Advisors work to help begin the healing, and rebuilding, in Katrina's wake.
Financial advisor Scott Bordelon has been working
with Hurricane Katrina victims in his home state of Louisiana
practically since the day the storm struck. He's dealt with clients who
have lost homes and jobs, who have cleared out their retirement
accounts to pay for day-to-day living and who are trying to rebuild
businesses without even knowing if their customers will ever return.
It's been six months since Katrina hit the southern coast, Bordelon says, but those who have been hit hard by the natural disaster still have a long way to go before they recover. "I think it's hard to place a value on everything," says Bordelon, whose regular office in Covington, La., was badly damaged.
For four months after the storm, he ran his business, Financial & Investment Management Advisors Inc., out of three rented office cubicles. He finally moved back into his normal place of business December 15.
"Things look like they're getting better," he says. "People are working hard to get back to normal, but it's going to take a while before people recover-even those who are insured."
Although the media coverage of hurricanes Katrina and Rita has subsided, those who are involved in recovery efforts say that for many victims the crisis is far from over. Many homes and businesses have yet to be rebuilt, while many residents are still without jobs and a steady income-predicaments that could be helped by the involvement of a financial planner.
As it did in the aftermath of the September 11 attacks, the Financial Planning Association (FPA) has acted as a coordinator for pro bono financial services for those in need. About 900 advisors have signed up as volunteers for the relief effort, says Clara Lipson, who heads the FPA's pro bono programs.
So far, however, volunteers haven't had much opportunity to put their services to work for hurricane victims. Only about a dozen calls for help have been received-most of which led to people being hooked up with advisor volunteers. Lipson says the lack of calls may be due to people still feeling the initial trauma of the disaster and the fact that the Red Cross and other relief agencies until recently were still in "relief mode," focusing on the immediate needs of evacuees.
As the situation stabilizes, Lipson says she expects the demand for financial planning services to rise significantly. "The next couple of months are when we think our role will start kicking in," she says.
She adds that the initial hush isn't surprising after what FPA experienced with its September 11 relief efforts. Initially, she says, people were slow to ask for help. That gradually changed, however, and the FPA September 11 relief center now gets more calls for assistance than it did in the months following the attack. "After the dust settles, and the shock kind of goes away, people start calling about their long-term needs," Lipson says.
The FPA has set up a Web site as a resource for planners dealing with hurricane-related issues, at www.fpaprobono.org, and also has a storefront location in Shreveport, La., with a second storefront location in the works for Baton Rouge. The FPA's Dallas-Forth Worth chapter recently set up tables at a disaster relief center in the wake of Hurricane Rita, she adds. The FPA has also been channeling help to the more than 300 advisors who are estimated to have been directly impacted by the hurricane themselves, Lipson says. As part of the effort, planners have donated office space, software and other resources for advisors whose offices were hit by the storms.
Susan Bradley, an advisor in Palm Beach Gardens, Fla., who recently held a conference-call training session for about 100 advisors volunteering help, says she's careful about explaining the type of financial planning work the relief effort will entail. "This is a pretty difficult service because it's not normal financial planning," she says. "These are short finite engagements and phone calls, and they are with people that are still in a lot of turmoil and transition."
She says the hurricane relief efforts are in many ways more complicated than those that the FPA set up to help victims of the September 11 attacks. Hurricane victims, she notes, are dispersed throughout a wide region, while victims of the terror attacks were concentrated in the New York City and Washington D.C., areas.
She also says the fact that hurricane victims are in many cases displaced, or even separated from family members, adds to the trauma. "If someone died in 9-11, the families still had relatives and neighbors for support," Bradley says. "In this case, people have lost that home base."
That's why she advises volunteers to try to work with clients in "baby steps." Instead of trying to achieve far-reaching goals, Bradley says, she tells advisors to try to accomplish one small thing at a time. "They're going to find the people they're working with have a short attention span-they are on emotional overload," she says. "One day they look fine and one day they are not, and they have less of a tendency to follow through on something."
Victims will often lack the documentation an advisor is used to working with, meaning information will sometimes be "guesstimates" with a lot of gaps, Bradley says. "A big part of it is listening to them," she says. "I'm advising that they try and get a take on where someone is before determining which project to work on."
For Bordelon, helping clients get through the crisis has been a "learn as you go" experience-partly because he has been a victim himself. Bordelon rode out Katrina with friends in Atlanta, returning a few days later to find that his home had been flooded and his office severely damaged by falling trees. "The neighborhood looked like a war zone," he says. "Most of the tree tops were snapped off 20 feet up in the air."
Ironically, a 43-foot boat he had berthed in Madison, La., eight miles away, got through the storm unscathed, and he was able to use it as a residence as he dealt with getting his business off the ground. After salvaging the computer servers from his office-which miraculously were undamaged despite floodwaters and multiple holes in the roof-Bordelon was able to rent three office cubicles from his Internet services provider, I-55 Internet Services of Hammond, La. Working in a warehouse with about two dozen other displaced business owners, Bordelon used an Internet connection and a couple of telephone lines to gradually make contact with every one of his 180 clients.
He discovered that few were spared by the storm. Many were scattered throughout the outlying region, in states such as Texas, Tennessee and Arkansas. "I remember calling one client as he was driving from Covington to Jackson, Miss., and he said it was the first time he got a phone call in two to three weeks," he says. "He was just excited to get a phone call and to hear from us."
Bordelon discovered that, fortunately, none of his clients had died or been seriously injured. The most jarring discovery for Bordelon, however, was that the storm had left 43 of his clients homeless-with homes that were either completely destroyed or damaged to the point where they had to be demolished.
The first thing Bordelon did after assessing his clients' situations was to waive all fees-a total of $15,000-in the current quarter for those who were homeless. Then, Bordelon got to work trying to get emergency funds into the hands of his clients. But with communications, postal service and transportation severely disrupted in the region, that wasn't always as easy as it would have been during sunnier days.
In one case, Bordelon had to convince a fiduciary to print out a check for his client, but mail it to his temporary office at I-55 Internet Services-something that typically would have been unheard of. "That's normally a no-no without the client's signature," Bordelon says.
Although Bordelon was able to move back into his house a month after the storm, not all of his clients have been as lucky. Contractors, he says, have a tremendous backlog, meaning many people have no idea when their displacement will end. Adding to the problems is the fact that the price of building materials has skyrocketed to up to three times their prehurricane values, he adds.
Bordelon estimates roughly half of the 43 clients who were put out of their homes have returned to their residences, while others have moved away permanently to places as far as Denver. "Some of them have been moved to other locations by their employers," he says. "This thing is going to go on for a couple of years at least," he says. "There are just so many ways this has changed people's lives that it's unbelievable."
By late January, Bordelon was seeing signs of hope. In areas that suffered moderate damage, he says, traffic has been clogged as construction workers-including many from out of state-have been busy repairing homes and roofs. In these areas, he says, homeowners have actually seen their property values rise because of the shortage of housing in the area.
In the places that were hardest hit, however, the landscape is cleaned of debris, but barren. "In the hardest hit areas, nobody is doing anything," he says.
Bordelon says he will pull his business back together with a newfound appreciation for disaster planning. He had no official disaster plan before the storm struck, saying everything he's done since the first raindrop was "by the seat of my pants."
Bordelon is apparently good at improvising. A few weeks after he set up his temporary office, he got a call from a Securities and Exchange Commission agent who was checking in on RIAs in the area. Bordelon, it turns out, was the only one in the area they were able to contact. "He told me, 'Obviously your disaster plan is working," Bordelon says with a laugh.