How to help clients rebound from a natural disaster

As the rains were pounding Houston the night of Aug. 26, 2017, Scott Bishop, CPA/PFS, was at once monitoring how his clients with STA Wealth Management were faring while also getting updates on his brother Eric’s home in the Meyerland section of town, known for flooding. Bishop, whose own home did not sustain any damage, learned that his clients were unharmed.

Eric and his wife and children, on the other hand, weren’t so lucky. With four feet of water in their rental home, Eric and his wife spent the night atop their kitchen counters. Because his wife suffers from a respiratory illness, they needed a medical rescue by helicopter on the second day of the storm. Eventually they made their way to Scott Bishop’s home, where they remained for several days.

Natural disasters have come fast and furious this past year with Hurricanes Harvey, Irma, Jose, and Maria coming in quick succession, not to mention the fires in Sonoma, California. CPAs in the stricken areas have found themselves dealing with much more than taxes and retirement planning.

It’s during these stressful times that CPAs can prove their mettle.

“CPAs are the most trusted adviser to their clients and are there to provide emotional support during a very difficult time,” said financial adviser Deborah Fox, founder of the Fox Financial Planning Network, an AICPA partner.

CPAs share the following insights on how to provide clients with the emotional support and financial know-how to rebound from a natural disaster. 

• Insurance is non-negotiable. Some clients argue against flood insurance because of the expense. The average cost is $700 a year, though for homes located in a flood plain it can be much more. As a result, just 15% of homeowners in Harris County, Texas, where Houston is located, have flood insurance. But Bishop hammers the point home to his clients. “I tell them, ‘If you can’t afford the flood insurance, you can’t afford the house,'” he said.

Insurance is less about getting money for rebuilding than it is about risk-management planning, said Leonard Wright, CPA/PFS, CGMA, who is based in San Diego. “If you don’t have the right insurance, it can blow up your retirement planning,” Wright said.

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• Use a checklist. Many CPAs may be experiencing their first natural disaster alongside their clients and are also scrambling to figure out what to do. Fox recommends that CPAs make a checklist of important steps for clients — as well as themselves — so nothing falls through the cracks. Her clients, for example, receive a checklist of 16 items for natural disasters. It addresses such issues as how to access federal aid and make an insurance claim. But it also lists emotional tasks such as taking good personal care and paying special attention to children. (The AICPA offers disaster planning checklists that you can share with your clients.)
• Be a sounding board. Clients can get overwhelmed with all the items on their to-do list. “You might need to help them find a rental and make sure they’re being charged a fair price,” said Fox. If they’re working with contractors, they might need another set of eyes to make sure the contracts are fair. “CPAs are used to reading contracts,” noted Wright.
• Watch for scams. Sadly, in the aftermath of a natural disaster, fraudsters prey on people desperate to rebuild, noted Fox. Common schemes include unscrupulous contractors promising to repair and remove debris who take homeowners’ money without ever completing the work. Another scheme involves swindlers posing as FEMA inspectors who charge for their services. Clients should know that FEMA never charges for inspections.
• Move to the cloud. When Superstorm Sandy hit in October 2012, it knocked out power for 10 days for Red Bank, N.J., accountancy firm WithumSmith+Brown PC, where Jim Bourke, CPA/CITP/CFF, CGMA, is a partner.

Bourke’s clients were similarly affected. When power was restored, they were ready to start rebuilding. But there was a problem: Their important documents had washed away in the storm surge.

“They needed copies of their financial information, like deeds and tax returns, and we had it all on the cloud,” Bourke said. “To all the naysayers who are worried about hacking, I say, ‘What happens if all your data gets washed away?’ “

Natural disasters are inevitable in some parts of the country. And while you can’t prevent them from striking you or your clients, laying the groundwork ahead of time for how you’ll help your clients in the aftermath can go a long way toward helping them rebound.

For more information on this topic, view the AICPA’s free Disasters and Financial Planning guide.

Ilana Polyak is a Massachusetts-based freelance writer. To comment on this article or to suggest an idea for another article, contact Courtney Vien, a senior editor at the Association of International Certified Professional Accountants.