Igm Financial Inc. · TSX:IGM
Igm Financial — Q3 2017 Earnings Presentation
38 slides from Igm Financial's earnings presentation, Nov 3, 2017
Slide 1: IGM Financial Q3 2017 Results
IGM FINANCIAL Q3, 2017 Results November 3, 2017 1
Slide 2: Conference call participants
IGM Financial Q3 Analyst Call Conference call participants Paul W. Hancock Kevin E. Regan Jeffrey R. Carney Barry S. McInerney Vice-President, Executive Vice- President & CEO, President & CEO, Finance and Investor President & CFO, IGM Financial and Mackenzie Relations, IGM Financial President & CEO,
Slide 3: Caution concerning forward looking statements
IGM Financial Q3 Analyst Call Caution concerning forward looking statements Certain statements in this report other than statements of historical fact, are forward-looking statements based on certain assumptions and reflect IGM Financial’s current expectations. Forward-looking statements are provide
Slide 4: Non-IFRS financial measures and additional IFRS measures
IGM Financial Q3 Analyst Non-IFRS financial measures and additional IFRS Call measures Net earnings available to common shareholders, which is an additional measure in accordance with IFRS, may be subdivided into two components consisting of: −Adjusted net earnings available to common shareholders;
Slide 5: Documents incorporated by reference
IGM Financial Q3 Analyst Call Documents incorporated by reference This summary document and webcast are meant to discuss, not to serve as a substitute for, information included in these documents. The reader is hereby cautioned to refer to the following documents relating to IGM Financial’s results:
Slide 6: Agenda
IGM Financial Q3 Analyst Call Agenda 1 IGM Financial 2 Investors Group 3 Mackenzie Investments 6
Slide 7: IGM highlights
IGM Financial Q3 Analyst Call IGM highlights Highest Q3 investment fund net sales in IGM’s history • Investment fund net sales of $779MM Executing on our strategy of operational excellence and discipline • Formation of a single global investment management organization focused on driving the best in
Slide 8: Investment management changes
IGM Financial Q3 Analyst Call Investment management changes • Investors Group’s in-house portfolio management team is becoming part of Mackenzie’s investment management boutique structure Objectives Key Outcomes • Deliver better investment performance and • Expansion of Mackenzie boutiques from 10 t
Slide 9: Mackenzie's boutique structure
IGM Financial Q3 Analyst Leveraging talent across IGM and enhancing Call Mackenzie’s boutique structure Mackenzie Investment IPC IGM Financial Investors Group Investment Funds Counsel Consolidated Assets ($85.8B) Funds & Institutional Funds ($5.2B) ($69.2B total, $59.1 ex advisory to IG & IPC) Under
Slide 10: Thirteen boutiques with strong investment leadership
IGM Financial Q3 Analyst Call Thirteen boutiques with strong investment leadership Tony Elavia, CIO Mackenzie Investments Cundill Ivy Canadian Growth Resources Systematic Global Growth Strategies Equity & Income Norwood/Wong Musson DeGeer Taller Gervais Weed McKiernan 8 Professionals 9 Professionals
Slide 11: Q3 2017 financial performance
IGM Financial Q3 Analyst Call Q3 2017 financial performance Net Earnings ($MM) • Net earnings were $173.4MM or $0.72 per share in the quarter compared to $197.6MM or $0.82 $197.6 $173.4 per share in Q3 2016 • Earnings were negatively impacted by; 3Q/16 3Q/17 - A negative fair value Net Earnings adju
Slide 12: Q3 2017 financial performance
IGM Financial Q3 Analyst Call Q3 2017 financial performance Average Investment Fund AUM ($B) $132.2 $141.9 • Average investment fund AUM of $141.9B, compared to $132.2B last 3Q/16 3Q/17 year Mutual Fund Gross Sales ($MM) $3,454 $4,068 • Mutual fund gross sales of $4.1B, up 17.8% compared to Q3 2016
Slide 13: Industry operating environment
