IGM Financial Inc. · TSX:IGM
IGM Financial — Q4 2018 Earnings Presentation
36 slides from IGM Financial's earnings presentation, Feb 8, 2019
Slide 1: Q4, 2018 Results
Q4, 2018 Results IGM FINANCIAL F e b r u a r y 8 , 2 0 1 9 1 1
Slide 2: Conference Call Participants
CONFERENCE CALL PARTICIPANTS Jeffrey R. Carney Barry S. McInerney Luke Gould President & CEO, President & CEO, Executive Vice-President & CFO, IGM Financial and Mackenzie Investments IGM Financial President & CEO, IG Wealth Management 2 2
Slide 3: Caution Concerning Forward-Looking Statements
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 provided to assist the reader in und
Slide 4: Non-IFRS Financial Measures & Additional IFRS Measures
NON-IFRS FINANCIAL MEASURES & ADDITIONAL IFRS 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; and ▪ Other items, which includ
Slide 5: Documents Incorporated by Reference
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: 1. Documents related to IGM F
Slide 6: IGM Financial
IGM FINANCIAL 6 6
Slide 7: IGM Financial 2018 Highlights
IGM FINANCIAL 2018 HIGHLIGHTS 1 Record high adjusted EPS of $3.29, up 9% from last year1 • Record high average assets, up 5% • Expense management on guidance, with non-commission expenses up 5%1 2 Investment fund net sales of $1.4B, in context of industry long-term fund net redemptions of $7.4B2 • E
Slide 8: IGM Financial Q4, 2018 Highlights
IGM FINANCIAL Q4, 2018 HIGHLIGHTS 1 Total AUM of $149.1B reflective of market declines in the quarter • AUM as at January 31, 2019 increased by 3.5% to $154.3B, recovering over half of the Q4/18 decline 2 Gained market share during the quarter1 • IGM Investment fund net redemptions of $225MM • Chall
Slide 9: Assets Under Management & Financial Markets
ASSETS UNDER MANAGEMENT & FINANCIAL MARKETS IGM Assets Under Management Investment Performance ($B) Q1 at Q4/18 FY 2018 Jan 31/19 Total Assets Annual Average IGM Client Investment Returns (6.4%) (5.3%) 3.6% Quarterly Average S&P TSX Equity Markets: 170 Canada (S&P / TSX Composite) (10.9%) (11.6%) 8.
Slide 10: Industry Operating Environment
INDUSTRY OPERATING ENVIRONMENT Industry Net Sales Long Term Mutual Fund Net Sales ($B) Total Industry Net Sales Rate (%)1 1 Q4/17 Q4/18 $ Change Net Sales Rate % Advice Channel Net Sales Rate (%) Long-term Mutual Funds Q4/18 Annualized Total Industry Quarterly Net Sales ($B) Advice channel 2.5 (8.3)
Slide 11: IGM Financial Q4, 2018 Results
IGM FINANCIAL Q4, 2018 RESULTS Average Total AUM Net Earnings Net Earnings Per Share ($B) ($MM) (₵) 154.2 153.0 75 180 51 21 Q4/17 Q4/18 Q4/17 Q4/18 Q4/17 Q4/18 Investment Fund Adjusted Net Adjusted Net 1 Net Sales Earnings 1 Earnings Per Share ($MM) ($MM) (₵) 749 191 79 180 75 (225) Q4/17 Q4/18 Q4/
Slide 12: Operating Segments Q4, 2018 Results
OPERATING SEGMENTS Q4, 2018 RESULTS Adjusted 184.9 172.1 Earnings Before Interest & Taxes ($MM) 50.1 35.4 43.3 42.6 Q4/17 Q4/18 Q4/17 Q4/18 Q4/17 Q4/18 IG Wealth Management Mackenzie Corporate & Other Investment Fund Net 1 477 Sales ($MM) 332 48 (91) 1 (65) (125) Q4/17 Q4/18 Q4/17 Q4/18 Q4/17 Q4/18
Slide 13: IG Wealth Management
IG Wealth Management WEALTH 3 MANAGEMENT
Slide 14: IG Wealth Management Highlights
