Journal of Financial Planning: February 2026
NOTE: Please be aware that the audio version, created with Amazon Polly, may contain mispronunciations.
Juan Sandoval is a Ph.D. student in financial planning at the University of Georgia, with experience as a university lecturer in Colombia. His research focuses on the impact of natural disasters on household finances. He has research experience and has published in several academic journals.
Lindsay Mapes is a Ph.D. student in financial planning at the University of Georgia. Her research examines financial decision-making in Native American households, policy and poverty, and financial education. She also provides financial counseling, presentations, and videos to UGA graduate students.
Charlotte Ingram is a Ph.D. student in financial planning, specializing in sudden wealth and client decision-making.
Her research examines emotional framing, risk perception, and holistic planning strategies to support advisers in guiding clients through complex financial transitions with clarity, empathy, and informed structure.
Joseph W. Goetz, Ph.D., serves as CEO of Elwood & Goetz Wealth Advisory Group and as a Josiah Meigs Distinguished Professor of Financial Planning at the University of Georgia in Athens, GA. With graduate degrees in financial planning and psychology from Texas Tech University, he brings academic depth and practical insight to provide fee-only, fiduciary-based retirement and wealth management advice tailored to clients’ long-term goals.
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The devastation caused by natural disasters, particularly wildfires, has escalated at an alarming rate in recent years. For example, Wang et al. (2021) estimated more than $148.5 billion in costs associated with wildfires in 2018, from which $27.7 billion were capital losses and $32.2 billion were health costs. As climate-exacerbated wildfires are increasing in number and severity (Cunningham et al. 2024), financial planners are positioned to play a pivotal role in helping clients navigate the financial and emotional consequences of climate-related disasters. This role is particularly important given that individuals are more prone to suboptimal financial decision-making following exposure to traumatic events (Goetz and Gale 2014).
The CFP Certification Learning Objectives include risk and insurance planning, providing guidance on assessing risk exposure and determining the need for coverage. However, natural disasters are commonly overlooked and are becoming increasingly difficult to insure as they become more frequent (Kousky 2019). Therefore, we propose complementary tools to assist clients in preparing for and recovering from wildfires.
Our strategies and best practices are designed not only to provide a roadmap for middle- and high-income clients, but also to serve as a resource for socially and geographically vulnerable communities that may also be impacted by wildfires. Weather catastrophes, particularly wildfires, disproportionately affect low-income households due to their overexposure to natural disasters, lower ability to financially cope and recover, and higher permanent impact on education and health (Hallegatte et al. 2016).
This article provides strategies for guiding clients before, during, and after a wildfire event, including checklists and actionable steps. By providing financial planners with these tools, they can be better prepared to assist their clients, both financially and psychologically. The strategies depend on the client’s situation: whether they are preparing for, experiencing, or recovering from a natural disaster.
Proactive Planning
A primary consideration and strategy is to avoid living in or moving to areas with a high wildfire risk. High-risk areas can be identified using maps from the USDA Forest Service and Federal Emergency Management Agency (FEMA). Additionally, online real estate platforms like Zillow now include information on natural hazards associated with properties that are for sale. If the client already resides in an area with an excessively high wildfire risk, they may consider relocating to a safer location to mitigate risk. For those clients who already live in a wildfire-prone area and plan to stay, here is a set of strategies that aim to protect their wealth and health:
1. Increase emergency savings. Holding liquid assets provides flexibility to cover future unexpected expenses, compared to other strategies whose funds are more conditional. The amount should be enough to cover deductibles, temporary relocation, food, transportation, and any uninsured risk. This strategy is even more crucial for clients who cannot afford appropriate insurance coverage on their property.
