Belleville city council has strongly supported a letter from the Township of Amour calling for governments to make a substantial investment in high-speed internet connectivity in rural areas of Ontario.
“The letter we received from Armour Township and Coun. Roy Ward summarizes the difficulties of people in rural areas have with poor connectivity and they say, and I agree, ‘high speed connectivity cannot be seen as a luxury or nice to have anymore than hydro should be’. The wise investment is providing connectivity for every resident in the province, and with the increased demand on internet and so many people using the internet and working from home it must make it very difficult in the rural areas and it can’t get anything but worse, so I’m asking that we support this motion,” said Coun. Pat Culhane.
Thurlow Ward Councillors Paul Carr and Bill Sandison both supported the proposal, noting they have been advocating for improved service in their rural area of Belleville.
“High speed internet in rural sections of Ontario has been a screaming need for at least a decade and over the course of the last year-and-a-half, maybe even two years, we’ve had federal announcements of money, we’ve had provincial announcements of money, we most recently had the Eastern Ontario Regional Network take on the procurement of expanding internet in the rural Ontario, and specifically in our region,” said Sandison.
However, Sandison said the deployment schedule for the monies that have already been committed is needed. He said a schedule, rather than just discussion of funds, would indicate progress.
“This has been a message to the feds and the province for the last 10 to 15 years, and it seems to be no better today then it was in 2008,” said Coun. Sean Kelly.
Carr said the issue has been one for many years and recalled meeting with former MP Mike Bossio on Parliament Hill in early 2018 as well as a Connect to Innovate announcement the same year in Corbyville.
“We were told at that announcement that as far as rural Belleville goes and even rural Hastings County goes, and even rural Eastern Ontario goes that this would be the solution, and interestingly enough, the one thing that we don’t see is the timeline and we don’t see the deliverables,” Carr said.
Carr noted while he supported the motion wholeheartedly, “the more we pile on the better, but perhaps the mayor could send a letter to the Member of Parliament to get a timeline on some of these things. The announcements are great, and that Connect to Innovate announcement was supposed to solve all our broadband issues in Eastern Ontario and certainly in Belleville we would have high speed internet right to our northern border, and that hasn’t been the case, and I don’t even know how much work has been done.”
“The money has been promised, but it has not flowed yet because in our system of government we have to have contracts signed, you have to have RFPs released before the money gets released by those federal and provincial governments,” said Mayor Mitch Panciuk. “Successive governments have promised and have in some cases re-promised monies, meanwhile the Eastern Ontario Regional Network has been doing all the prep work and figuring out what the game plan is, and right now there is an RFP out for the installation of these towers and once that is received and a decision is made to award the contract only then will some of those funds move forward.”
Panciuk he has been told the project will be completed by 2025.
No matter your age, you invest for only one reason: to accumulate wealth. Anything else is charity.
Not that there’s anything wrong with charity (and faith and hope and all those other good things). Charity puts food on other families’ tables. Investing—good investing, smart investing, successful investing—puts food on your family’s table. And if you’re really good, smart and successful at investing, you can accumulate enough wealth to put plenty of food on both your family’s table and other families’ tables.
So-called “ESG”-based investing is treated seriously by many, including, judging from the many investment products touting their ESG affinity, many investment firms. Some even argue ESG-based investing produces more favorable investment returns than traditional financial-based investing. This may be true, if only for a very financial-based reason.
Any product that hits its groove attracts investors. When Apple
AAPL tore off its corporate suit and “changed everything” with the iPod (then the iPhone, then the iPad, and, pretty much, the i-anything), its stock took off. Hot products produce hot companies which leads to hot stocks.
All good, smart and successful investors pay attention to consumer demand. It doesn’t matter if those consumers are retail or business, a product that suddenly emerges into “must have” status means sales. For the company doing the selling, that means profits. For investors, profits mean favorable returns.
It’s as easy as that. Find a product boosted by surging demand, then ride that wave.
Right now, ESG-based investing is just such a product. As a result, it’s easy to confuse the story with the finances.
While environmental, social and governance (the “ESG” in ESG) may not appear to have a direct impact on revenues and profits, they very well may.
“Many investors have been raised in a society that has become increasingly aware of a variety of risks that affect the environment and social behavior & well-being and financial outcomes for companies,” says Robert ‘Bob’ Smith, CIO and President of Sage Advisory Services in Austin, Texas. “They have also come to understand the importance of good corporate governance, disruptive product innovation, and creative approaches to resource or time management. All of these elements are identified, evaluated, and beneficially highlighted through the effective ESG risk assessment application in the investment process.”