IGM Financial Q3 Analyst Call Industry operating environment Industry Mutual Fund Sales by Primary Distribution Emphasis Total Funds ($ Millions) Three Months Ended September 30 Gross Sales 2016 2017 % Change IGM 3,454 4,068 17.8% Other advice channel peers 16,116 16,473 2.2% Total advice channel 19
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Slide 15: Investors Group Q3 highlights
IGM Financial Q3 Analyst Call Investors Group Q3 highlights Record high mutual fund AUM of $85.2B, up 8% compared to Q3 2016 Significant mutual fund sales momentum continues • Record high mutual fund gross sales of $2.1B, up 28.5% from Q3 2016 • Mutual Fund net sales of $287MM, best Q3 in a decade •
Slide 16: Mutual fund flows
IGM Financial Q3 Analyst Call Mutual fund flows Mutual Fund Gross Sales Mutual Fund Net Sales $ Billions $ Millions 3.0 400 • Gross sales of $2.1B in the 287 2.09 300 quarter, up 28.5% compared 200 2.0 1.63 100 to last year 0 1.0 -100 • Net sales of $287MM in the -200 - -300 (194) quarter, up $481MM
Slide 17: Consultant network
IGM Financial Q3 Analyst Call Consultant network Consultant Network Composition (Number of Consultants) • New recruiting standards fully Associates1& RD's implemented delivering Recruits (<4 years) Consultant Practices (>4 years) enhanced quality and productivity improvements 5,380 957 4,947 4,754 9
Slide 18: High net worth solutions
IGM Financial Q3 Analyst Call High net worth solutions HNW Mutual Fund Series Assets1 • $38.3B in high net worth series assets representing 45.0% of mutual fund AUM $38.3B +25% Unbundled • $17.3B of AUM in unbundled $30.6B $4.9B fee structures fee structures, up 175% growth of $1.9B $12.4B +175% com
Slide 19: High net worth solutions
IGM Financial Q3 Analyst Call High net worth solutions Gross Sales of High Net Worth Solutions ($ millions) 1,200 Series J (HNW Bundled) 1,095 • $0.9B in quarterly gross sales, Series U (HNW Unbundled) 977 +106% 1,000 iProfile (HNW Unbundled) 892 up 106% relative to Q3 2016 746 800 549 • Unbundled f
Slide 20: Managed solutions products
IGM Financial Q3 Analyst Call Managed solutions products1 Managed Solutions Share of Long Term Fund Gross Sales and Assets • Broad selection of products 80% with a variety of asset 70.4% 70% allocation strategies Share of Long Term 60% Gross Sales • 25.3% increase in managed 50% solutions AUM compar
Slide 21: Insurance and mortgage operations
IGM Financial Q3 Analyst Call Insurance and mortgage operations New Annualized Insurance Premiums (Three months ended September 30 - $ Millions) • New individual insurance 21.8 product sales decreased 41.5% in Q3 2017 compared 13.8 to the same period last year Group Insurance as sales volumes normal
Slide 22: Average mutual fund AUM & fee rates
IGM Financial Q3 Analyst Call Average mutual fund AUM & fee rates • Q3 2017 average mutual 208.6 208.1 206.3 205.7 fund AUM increased 7.3% 204.7 compared to Q3 2016 85.0 83.8 82.8 • Fee rate declined due to 79.7 78.1 ongoing mix shift into high net worth products and reduction in no-load pricing whi
Slide 23: Investors Group EBIT
IGM Financial Q3 Analyst Call Investors Group EBIT ($ Millions, unless otherwise indicated) Change Relative to: Q3/16 Q2/17 Q3/17 Prior Prior • Total revenue down 1.1% in Year Quarter the quarter compared to Q3 Average mutual fund AUM ($ Billions) 78.1 85.0 83.8 7.3% (1.4%) 2016 Revenues Management
Slide 24: Mackenzie Investments
pr& MACKE | CONFIDEN ——_ hvcenents NZIE IN A CHANGING WORLD
Slide 25: Mackenzie Q3 highlights
IGM Financial Q3 Analyst Call Mackenzie Q3 highlights Significant sales momentum continued in Q3 with investment fund net sales of $538MM, best since 1999 • Mutual fund gross sales of $1.8B, up 11.4% from Q3 2016 • Mutual fund net sales of $304MM, highest since 1999 and up $374MM compared to Q3 2016
Slide 26: Investment fund flows
IGM Financial Q3 Analyst Call Investment fund flows Quarterly Investment Fund Flows1 Mutual Fund Gross Sales Investment Fund Net Sales • Mutual fund gross sales up $ Billions $ Millions 11.4% compared to Q3 2016 3.0 600 538 2.0 1.65 1.84 400 • Investment fund net sales of 200 0 $538MM, up $0.6B comp