2. Create an inventory of assets. This strategy can make the claims process easier with insurance companies, ease the filing of taxes to claim deductions and credits, and provide access to other types of assistance. It also offers evidence for third parties to assess the property losses. This can be accomplished using several methods, but it can be as simple as using your personal cell phone video app to record household items, going room by room and drawer by drawer through the property, capturing videos and photos of belongings. Completing this task annually is recommended to ensure documentation of new purchases and household changes to the property, such as remodels or additions of amenities. It is also recommended that they save important documents for future reference, such as property titles and receipts.
Although the priority is to record the covered assets, the client may also include other non-physical assets, such as financial information. To document all their clients’ assets, planners could start by constructing a balance sheet for the client and including records of their main assets. To protect the information, it is essential to store it electronically with alternative access in case the owner is unable to do so.
3. Comprehensive insurance coverage. Review the client’s insurance coverage. Typically, homeowners’ insurance covers wildfires; however, in high wildfire risk areas, insurance companies often exclude them or charge considerably higher premiums to include them. As an alternative, states such as California and Colorado offer programs that aim to provide this coverage, with limits and conditions varying by state.
The goal is to cover the current value of a client’s property. Financial planners should evaluate whether the insurance is a replacement cost coverage and consider increasing coverage by using extended or guaranteed replacement costs or other alternatives, as construction costs tend to be higher following a natural disaster (Kousky 2019).
Most homeowners’ insurance policies include personal property coverage, though with certain limitations. Therefore, as part of the inventory recording strategy, consider acquiring additional coverage for valuable private property that may be at risk in the event of a wildfire, is challenging to transport, or is worth more than $2,500.
If the client is a renter, they should have coverage with renters’ insurance. Check to see if additional personal property and additional living expense (ALE) coverage may be required to cover lost property and temporary relocation expenses.
Another recommendation is to develop property improvements to increase the defensive space around the home, thereby enhancing the client’s home’s resilience against wildfires. Many organizations, such as Firewise USA, work at the community level, while others focus on the individual level, such as the Insurance Institute for Business and Home Safety.
If a wildfire is imminent for your client, identifying early emergency alerts and evacuation plans, which are generally coordinated by local authorities, is imperative. The National Weather Service typically issues early warnings through multiple channels, including text messages and radio broadcasts. It is essential that your client has access to the latest information early in the disaster through these public channels. Identifying these and ensuring your client gets signed up is crucial.
Since evacuation plans require coordination (Abbasov 2025), your client should familiarize themselves with their county’s evacuation plan, including evacuation routes, shelters, and locations to access supplies. Additionally, it is advisable to have a list of essential items that can be packed in case of evacuation, including food, water, clothing, and necessary devices.
Responding to Wildfire: Immediate Steps
In the immediate aftermath of a wildfire, the first step a planner should take is financial triage: assess your client’s current financial condition and stabilize their financial situation. Begin by assessing your client’s cash flow needs, including hotel expenses, food costs, and potential medical care expenses. Then identify your client’s cash sources, ideally their emergency savings. They may need assistance accessing their emergency funds or ensuring they are tapping the correct fund. For example, a brokerage account might be used before a 401(k) distribution to cover these expenses, depending on the tax implications. Your clients may also need guidance in managing their debts, prioritizing higher-priority debts while helping them work with creditors, such as mortgage companies or landlords, to defer financial obligations. Inform your clients to retain all documentation of any expenses incurred during this period, as an insurance company may reimburse them later.
Then, it is essential to guide clients through the often-confusing insurance claims process. This entails assisting your client with contacting their homeowners’ insurance company to report the incident and file a potential claim. When it is safe for your client to return home, they can assess the damage using photos and video and then file a complete claim. The insurance aspect can be tedious with paperwork for claims, possible denials, and appeals. You can help your client understand policies and assist them with appealing a denied claim.
An additional critical step involves evaluating the relief aid programs for which clients may be eligible, as research indicates that vulnerable populations frequently underutilize such resources (Hallegatte et al. 2016). Financial planners can play a pivotal role by systematically identifying, analyzing, and facilitating access to relevant assistance programs. These may include federal initiatives such as FEMA and SBA disaster loans, as well as state and local grants, charitable relief funds, and prospective tax benefits.
