A new era of opportunity for Canada’s aboriginal communities

Summer 2008
By Blaine Knott, National Manager, Aboriginal Services, T. E. Investment Counsel, Edmonton

The settlement of the more than 1,000 outstanding aboriginal land claims will collectively put billions of dollars in the hands of the affected Aboriginal communities. With this money comes a one-in-a-lifetime opportunity for the bands but only when it can be put to good use to further the development of the community and provide an economic base for generations to come.

As member of the Peguis First Nation in Manitoba, I’ve experienced first hand the right way for an aboriginal community to deal with a sudden windfall. As a result of the settlement of land claims, Peguis First Nation will soon be one of the largest landowners in Manitoba. With proper stewardship of this legacy, the band is developing its economic potential through land leases to farmers and partnering with businesses to tap into natural resources such as hydro and minerals. Furthermore, it is looking after the needs of the community, negotiating inclusion in the employment opportunities that result from its business ventures and managing the income stream to invest in community facilities such as a new arena.

What has been critical for this process is that the Chief and Council are able to gain consensus on how to use the money for the benefit of the community for generations to come. As you can imagine, this is not always easy. Conflicting visions, immediate demands and distrust within the community can make this process contentious and without strong leadership can result in ill-conceived decisions. This can be compounded by the fact that a majority of aboriginals in Canada have little financial education – approximately 80% of on-reserve populations in Canada don’t have a bank account, never mind knowledge of how to invest and engage in the capital markets. As the land claims process begins to accelerate – in the past we could expect one claim to be settled every ten years, now it is more likely to be ten claims that are settled per year, it is vital that Canada’s Aboriginal communities are able to fully benefit from the money they receive.

How T.E. Wealth is getting involved

T. E. Wealth has been a leader in establishing Aboriginal Services within T.E. Investment Counsel to work directly with Aboriginal Chiefs and Councils on prudently managing the proceeds of any settlements in the best interests of the community. T.E. Wealth’s suite of services – institutional investment management and oversight and individual financial education and financial planning combined with its tradition of objective, unbiased advice, make us ideally suited to meet the needs of Aboriginal communities.

Our approach is to work in partnership with the Aboriginal community to develop an investment strategy that will assist the community with achieving its long-term goals and objectives. We begin with a discussion of what the community wants to do with the money. This leads to an examination of the benefits to the community of a disciplined investment process. In our experience, clients are best served when they fully understand and commit to a disciplined process that ensures both partners, the community as represented by the Chief and Council and the investment counselor, are focused on the investment policy goals. This partnership approach is similar to those in business-to-business relationships where both parties share resources to achieve a common goal.

Promoting good governance and financial education

We work with the Chief and Council to develop an investment policy statement involving investment analysis and planning, portfolio structure and design, investment manager search and selection, performance measurement, reporting and interpretation, ongoing monitoring. To ensure that the stated goals can be achieved we provide the community with investment education (adapted for the needs of the community from T.E. Wealth’s employee education resources). They are more likely to realize their goals when all the stakeholders have an equal level of understanding of the investment strategy and how it will work to their benefit.

With greater wealth also comes greater fiduciary responsibility. Today, the roles of many Chiefs and Councils are changing. For one thing, many are assuming these roles for longer terms. In addition, there is greater accountability and, therefore, the need for formalized governance. This is especially important when the community is looking to develop business opportunities, as potential partners will want evidence of stability and good governance. As result, we can provide Chief and Council with governance education and incorporate the necessary mechanisms of good governance into the investment management process.

In the coming years, through the settlement of land claims, many Aboriginal leaders will have the opportunity to transform their communities from subsistence economies to important economic entities. When properly managed this transformation can create a legacy for many generations to come.