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Prudent Investor Update, May 1, 2019

Paving the way for prudent investing


There is no doubt that the road to prudent investor means taking Council along for a ride through some complex decisions and regulations.

Several municipalities have begun the process and are showing how it can be done. ONE Investment, for its part, is focused on helping make the steps as simple and painless as possible, with lots of ready to use resources.

To pursue prudent investing, there are several key steps that, with respect for Council authority, require their approval. These steps methodically help to educate Council about the standard and allows them time to review by-laws, investment policy statements and agreements with the Investment Board or Joint Investment Board.

In addition to creating a Joint Investment Board solution, ONE Investment is creating templates for staff reports, by-laws and other materials needed for all the steps, saving time and effort for treasurers.

Charlotte Edie, Treasurer for Kenora said the tools and support from ONE make it possible for the city to pursue prudent investor. Although they qualify independently, they don’t have the internal staff or financial resources to fulfill all the requirements and form an investment board of their own.

“ONE’s template for the first Council report was comprehensive yet easy to understand,” Charlotte said. “Council gave us the green light to continue exploring the option and go on to next steps. Knowing we will have support every step of the way  makes it easier.”

Whitby Treasurer Ken Nix, who is also the Chair of ONE Investment, said he started introducing the general concept to Council early, during Council orientation sessions as well as the budget process. This helped raise awareness of the need for new revenue sources and the potential to reduce risk and improve returns under prudent investing.

Last month, in April, he presented to the board an introductory staff report that summarized all of the background on the investment changes at a high level, including who qualifies to be eligible and options for the Investment Board/Joint Investment Board. He emphasizes how it can help address local financial needs by better managing risk and improving investment returns.

Because it can be complex, Ken says breaking the process down into small pieces makes it easier for Council to digest.  

One Council question he’s heard has been about handing over management of investment to an investment board. Ken explains that the municipality retains a lot of control over how money is invested through its Investment Policy Statement. Further, the municipality benefits from a professionally managed board with expertise in investment planning and financial markets.

It’s important that throughout the process, Council gets good, easy to understand information, so they make good decisions, Nix notes.