You can easily imagine how this zeal for ESG-based investing suggests companies might profit from selling ESG-based products. These products can range from organic foods to electric cars.
It’s not just actual products. To establish an ESG appeal to its entire product line, a company might take actions that align themselves with causes positioned to show support for ESG issues. Of course, investing in these “ESG-affiliates” does pose some risk.
“In some cases, we see statements from companies making products that when you make your purchase from them the company will donate funds to an ESG cause,” says Stephen Akin of Akin Investments, LLC in Biloxi, Mississippi. “In the event the company doesn’t follow through on those donations, then buyer’s remorse will set in and turn the young consumer away from the product they once loved.”
It’s not just failure to follow-through on philanthropic promises that can hurt companies. Changing definitions of acceptable behavior can resurface decades-old statements that cause one to cringe in today’s society. Endorsing the wrong political candidate or belonging to the wrong political party can lead activists to call for a boycott of an otherwise upstanding “good citizen” company.
“Any sort of scandal, however minor, can set off a firestorm of negative press for a company,” says Kathleen Owens, of Aurora Financial Planning & Investment Management LLC, in the San Francisco Bay Area. “Companies are boycotted for what a company executive Tweeted, board members are pressured to resign if they mis-speak. Groups of people have become very organized in coordinating a pushback on a company that they are displeased with.”
The greatest risk when it comes to ESG-based investing, however, lies in the greatest risk to ESG-based products. It’s one thing to be a good story stock, but that story has to be implementable.
“Younger consumers may desire to purchase products that align with their ESG goals, even if they are more expensive,” says Ryan Brown, partner at CR Myers & Associates in Southfield, Michigan. “If, however, those products are not as readily accessible to purchase, as easy (or easier) to use or will promote that goal in a truly scalable way, younger purchasers will likely shy away from them.”
Worse for higher cost ESG-based products is the awful reality of economics can come down hard, especially when the economy heads south.
“Younger generations are becoming increasingly skeptical and frugal after witnessing the 2008 financial crisis and recent coronavirus market drop,” says Brown. “If you’re asking them to spend more money on a product that they could otherwise purchase in a cheaper, generic version, that product best be able to accomplish those goals in a material fashion. You don’t see many Generation Z individuals driving a Tesla
It’s not just the coronavirus market drop, it is the impact the pandemic has had on certain sectors in the marketplace. This is particularly acute for those just entering the job market in states that have had trouble re-opening. Can those people, (in many ways the target market for ESG-based products), afford to pay for the luxury of supporting their favorites causes? And, if they can’t, what kind of financial impact will that have on the companies that sell those products?
“COVID-19 may put a damper on younger people spending according to their beliefs,” says Derek Horstmeyer, an Assistant Professor of Finance at George Mason University’s School of Business in Washington, D.C. “For those that are newly unemployed or have faced pay cuts it is now more difficult to pay extra for a good that aligns with their belief.”
Finally, what happens if we discover the appearance of ESG altruism is just that—an appearance, not a reality?
“The answer to this question may lie in a research project that one of my students just did,” says Michael Edesess, Adjunct Associate Professor, Division of Environment and Sustainability at Hong Kong University of Science and Technology. “She surveyed a couple of hundred subjects (mostly young and college-age) about their feelings about the ‘greenness’ of five different fashion brands. She found, surprisingly, little or no correlation between their beliefs in their greenness and their proclivity to buy them. Upon direct questioning of a few of the participants in the survey, she found that their preferences about other features of the products overwhelmed their preferences about their greenness. They may say they prefer green products, but when it comes down to it, they just want them to be stylish.”
Fashion, perhaps, provides the key to successful ESG-based investing. Fashion brands occupy a long spectrum from “bargain-basement” to “luxury.” Good, smart, and successful companies sell brands along that entire spectrum. Those companies with sustainable marketing strategies understand that you cannot sell luxury items using the same techniques that sell bargain-basement products. The same holds true for production and distribution systems.
Business models differ for high-margin products and low-margin products. At this point, ESG-based products appear to be high-margin products. Successful ESG-based investments will therefore be in companies that show they can implement a high-margin product business model.
Otherwise, if they’re dependent on consumers’ willingness to continue to pay a premium for ESG, they may be in for a dreadful surprise the next time we hit a broad-based recession.
Rivian has closed an investment round of $2.5 billion. The financing was led by funds and accounts advised by T. Rowe Price Associates, Inc. Rivian has developed and vertically integrated a connected electric platform that can be flexibly applied to a range of applications including the company’s adventure products as well as B2B products such as the Amazon last-mile delivery vans.
The Rivian R1T pickup. Photo credit: Jeff Johnson.
