The Money Managers | In the News

We are all reeling from the horror of the bushfires and the tragedy that has befallen so many of our fellow Victorians. The extent is so vast that nearly all of know at least someone who has been personally affected. The concerns we have had about the financial crisis have been suddenly bought into stark perspective.

As we move beyond the immediate crisis we can start to focus on the difficult issue of disaster recovery and getting people back on their feet and rebuilding their lives. It has been estimated that the property damage alone will be over $500 million, perhaps substantially more. The insurance industry estimates that 25% of people in the community are not insured for house or contents insurance. Should some of the victims be underinsured it will complicate their situation immeasurably.

For many who have lost loved ones as well as property the financial situation is an added burden. If they didn’t have appropriate life insurance or income protection they will find themselves in a diabolical situation. These are the people who will be in most need of our assistance.

The authorities have moved swiftly to begin the process of reissuing identity documents for survivors as some who have lost everything need to re-establish their legal identity. Many will have lost documents pertaining to property and shareholdings as well as wills and drivers licenses.

The community has been moved to respond quickly and with generosity that is indicative of our national character. This has extended beyond Government support and community and individual responses to corporate and business support.

The Financial Planning Association (FPA) has already moved quickly to establish a pro bono service where their Financial Planner members will provide pro bono strategy and planning advice to victims of the fires. The Association has professional members in all of the affected areas that will be able to work free of charge with anyone affected by the fires.

The provision of this service will prove invaluable to anyone who has suddenly found themselves looking at an uncertain future. It is a practical way that the financial planning community can do something to make a difference. I will certainly be making myself available, as will many colleagues. The contact number at the FPA is 1800 626 393 and the email contact is probono@fpa.asn.au and anyone affected by the fires should be encouraged to make contact.

Professional advice, provided free of charge will assist to give a degree of peace of mind at a difficult time. Some of the advantages of having a comprehensive financial plan drawn up will be a concrete understanding of what resources are available to begin rebuilding your life. The first step will be to look at your remaining resources, not only investment assets but your income generating ability as well. Although many in fire ravaged areas were retirees and were no longer working full time.

Part of the process will be that insurance will need to be reassessed. Not only home, contents and car insurance for the future but life, trauma and income protection coverage will be needed at an appropriate level too. Health Insurance is another area that needs to be considered.

Estate planning as well as retirement and superannuation planning is something that will need to be looked at. This will be a time for taking stock and determining priorities. Lifestyle decisions and budgeting for what is important to you will need to be thought through. Life will never be the same again but new beginnings need to be made. Many will want to rebuild their properties but there will be some that will want to start afresh somewhere else and there will be all the planning that is needed for this to be successful. There will be an impact on property values in some of the worse affected areas but gradually normalcy will return.

Case officers are being assigned through Centrelink and a pro bono planner can work with government representatives to achieve the best outcomes. There is likely to be work needed on reissuing policies as well as investment advice in relation to income streams and pensions as well as entitlement to government pensions and programs.

The experience of witnessing the loss suffered in the bushfires by so many of our fellow Victorians has been a salutary lesson to all of us to think of our risk management. We can’t begin to imagine the trauma these people have been going through but it does cause us to question what risk minimization and protection we have put in place in our own lives.

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Many Hands Will Be Needed In Recovery Effort

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