There was no reason for attorney Bryant Banes to think he would be impacted by Hurricane Harvey when it hit Houston on August 25. After all, his million-dollar home and the homes of his neighbors were outside the 500-year flood zone near the Buffalo Bayou waterway. Members of the upper-class enclave were so confident of their perch that most had no flood insurance.
What Banes and his neighbors didn’t foresee was the opening of the flood gates of the Barker and Addicks reservoirs by the Army Corps of Engineers, which intentionally unleashed accumulated rain water at the rate of 13,000 cubic feet per second or more. “There are 300 people in my neighborhood that have houses worth $500,000 to $1 million and most of them have no house anymore,” said Banes, who filed a class action lawsuit.
The destruction left by Hurricane Harvey and Irma combined will likely result in $290 billion in damages, according to AccuWeather data.
Advisors say these historic storms illustrate why it's important for advisors to have discussions about insurance to cover dramage from storms and other natural disasters.
“Even if you're not in a high-risk area, there are many unexpected ways that people are impacted in a natural disaster, whether it’s flying debris or car accidents,” said Scott Snider, a CFP who holed up in a Jacksonville, Fla., hotel during Hurricane Irma.
“If their clients live in coastal areas or near bodies of water, first the financial advisor should have a conversation about flood insurance,” said Ashley Foster, a CFP in Houston. “They can also help clients understand the National Flood Insurance Program and connect them to a trusted property and casualty insurance agent.”
With hurricane season still in full swing, and forest fires and earthquakes also making news, Americans are understandably concerned as to whether such an event could happen near their homes.
Advisors say they're aware of the concern and taking steps to address it among clients.
“Now that the storm has passed, I am setting up face-to-face and video conferencing meetings to review not only my client’s insurance policies but also whether they have an evacuation plan, storm shutters and a steel-reinforced closet installed in their home and what it might cost to add these amenities,” said Snider, who sent out a newsletter during the worst of the hurricane.
Like Snider, financial advisors are increasingly using disaster financial planning to demonstrate that they are indispensable to their clients. For example, because Hurricane Irma cut power to 20 million people, CFP Jonathan Cameron opened his Miami office three days after the storm.
In a mass email, Cameron wrote:
Please know that CameronDowning is open for business and fully operational. We have power and A/C in our office in Downtown Dadeland. If any of you want to stop by for coffee and get out of the heat for awhile, you are most welcome. Give us a ring if you're in the area. We would love to see you and hear your Hurricane Irma story.
“We wanted to show that we care in case someone needed a free cup of coffee, electricity to charge their mobile devices or just to cool off and share their experience,” Cameron told Financial Advisor. “We received an overwhelming, positive response from clients appreciative of the offer.”
After surviving forest fires in southern California, Andrew Anable offers a list of important tips on his website, including how to contact relief organizations such as FEMA and the Small Business Administration and network with friends and neighbors.
“There’s a lot of emotion going on when you’re facing mother nature gone awry,” said Anable, a registered investment advisor and founder of Safeguard Investments in Santa Barbara, Calif. “Bonding with other people similarly situated is important because you’ll discover resources and the last thing you want to do is isolate.”
In Troy, Mich., last week, advisor Leon LaBrecque gave a lecture to police officers and individual investors who wanted to know how to prepare in advance for a sudden and unexpected event such as Irma or Harvey.
“I instruct my clients to photograph the contents of their home with their cellphone, make copies of the content of their wallets as well as recent billing statements and encrypt them in a cloud,” said Lebrecque, a CFP who recently appeared on a local FOX affiliate discussing disaster financial preparedness.
“I also advise having a getaway backpack ready in advance that holds spare clothing and hard copies of financial documents that are scanned in the cloud.”
The financial planning software RightCapital maintains an encrypted cloud that CFP Pierre Jouve takes advantage of. He has advised his clients to do the same so that he can access and email scans of their passport, life insurance and property casualty policies, birth certificates, Social Security cards and drivers licenses in the event of a travel emergency.
“Since the storm, I’ve emailed reminders to those who haven’t taken advantage of this feature on RightCapital’s website and I also plan to write a blog about how I survived Irma and post it on my website,” said Jouve, who fled his home base in Tampa, Fla., with his wife and two children.
Although Jouve decided to play it safe and spend the night with friends in Jacksonville, Fla., the next morning, a nearby river was flooding and the family was forced to drive even further inland.
“Gas stations were closed along the way, but we had just enough,” Jouve told Financial Advisor Magazine.
Luckily, the Jouve family home was untouched when they returned to Tampa a few days later.
“I'm advising clients to fill up their gas tank and a spare container of fuel as soon as there’s any talk of a storm on the news,” said Jouve.