Rivian has developed and vertically integrated a connected electric platform that can be flexibly applied to a range of applications including the company’s adventure products as well as B2B products such as the Amazon last mile delivery vans.
Participants in this investment round include Soros Fund Management LLC, Coatue, Fidelity Management and Research Company, and Baron Capital Group. Existing shareholders Amazon and funds managed by BlackRock also participated.
We are focused on the launch of our R1T, R1S and Amazon delivery vehicles. With all three launches occurring in 2021, our teams are working hard to ensure our vehicles, supply chain and production systems are ready for a robust production ramp up. We are grateful for the strong investor support that helps enable us to focus on execution of our products.
—Rivian Founder and CEO RJ Scaringe
No new board seats have been added, and additional details about this investment are not being disclosed at this time. The investment announcement is Rivian’s first in 2020. In 2019:
In February, Rivian announced a $700 million funding round led by Amazon.
In April, Rivian announced that Ford Motor Company invested $500 million and that the companies would collaborate on a future program.
In September, Cox Automotive announced its $350 million investment in Rivian, complemented by plans to collaborate on logistics and service.
In late September, Rivian announced it was developing an electric delivery van for Amazon utilizing Rivian’s skateboard platform and that 100,000 of these vans had been ordered with deliveries starting in 2021.
In December, Rivian closed an investment round of $1.3 billion. The financing was led by funds and accounts advised by T. Rowe Price Associates, Inc. with additional participation from Amazon, Ford Motor Company and funds managed by BlackRock.
Rivian’s launch products, the R1T and R1S, deliver up to 400+ miles of range and provide a combination of performance, off-road capability and utility. These vehicles use the company’s flexible skateboard platform and will be produced at Rivian’s manufacturing plant in Normal, Ill., with customer deliveries expected to begin in 2021.
Every day our team fields phone calls and emails from clients asking how they can put money into their investment account. The inquiry is from the mindset of what is the most efficient way to make the deposit that is secure, easy and fast.
Many of our clients that are working are generating more income than they are spending. This is especially the case, once the mortgage is paid off. When this is the case, the focus normally turns to using the accumulated funds to build up investments savings in non-registered accounts, Registered Retirement Savings Plans (RRSP), Registered Education Savings Plan (RESP) and Tax Free Savings Accounts (TFSA).
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Some of our retired clients are making deposits into their investment accounts. In some cases, the pension and other income they receive exceed their expenses, and they would rather have us invest these funds than have them sit in a bank account earning very little.
When our clients sell a house, major asset (i.e. boat, plane), business, or receive an inheritance, they will often call to request guidance on how best to get the proceeds to us to invest within their accounts. Below are a few of the most common ways clients can make deposits into their investment accounts.
Every institution will have their own specific policies but the expectation is that branches will generally not accept cash deposits of any size, unless there is an exceptional service situation (e.g. to facilitate a client covering a small debit balance); however, this is possible only when the branch has appropriate procedures and controls in place to handle cash deposits. It should be noted that travelers’ cheques are considered as cash deposits and typically will not be accepted. The best course of action would be to deposit the cash to your bank account and then use one of the methods below to fund your investment account(s).
Mailing or dropping off a personal cheque
One of the easiest and simplest ways of funding your investment account is to write a personal cheque and either mail it to us or drop it off at the branch. In this case you would make the cheque payable to the institution. It is always worth confirming who to make the cheque payable to. For example, with the rebranding our firm is now referred to as “Scotia Wealth Management”; however, when clients are writing out cheques to deposit to their account they should make the cheque payable to “ScotiaMcLeod”.
Do not make the cheque payable in the name of your Wealth Advisor or portfolio manager. For segregation of duties, the mail is not opened by the portfolio manager, but rather another staff member in the branch that will immediately secure the cheque and ensure it is deposited to the correct account. To avoid any confusion, we recommend writing the investment account number in the memo section of the cheque (i.e. Account 123-45678-90). If your deposit is funding to a few different accounts such as TFSA and RRSP contribution, you can simply write one cheque for the total amount, and it can then be allocated to the proper accounts (i.e. $12,000 cheque to be allocated into two different TFSA account — $6,000 each). When this is done, we recommend that you put both account numbers in the memo field with the respective dollar amounts written beside each account number.
Draft or Certified Cheque
A lot of clients that we have spoken with have the thought that a draft is more reliable than a personal cheque. This is a natural assumption given that when you have a draft issued from a bank account the funds are pulled out immediately. However, when a draft is deposited, we are required to prove the source of funds and require the issuing bank to confirm that the draft was in fact issued from your account. In general, Bank Drafts are not a preferred form of payment and we encourage clients to issue a personal cheque or use one of the electronic options mentioned below to make deposits.
