Financial Disasters That Could Happen to Anyone — And How to Help Your Clients Prepare

You don’t want to overwhelm people with a litany of things that could go wrong, but you don’t want to sugarcoat anything, either. It’s a difficult line to walk. Here are some ideas to communicate to your clients so they can be informed of the dangers while staying optimistic at the same time.

Natural Disasters

No matter where your clients live, they may fall victim to a natural disaster, whether it’s a twister in “Tornado Alley,” an earthquake in California, a blizzard in Colorado, or a hurricane on the Gulf Coast.

Weather catastrophes are a threat to homeowners and small businesses alike, and many small business owners have said they’re unprepared to deal with disasters. The loss of a home, business, or other major asset can be financially catastrophic as well as emotionally devastating. That’s the bad news.

The good news is that they can lessen the possibility of a disaster causing financial ruin. It’s a great idea to emphasize the power that’s in their hands. Remind clients that they can bounce back in the aftermath of disaster with the help of forethought, planning, determination, and resilience.

To minimize the risk of disaster, they can:

• Avoid areas of greatest risk. Clients can research how likely disasters are to happen in given areas. Maybe that means buying a little farther away from a known earthquake fault line or targeting an area known for mild weather and low fire danger. For example, it’s a good idea not to buy a mobile home in a tornado-prone area or build too close to a flood plain.

• Solidify their insurance. Work with clients to make sure their homeowners, business, and other insurance policies are tailored to the kind of risks they’re most likely to face. They need coverage that will support them sufficiently for all the kinds of disaster that might strike.

• Keep a solid stock of essentials. Remind clients to be on the lookout for weather alerts so they can stock up early on essentials like water, nonperishable food, paper towels, toilet paper, etc. before a disaster hits. They’ll want to keep ready a first-aid kit, flashlight with extra batteries, their prescriptions filled, and a tool kit.

• Implement a disaster plan. Let your clients know it’s important to develop an emergency plan that addresses all the possibilities. They’ll need to know how to escape in case of fire (and to have smoke detectors to alert them), and where to take refuge in case of a tornado, earthquake, or hurricane. This type of planning also should involve a business disaster and succession plan that will help keep the business operational, leaders in control, and employees at work in the aftermath, if possible.

Traffic Accidents

Whether their business employs a fleet or not, clients should know it pays to be a careful driver. Road safety can reduce your clients’ (and their employees’) chances of being in an accident and also minimize their insurance costs. They’re going to like the sound of that.

Drivers won’t always be able to avoid accidents, but by avoiding high-traffic areas, bad roads, and inclement weather whenever possible, they can certainly minimize their chances of being caught in one. And it’s important to learn how to deal with less-than-ideal conditions: to navigate rainstorms, icy roadways, and snowy conditions, if necessary.

It’s also important to have the right equipment and make sure their car is properly serviced and maintained, especially if clients have a fleet to maintain. Tires are important in dealing with adverse weather conditions: making sure they’re properly balanced, have good tread, and aren’t cracking or bulging. Tire failure causes approximately 11,000 accidents per year, which can be disastrous for your client and their finances.  Tire failure or blowout can cause be disastrous.

Again, it’s a good idea for clients to make sure their insurance coverage is sufficient. A bad accident can lead to hospital stays, broken bones, extended time off work, and chronic conditions that can create significant costs. These can add up not just in the days following a crash, but in the long term as well.

Be Prepared

Of course, not all disasters are weather- or vehicle-related, though those are common. For example, a digital breach or online theft can prove just as catastrophic to businesses and individuals as a hurricane. So, you should recommend clients monitor and update their cybersecurity infrastructure regularly.

Another kind of disaster people don’t like to think about is a death in the family, but it’s important to prepare for the possibility. Recommend that clients enact a plan to distribute their assets, pay for medical care, and designate a power of attorney if they become incapacitated or pass away. An estate planning checklist can help them ensure they aren’t missing any key components.

While insurance is a key aspect of financial preparation, it’s not the only one. Putting money away in savings to draw on in case of a crisis is important. And good credit can be a lifesaver if your clients need funds to bounce back after a disaster, whether they’re rebuilding their homes or re-establishing small businesses.

Talking about disaster planning is never easy, but it’s necessary. In fact, it can be easier to accept coming from a trusted expert. These are just a few things you can do to ease the burden on your clients and empower them to persevere through difficult times.