Disaster teaches hard lessons

Advisers near tornado's path focus on clients and communication

May 26, 2013 @ 3:31 pm

By Liz Skinner

While residents in the Oklahoma City area focus on cleaning up the devastation left by last Monday's powerful tornado, the incident reminds financial advisers that life-changing events happen quickly and people need to be prepared.

Advisers who experienced the destruction firsthand or through clients know the importance of having quick access to client data, beginning with contact information.

“It's a matter of having the data at your fingertips,” said Mark Woody, a private wealth adviser with Ameriprise Financial Services Inc. in Norman, Okla., which is about six miles south of the tornado's path. “Knowing client cell numbers and in some cases, other family members' cell numbers to reach out right after something like this happens is crucial.”

Of course, cell phone communication is often out or spotty after such catastrophes, as was the case during last week's class EF-5 tornado that struck the city of Moore and killed 24 people. Even miles away, all phone, cell and Internet service was down for about six hours after the tornado touched down, Mr. Woody said.

Another challenge was figuring out which clients were in the twister's path of destruction, which was more than a mile wide and 17 miles long. The day after the tornado, Mr. Woody downloaded a list of clients in area codes that had been affected, created a map of the damaged areas and then had to pinpoint each client's home to evaluate whether they were likely to have been hit and most in need of his help.

In the end, one client, Shane Vaughn, had lost his home to the tornado. Mr. Woody reached him on his cell phone and offered food, clothing and a place to stay. But Mr. Vaughn's insurer was already providing money for his needs, and he, his wife and four daughters are staying with his in-laws.

While the tornado's wrath is still clear in everyone's minds, Mr. Woody plans to talk about emergency preparedness with all his clients at their next meeting. He will encourage clients to have a plan with their families of where to meet up during an emergency.

And he will collect all of their insurance policy details — so he can provide those numbers to clients in need on a moment's notice — and discuss whether they are properly insured. He may also investigate whether there is software that could quickly generate a map of the location of all his clients in a certain area.

(See also: Get clients federal help faster)

Peggy Doviak, a fee-only adviser at DM Wealth Management Inc., also in Norman, said the communications breakdown in the hours after the storm was frustrating and made her question her own emergency planning. She was occasionally able to get a text through during those first few hours, but that was it.

“I would have argued that I was good with a redundancy system, but even your redundancies can fail,” she said. “I was amazed at how completely without everything I was.”

Since last Monday's tornado, she has collected cell phone contacts for her firm's custodian and she is gathering them from clients. Her office also is purchasing a battery-powered weather radio, she said.

Burl Wimsett, a Waddell & Reed Inc. adviser, knows how it feels to really be without everything. Two years ago, his office was demolished by the tornado that hit Joplin, Mo. Sadly, one of his clients was killed and 40 of them lost homes.

BACK UP RECORDS

“It's absolutely essential that your records are backed up and available because your clients need money the next day,” Mr. Wimsett said.

The day after the Joplin tornado, Mr. Wimsett found that his filing cabinets had blown a block away. He rented a warehouse to operate from and dried out client documents. The Waddell & Reed home office sent him a laptop and his business was operational within 48 hours.

Mr. Wimsett now makes sure he has e-mail addresses and cell phone numbers for all his clients on hand.

Oklahoma Securities Commission Administrator Irving Faught said advisers must have sufficient off-site storage for all records and alternative communications systems at the ready.

“If an investor would be panicked about what's happening or fearful about their funds, they should have alternative ways to reach someone to reassure them,” Mr. Faught said.

In addition to having advisers' cell phone numbers, it may be appropriate for clients to have numbers for the entities that hold their funds in custody, he said.

Kirk Hulett, executive vice president of strategy and practice management for Securities America, said advisers should make sure they test their emergency plan with a simulated disaster. Some advisers who experienced Hurricane Sandy in October found that not everyone had the keys they needed to get to alternate sites, and that some of the backup sites didn't have power, either.

John Napolitano, chief executive of U.S. Wealth Management in Braintree, Mass., said last Wednesday that his firm's contingency plans worked well in the days following the bombings at the Boston Marathon. Even employees who were locked in their homes in Boston and couldn't get into the office were able to work from remote locations, Mr. Napolitano said.

“Thank God for iPads,” he said.

Emergencies such as the Oklahoma tornado should provide an opportunity for advisers to show their clients they care about more than just their finances, Mr. Hulett said.

“Whether a natural disaster or just a market correction, if your clients don't hear from you, the message is that you don't care about them,” he said. “Even if you don't have anything of substance to add, other than that you are thinking of them, this is a big win with a client.”

Darla Mercado contributed to this story.

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