Sheila David Oliveira has seen firsthand the challenges people in Brazil are facing as a result of the recent global health and economic crises. As clients have lost jobs or had their income reduced, it has reinforced her belief that it’s critical for everyone to understand topics such as cash flow and budgeting, something that isn’t taught enough, she said. And she thinks educating clients on finances is what will help them out of these difficult economic times.
“Without a doubt, what generates the most challenge is financial literacy,” said Oliveira, a two-year MDRT member from Santo Andre, Brazil. “It is not enough to know how much you earn or how much you spend, which is the basis of everything. Knowing what to do with this information is what matters.”
Increasing clients’ financial awareness means working with them to review and understand their behavioral choices as well. “A client might know what needs to be done but is not able to do it. That is a step that goes beyond numbers,” she said. “Financial behavior is a subject that should be included in schools, but until we have that, we will promote it through our company.”
Oliveira has worked in financial services for 19 years, starting with marketing individual retirement accounts and soon adding life insurance. In the last three years, she has also worked as a financial planner, covering cash flow, wealth planning, succession planning, retirement planning, asset management and risk management with her clients. She primarily works with people who are small-business owners or self-employed.
Her target market has been one of the hardest hit by the economic downturn. “These are the ones who are feeling the impact of the pandemic the most,” she said.
“It’s important to look the client in the eye without judging him, and show respect for the moment he is going through,” she said. “It’s paramount for him to understand I have a stake in this.”
Before the pandemic, the challenge for most of her clients was balancing their finances and building an emergency reserve, she said. Now, the challenge is
capping expenses and adjusting their budget to keep the emergency reserve from being tapped out.
“The importance of keeping an eye on cash flow is paramount. There are two ways to get money — one is to open the tap and the other is to close the drain,” Oliveira said. “If my client is struggling right now to sell more or is not able to work, it’s time to cap their luxury expenses.”
Oliveira breaks down expenses into luxury, comfortable living and basic living. Expenses such as traveling, purchasing property and upgrading the car are luxury expenses that can be put off until a later time.
She’s helping clients look at the comfortable expenses, such as cable TV and internet to negotiate one by one what’s necessary and what’s not.
“Basic living expenses are not being spared either, because they involve negotiating the rent or the opportunity of real estate credit portability,” she said. “With the low Selic rate (Brazil’s interest rate), the time is right for this.”
There are two ways to get money — one is to open the tap and the other is to close the drain.
Oliveira also found, at the beginning of the pandemic, that clients were throwing insurance premiums into the luxury bucket. “They were scared and wanted to cancel everything right away,” she said. Part of the process in recent months has been reminding clients why they bought insurance, and how the safety and protection it offers is still important.
She’s spending more time with each of her clients as they struggle through the hardship, and is often the one to initiate calls to her active clients. Once she’s sure they have their financial house in order, Oliveira asks if they have friends or family who have lost jobs or had cuts in income. She then reaches out to them to offer her services.
“I have participated in live talks, offering tips on financial planning in times of crisis, and have received good results,” she said. “Financial planning is now a priority for an economic rebound, which is why we need more people to be aware of their finances.”
And it’s time for advisors to look at their own strategies and behavior, she says. During her almost two decades in financial services, Oliveira has seen many advisors focused on technical challenges, such as how to sell more, handle objections or get more referrals.
“I see few professionals who go deeper into adaptive challenges, such as understanding their own behavioral profile or discovering what their client’s behavioral profile is,” she said. “Or even discovering their own fear, which keeps them from doing what they have already learned to do.”
When advisors understand what limits them, it opens doors to understand what limits clients or why they have certain behaviors, she explained.
“Seek to understand the beliefs that have been limiting you, understand your fears before trying to understand your client’s fear, and find more information on neural systems and behavior,” she advises. “Maybe afterward, you’ll have fewer miles to cover.”