

So somewhere within you, you already have the DNA for how you will be around money. It’s taken on board unconsciously from your parents typically. There is a book called The Seven Stages of Money Maturity by George Kinder. It’s been around a few decades but it makes you very aware of some of the unconscious habits of how you spend money or how you think about money. The first few chapters are great around that.

This is really about improving your own relationship with money.

Thank you very much for talking to the Good Money Guide.

Anna Sofat, is founder of addidi wealth, a financial advisory firm that specialises in wealth management for women

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