Rebuilding and Recovery
Natural disasters can be life-changing experiences that leave clients vulnerable (To et al. 2021). This and the next section provide guidelines for reducing your clients’ financial vulnerability after a wildfire, enabling them to recover quickly and lead their fullest lives.
If your client’s property is destroyed, a budget will be required for its reconstruction, which is expected to be higher after a natural disaster. This is based, in part, on FEMA and National Association of Insurance Commissioners (NAIC) estimations. To increase the property’s resilience, the new house should comply with the most recent construction codes and include additional measures to withstand wildfires better.
Finally, adjustments to clients’ comprehensive financial plans should be implemented, including an additional tax-planning strategy for losses associated with the wildfire. Potential benefits may include amending previous tax returns to deduct losses not covered by insurance reimbursements, thus helping with more immediate cash flow needs. As with insurance claims, this process requires proper documentation, timely filing, and professional assistance. IRS Publication 547 explains the tax treatment of casualties, thefts, and losses, including those resulting from wildfires.
Checklist: Response and Recovery
Building on the previous framework, the following checklist outlines practical and financial strategies that your firm can adapt to help clients navigate the challenges they face immediately after a wildfire. It could be mutually beneficial to review this checklist with your client and collaborate on implementing the strategies.
1. Prevention for at-risk clients and proactive planning. These actions focus on preparedness and mitigation:
- Proactive financial planning: Build emergency savings to cover deductibles and uninsured risk with liquid assets. Review policies for comprehensive insurance and adequate wildfire coverage. Identify trusted financial managers for emergencies (estate planning).
- Asset inventory: Create detailed records with cloud storage backup. Digitally back up financial and personal documents.
- Insurance review: Ensure coverage aligns with local rebuilding costs and includes personal belongings. Consider additional policies for fire risks.
- Fire-resistant environment: Maintain a defensible space around your home. Use fire-resistant building materials. Install ember-resistant vents and upgrade windows to tempered glass. Pursue certifications from the Insurance Institute for Business & Home Safety (IBHS) Certification such as FORTIFIED Home and Wildfire Prepared Home.
- Stay connected: Sign up for local emergency alerts and stay informed about fire risks. Network with others who have been affected to share resources and advice.
- Behavioral resilience planning: Implement motivational strategies by encouraging small, achievable steps to build confidence and long-term resilience.
2. Immediate action plan. These actions are critical for ensuring safety and initiating the recovery process immediately following a loss:
- Ensure safety: Prioritize the safety of loved ones and pets. Follow evacuation orders and monitor local alerts. Sign up for notifications to receive updates on when it is safe to access the property and learn about safety protocols.
- Gather supplies: Acquire food, water, and other essential goods.
- Secure temporary housing: If your household is destroyed, consider a long-term rental search for a property suitable for several months up to 1–2 years of residence. Then coordinate with your insurance company to arrange for payments to be made directly to the landlord.
- Document damages: Once the local authorities have determined your property is safe to return, thoroughly photograph and video all damage before cleanup begins.
- Establish a mailing address: Obtain a P.O. Box for receiving mail and use it as the mailing address on all official forms. Forward mail from your previous address to the P.O. Box.
- Register for assistance: Register with shelters, the Red Cross, and FEMA. Evaluate eligibility for disaster relief programs through state and federal agencies. Apply for assistance from the government and local organizations.
- Contact insurance providers: File claims for “Loss of Use” to access immediate funds for essentials and secure housing. Verify coverage includes rebuilding costs and additional living expenses.
- Preserve receipts: Keep receipts for all expenses, as Loss of Use insurance may reimburse incidentals like toiletries and clothing. You may also receive tax relief from some expenses.
- Utilize community support: Share your situation with local businesses (many offer discounts or donations). Accept help from friends and family for errands, emotional support, and access to mental health resources.