Electronic Transfers from Scotiabank to Scotia Wealth Management
For those that use the same institution for both their banking and their investments, making deposits can be done electronically. In the case of Scotiabank and Scotia Wealth Management — you would simply log on to your online access and transfer between accounts such as a chequing account and an investment account. If you do not have online access to your accounts, you could use the telephone banking services to have them complete the transfer for you. Alternately, you can use the good old fashioned way and go into your local branch and have a branch representative complete the transaction for you. Whichever way is your preferred method, it is always a little bit easier when you deal with the same institution.
Direct Debit from Scotiabank to Scotia Wealth Management
With some of our clients that do their day to day banking with Scotiabank, we have a signed agreement on file that allows us to pull funds directly from their Scotiabank chequing or savings account and move it directly to their non-registered account. In this scenario, a client would send us an email asking us to take money from their Scotiabank account on file and move it to their Scotia Wealth Management non-registered account. Once we receive the request, we would always confirm verbally with the client that this is their intention, and once we have confirmed, we submit the request. The funds then arrive in the investment account on the same day.
Direct Debit from non-related bank to Scotia Wealth
It is not a requirement for our clients to have their day-to-day banking with Scotiabank. Some prefer to use a bank that is in closest proximity to where they work or live. Some of these same clients like the idea of forced savings and putting aside a certain dollar amount every month. When a client is wishing to set up a regular stream of savings, we can automate this process by having the client sign a Pre-Authorized Contributions (PAC) form. The PAC form is also used with clients who have their day-to-day with Scotiabank. This is an automated way to set up a steady stream of investment saving regardless of where you do your banking.
Electronic Transfers from non-related bank
If you bank at a non-related bank then there are still ways in which you can electronically deposit funds to your Scotia Wealth Management accounts. In this scenario, it is done just as if you were paying one of your bills, such as B.C. Hydro, Fortis Gas or your telephone.
1. Add the associated investment account as a bill payee (i.e. ScotiaMcLeod)
2. Provide the account number of the account you would like to make the deposit to (for ScotiaMcLeod it would be ten digits)
3. Process the amount you want to deposit as a bill payment to the investment account
The set-up will vary between each institution and if you require more assistance you should contact the financial institution of where you are sending the funds from. If clients have never done this before, we will suggest that they test the electronic method by transferring one dollar. We will then confirm the transfer on our end, before they proceed with transferring a larger dollar amount. Each financial institution will impose a daily limit on these transactions. If you wish to do larger deposits electronically then we would recommend doing it as a wire transfer which is the next option mentioned below.
Doing a wire transfer could make sense when you are looking to electronically transfer larger dollar amounts or if you are looking to transfer funds in a currency other than Canadian dollars. Say, for example, you have received a large inheritance from a relative who lives in the United Kingdom and you would like the proceeds to be deposited to your Scotia Wealth Management investment account. The quickest and most convenient way to have the funds transferred is by having the sending institution send it as a wire payment. Some typical information you will need to provide to the sending institution would be:
• Beneficiary Institution
• Canadian Routing Code
• Swift Code
• Account with Bank SWIFT Code
• Beneficiary Customer
• For further Credit
This information is easily obtained by asking your portfolio manager to provide you with the details specific to your account and institution.
Another situation where having your funds sent via wire transfer makes sense is if you are transferring a large amount from your regular Canadian bank in either Canadian Funds or US funds. The information required is similar to the information mentioned above and again can easily be provided by your portfolio manager.
Third Party Deposits
A third party deposit is usually defined as a deposit (cheque or wire) made payable to a client where the payor is different from the name on the account where the funds are being deposited. An example of a third party deposit could be when a client works for a company that matches his or her RRSP contributions and sends a cheque monthly to the client’s Group RRSP account. Another could be where a grandparent would like to add some funds to their grandchild’s RESP account set up by the parents. In all of these cases, there is going to be enhanced scrutiny on the deposit due to the fact that third party deposits can represent money laundering activity.
In order to accept the third party deposit, a few things that we are required to do are determine why the third party cheque or wire is being deposited, what is the relationship of the third party to the client, contact the issuer of the cheque or wire to determine the appropriateness of the deposit, and contact the financial institution involved with the cheque or wire to determine if the funds are available.
Kevin Greenard CPA CA FMA CFP CIM is a portfolio manager and director, wealth management, with The Greenard Group at Scotia Wealth Management in Victoria. His column appears every week at timescolonist.com. Call 250-389-2138. greenardgroup.com
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