Help aboriginal communities manage wealth

Jack Jamieson, PFP, is vice-president, Aboriginal Services at T.E. Wealth in Waterloo, Ont. He helped launch the division eight years ago, and has been in the financial services industry for more than 30 years.

Today, Canadians can take part in various aboriginal events in celebration of National Aboriginal Day. Why not give your aboriginal 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 aboriginal services at T. E. Wealth. He says there’s new wealth being created within aboriginal 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 aboriginal practice at Ernst & Young, he moved to T.E. Wealth and created its aboriginal services division eight years ago.

There are 600 first nations communities in Canada

Source: Statistics Canada

Sources of aboriginal wealth

• Land claim settlements: As late as 1923, the Canadian government signed treaties with aboriginal 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.

Today the team of six, three of whom are of aboriginal 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.”

Chasing prospects

Acquiring new clients isn’t easy. Jamieson warns it can take years to build new relationships, and you must understand the embedded culture that exists. This is a key first step to gaining trust.

“Many industry participants just walk into a community and say, ‘I’m here, how can I help?’ ” he says. “To be effective, you need to immerse yourself in the aboriginal community. It’s about seeing this new wealth create an improved economic and social environment for your clients.”

For instance, Jamieson is a member of the Aboriginal Financial Officers Association and the National Aboriginal Trust Officers Association. He’s a regular attendee and speaker at aboriginal conferences and enjoys attending community events and pow-wows.

And he couldn’t do it alone. The long lead times needed to build a client base that would pay for his services, and the expenses and commitment to travel to remote communities, meant Jamieson needed his firm’s support for it to be cost-efficient. For instance, it took him two-and-a-half years before one of the First Nation communities became his client. During this time, he hosted workshops about how to invest wealth, answered questions and provided support—all free of charge.

“It wasn’t always profitable,” he says. “There were long periods of [no income], but leadership knew about this.

“So we built relationships [with the communities] and when their settlements were received, we were fortunate they chose us to help.”

Suzanne Sharma is the associate editor of Advisor Group.