5 Tips for Dealing with Banks

June 22, 2021

Treasurers regularly field sales calls from local banks and financial institutions seeking municipal investment business. Navigating these calls can be tricky. Clarington Treasurer Trevor Pinn, who serves as President of the Municipal Finance Officers Association and on the Board of ONE Investment, shared his top five tips for dealing with sales calls from banks:

(1)    Know municipal investing rules because the institution may not: Municipal investments are guided by the Municipal Act. Many financial advisors do not realize that the Province limits municipal investments to a pre-approved ‘Legal List’ of investments. For example, ONE’s Canadian Equity Portfolio is the only option on this list for municipalities who want equity exposure. 

While the Prudent Investor Regime provides much broader investment powers, it comes with its own set of requirements. Under the Regime, municipal investments must be guided by an investment board and a Council-approved Investment Policy Statement. 

You need to trust anyone who is selling you an investment product. Pinn said asking about their municipal experience is critical to ensuring they understand your needs. He will sometimes even ask them questions about municipal investments, to ensure he’s getting a product that meets his responsibilities under the Municipal Act.

(2)    Know what you are getting: It may seem simple, but if you are looking at fixed income products make sure it is clear if you are purchasing a GIC or a bond. You also need to know the financial terms and restrictions for accessing those funds. Liquidity can be important for managing unforeseen circumstances, especially in smaller communities. For municipalities, Pinn notes that bonds provide more liquidity as they are often traded, this provides municipalities more flexibility to react than locked-in investments. Unlike a GIC, which locks up money for a fixed term, a bond can offer access to funds on short notice if needed. 

(3)    Shop around: Different banks have different commission rates, which can impact your returns, even for the same or similar investment products. Shop around and don’t be afraid to ask pointed questions about how the financial advisor is compensated, rates of commission and knowledge of the municipal sector. Finding a trusted advisor with a competitive rate is worth the time. 

(4)    Be a proactive investor - it pays off: Pinn acknowledges that being more proactive takes time in a Treasurer’s already busy day. However, he notes that investing strategically can help increase revenues while reducing the impact on taxpayers, making it well worth the effort. This is especially true when it comes to long-term capital projects. The longer time frame gives Treasurers enough runway to take on well-managed risk to maximize the return. When dealing with sizeable reserve funds, even small improvements in returns can provide substantial benefit. 

(5)    Reach out for help: Treasurers have plenty on their plate when it comes to both day-to-day financial management and long-term budgeting and planning. Pinn suggests that municipal treasurers reach out to their networks, municipal associations and their peers to share ideas and problem-solve. 



The ONE Investment Advisory Services team can help treasures navigate the risks and rewards of investing.
The team combines municipal finance expertise with knowledge of financial markets.

Category
Investment Management
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