Slide 27: Mutual fund gross sales by asset class
IGM Financial Q3 Analyst Call Mutual fund gross sales by asset class Total TotalMutual MutualFund FundGross GrossSales Sales • 11.4% growth in gross sales (Three months ended September 30 - $ Millions) compared to 2.2% growth in 2016 2017 $ Change % Change advice channel excluding IGM Financial Mone
Slide 28: Total net sales
IGM Financial Q3 Analyst Call Total net sales Sales11,2 Total Net Sales (Three months ended September 30 - $ Millions) 2016 2017 $ Change • Mutual fund net sales driven by strong flows into balanced Money market 10 36 26 funds Income-oriented (34) (3) 31 Balanced • Combined net sales of Symmetry 117
Slide 29: Mackenzie ranked #3 in Advisor Perception Study
IGM Financial Q3 Analyst Call Mackenzie ranked #3 in Advisor Perception Study High Correlation between APS Score and Future Sales Activity 2014 2015 2016 2017 Overall Ranking 11th 5th 5th 3rd Brand Equity 4th 2nd 2nd 2nd Sales Penetration 4th 3rd 3rd 2nd 29
Slide 30: New innovative investment solutions recently announced
IGM Financial Q3 Analyst New innovative investment solutions recently Call announced 1 Socially Responsible Investments • Mackenzie Global Sustainability & Impact Balanced Fund • Mackenzie Global Leadership Impact Fund 2 Leveraging China AMC Relationship • Mackenzie All China Equity Fund sub-advised
Slide 31: Expanding our suite of ETFs
IGM Financial Q3 Analyst Call Expanding our suite of ETFs Mackenzie ETF AUM $906MM • ETF AUM approaches $1 billion on 1 year anniversary $333MM of 2016 cross country Exclusive retail roadshow partnership in Canada with $622MM TOBAM, an award-winning global asset manager based in France • $286 millio
Slide 32: Investment performance – mutual funds
IGM Financial Q3 Analyst Call Investment performance – mutual funds Mackenzie Mutual Funds in First or Second Quartile1 (Proportion of Assets) 73% 72% 60% 59% June 30, 2017 44% 44% 47% 40% September 30, 2017 1 Year 3 Year 5 Year 10 Year Morningstar Ratings – Proportion of Morningstar-Rated Assets1 (
Slide 33: Investment boutiques – performance & flows
IGM Financial Q3 Analyst Call Investment boutiques – performance & flows Mutual Fund Assets by Morningstar Rating ($ millions) 10,000 7,500 4 or 5 Stars 3 Stars 1 or 2 Stars Not Rated 5,000 2,500 0 % 4 or 5 0% 16% 32% 84% 72% 36% 0% 0% 81% 48% 17% Fixed Managed Value-Oriented Quality Growth-Oriented
Slide 34: Average total AUM & fee rates
IGM Financial Q3 Analyst Call Average total AUM & fee rates Annualized Net • Q3 2017 change in average AUM 76.9 77.3 77.1 76.0 Revenue Rate versus Q2 2017: 74.0 (bps)1 - Investment funds down 1.2% - Institutional2 up 7.6% 68.2 - Proportion of average AUM 65.2 67.8 Average Total AUM ($B) 63.5 63.8 in
Slide 35: Mackenzie EBIT
IGM Financial Q3 Analyst Call Mackenzie EBIT ($ Millions, unless otherwise indicated) Change Relative to: Q3/16 Q2/17 Q3/17 Prior Year Prior Quarter • Total net revenue up 3.5% in Average AUM ($ Billions): the quarter compared to Q3 Total Investment funds 63.5 49.7 67.8 54.2 68.2 53.5 7.5% 7.8% 0.6%
Slide 36: Higher incentive compensation driving rise in non-commission expense
IGM Financial Q3 Analyst Higher incentive compensation due to strong sales Call performance driving rise in non-commission expense $ millions Total Non-commission Expense 300 247.4 250 234.0 Performance-based compensation (based upon sales 45.0 volumes, investment performance among other measures) 3
Slide 37: IGM Financial's 2017 Investor Day
IGM Financial Q3 Analyst Call IGM Financial Investor Day INVESTOR DAY 2017 IGM Financial’s 2017 Investor Day You are invited to attend IGM Financial Inc.’s 2017 Investor Day. Senior leaders will discuss corporate and business-level strategies, the competitive and regulatory environment and the outlo
Slide 38: Q&A
Q&A 38