Helping Indigenous Communities Manage Wealth

via Advisors.ca | June 21, 2013

Today, Canadians can take part in various indigenous events in celebration of National Indigenous Peoples Day. Why not give your indigenous clients a call and wish them a happy one? Or better yet, invite them to one of the events.

And for advisors keen on breaking into this niche client base, learn from Jack Jamieson, vice president of indigenous services at T.E. Wealth. He says there’s new wealth being created within indigenous communities across Canada thanks to specific claim settlements, resource sharing, and gaming revenues.

Regardless of the source of new monies, funds typically are placed in a trust.

And because many communities have transitioned from extreme poverty to trust fund owners in fairly short order, like any new trustee they often lack the experience to manage this sudden wealth. So advisors willing to learn the culture, and connect with the community, play key roles in educating these clients.

That’s where Jamieson focuses his business. After he launched an indigenous practice at Ernst & Young, he moved to T .E. Wealth and created its indigenous services division eight years ago.

Today the team of six, three of whom are of indigenous descent, works with 20 communities with more than $1 billion in assets under management.

“Among other things, our role is to help our clients be properly positioned in the marketplace based on their needs and level of assets,” he says.

At times, his reviews of trust investments find clients are working with money managers who placed significant sums inappropriately, or aligned with the wrong investment managers. Worse, he sometimes finds managers who have swooped in merely for the chance of making money—a situation he calls very unfortunate. “If a community is getting a significant settlement, they’re probably going to end up in the local newspaper and they’ll get people from the industry who want to manage their money,” says Jamieson.

“And while all products [and] providers exist for a reason, not all are appropriate.”

It’s important to strike a balance between the distribution of trust income and preserving capital.

“Given most communities have many immediate social and economic needs, it’s vital to ensure that the trust is capable of providing the same level of benefit in 30 years as it does today.” He adds, “It would be understandable that political leaders would want to disburse more money today and do good things in the community.”

Sources of Indigenous Wealth

Land claim settlements:

As late as 1923 , the Canadian government signed treaties with indigenous communities that included compensation for building on their lands. But in some cases, these payments have been insufficient due to boundary disputes or loss of land use; in other cases, the treaties were not honoured. So within the last two decades, communities have been going to court and winning cash settlements for not being properly paid. In Ontario, there are currently 60 ongoing land claims.

Gaming revenues:
Casino Rama, for example, has a profit-sharing formula that benefits First Nation communities in Ontario.

Profit sharing with resource companies:
Some communities are located in resource-rich areas. The government has passed legislation that imposes a Duty to Consult, meaning exploration companies must negotiate deals with these communities if they want to dig on their lands. In many cases, this includes a profit-sharing arrangement with the community and the training and employment of community members.

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These articles are for general informational purposes only. Please obtain professional advice before taking any action based on this information. No endorsement or approval of any third parties or their advice, information, products or services should be implied by any references to third parties contained in any article. Trademarks cited in these articles are the respective properties of their owners.

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