- Contact mortgage servicer: Contact your mortgage provider to discuss payment deferrals, loan modifications, or other available assistance programs, as many financial institutions offer additional flexibility for affected clients.
3. Steps for recovery. These actions focus on long-term financial and logistical recovery:
- Document losses: Create a detailed personal property list organized by room, including replacement costs. Be thorough, as losses not covered by insurance may still qualify for tax deductions.
- Manage utilities and subscriptions: Freeze or cancel utility services (electricity, gas, internet, landline). Update subscriptions (e.g., newspaper delivery) to your P.O. Box.
- Insurance follow-up and review: Work with your insurance provider to address specialty needs (car or valuable item coverage). Confirm coverage includes debris removal and permit applications. Reevaluate insurance coverage by reviewing and updating policies to reflect lessons learned from the disaster.
- Apply for permits: Apply for permits related to debris removal, erosion control, and temporary power poles or trailers. Coordinate with your insurance provider to ensure these costs are covered.
- Tax considerations: Consult with your financial and tax adviser to claim monetary losses for destroyed items not covered by insurance. Individuals whose homes are destroyed or damaged by wildfire may be eligible to amend prior tax returns to claim a refund for taxes previously paid.
- Emotional resilience: Acknowledge the emotional challenges of recovery, particularly when itemizing losses. Allow yourself time to grieve and lean on support networks, consider trauma-informed counseling if needed.
- Financial and rebuilding planning: Create a budget for rebuilding or relocating, considering both short- and long-term expenses. Collaborate with your financial planner to refine your financial goals and restore stability.
- Leverage community and professional resources: Team up with legal and tax experts to navigate post-disaster claims, deductions, and disputes. Learn from others navigating similar recovery and rebuilding processes.
The process of assisting clients affected by, or at risk of, wildfire is inherently cyclical. Clients engaged in disaster preparedness should take proactive measures to mitigate potential losses. In the event that a wildfire impacts their property, financial planners can guide them through response and recovery actions. Ultimately, the process returns to proactive planning, reinforcing a continuous cycle of preparedness and resilience.
References
Abbasov, R. 2025. “Bridging Climate Adaptation Gaps: Economic Policies, Financial Mechanisms, and Stakeholder Integration for Resilient Development.” American Journal of Economics and Business Management 8.
Cunningham, C. X., G. J. Williamson, and D. M. J. S. Bowman. 2024. “Increasing Frequency and Intensity of the Most Extreme Wildfires on Earth.” Nature Ecology and Evolution 8 (8): 1,420–1,425. https://doi.org/10.1038/s41559-024-02452-2.
Goetz, J. W., and J. E. Gale. 2014. “Financial Therapy: De-Biasing and Client Behaviors.” In Investor Behavior: The Psychology of Financial Planning and Investing: 227–244.
Hallegatte, S., A. Vogt-Schilb, M. Bangalore, and J. Rozenberg. 2016. Unbreakable: Building the Resilience of the Poor in the Face of Natural Disasters. World Bank Publications.
Kousky, C. 2019. “The Role of Natural Disaster Insurance in Recovery and Risk Reduction.” Annual Review of Resource Economics 11 (1): 339–418. https://doi.org/10.1146/annurev-resource-100518-094028.
To, P., E. Eboreime, and V. I. O. Agyapong. 2021. “The Impact of Wildfires on Mental Health: A Scoping Review.” Behavioral Sciences 11 (9). https://doi.org/10.3390/bs11090126.
Wang, D., D. Guan, S. Zhu, M. Mac Kinnon, G. Geng, Q. Zhang, H. Zheng, T. Lei, S. Shao, P. Gong, and S. J. Davis. 2021. “Economic Footprint of California Wildfires in 2018.” Nature Sustainability 4 (3): 252–260. https://doi.org/10.1038/s41893-020-00646-7.
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