IG WEALTH MANAGEMENT HIGHLIGHTS 1 Continued transformation of IG Wealth Management; beginning to capitalize on significant growth opportunity • Brand re-launch, pricing & product enhancements with increased focus on the mass affluent and HNW markets • Technology transformation well underway, includ
Slide 15: IG Wealth Management Q4, 2018 Operating Results
IG WEALTH MANAGEMENT Q4, 2018 OPERATING RESULTS Mutual Fund Gross Sales Long Term Mutual Fund Net Sales Rate 1 ($MM) (LTM, % of Average AUM) ▪ Gross sales of $2.1B 2,314 2,118 Total Industry ▪ Net redemptions of $125MM Advice Channel ▪ Capturing market share: Q4 IG Wealth Management annualized net r
Slide 16: Continued Emphasis on High Net Worth Solutions and Managed Solutions
CONTINUED EMPHASIS ON HIGH NET WORTH SOLUTIONS AND MANAGED SOLUTIONS Gross Sales of HNW % of Total Sales Managed Solutions Share HNW Solutions 48% of Long Term Funds ($MM) 45% 36% iProfile (Unbundled) Series U (Unbundled) Share of Long Term 76% Series J (Bundled) Gross Sales Q4/18 Q4/16 Q4/17 1,045
Slide 17: Gross Sales per Consultant Up 13% in 2018
GROSS SALES PER CONSULTANT UP 13% IN 2018; CHANGES TO RECRUITING STANDARDS RESULTING IN MORE PRODUCTIVE NEW HIRES Average Number of Consultants Consultant Productivity – Gross Sales per Consultant ($MM) 4,506 3,947 1,015 3,491 2017 Consultant 1.12 Associates & Recruits (<4 year) 1,050 Regional Direc
Slide 18: November 2018 Announcement to Introduce More Competitive Pricing
NOVEMBER, 2018 ANNOUNCEMENT TO INTRODUCE MORE COMPETITIVE PRICING TO ENCOURAGE CONSOLIDATION AND NEW CLIENT ACQUISITION • Beginning March 1, 2019, enhance segmented pricing to households with over $1 million in assets with IG Wealth Management through advisory fee reductions • Opening unbundled fee
Slide 19: IG Wealth Management's Client Rate of Return Experience and Redemption Rate
IG WEALTH MANAGEMENT’S CLIENT RATE OF RETURN EXPERIENCE AND HISTORICAL REDEMPTION RATE IG Wealth Management Client Account Rate of Return Experience (as at December 31, 2018) 15% ▪ Clients experienced 10% 90% of negative returns over a 5% 0% 2.0% 2.6% clients had 1-year period; remain returns -5% -5
Slide 20: Mackenzie Investments
MACKENZIE INVESTMENTS 20 20
Slide 21: Mackenzie Investments Highlights
MACKENZIE INVESTMENTS HIGHLIGHTS 1 Transformation of Mackenzie Investments complete; significant momentum • Best retail net sales in 20 years as advisors rank Mackenzie Investments top three in both mutual funds and ETFs – Environics Advisor Perception Studies1 2018 Highlights 2 Investment fund net
Slide 22: Mackenzie Q4, 2018 Operating Results
MACKENZIE Q4, 2018 OPERATING RESULTS Mutual Fund Gross Sales Long-term Fund Net Sales Rate ($MM) (LTM, % of Average AUM) ▪ Q4 total mutual fund gross sales up 4.2% Total Industry mutual funds 2,234 2,328 Advice Channel mutual funds ▪ Investment fund net Mackenzie mutual funds Mackenzie investment fu
Slide 23: Retail Mutual Fund Gross Sales Capture Rates Improved Across Major Asset Classes
RETAIL MUTUAL FUND GROSS SALES CAPTURE RATES IMPROVED ACROSS MAJOR ASSET CLASSES Retail Gross Sales Mackenzie’s share of Q4/18 $MM Mutual Fund Gross Sales Net Sales Capture Rate1 % $ ▪ Retail Investment Funds Q4/17 Q4/18 Q4/17 Q4/18 Change Q4/17 Q4/18 advice channel long-term Change Change Mutual Fu
Slide 24: Mackenzie's Continued ETF Growth Is Broad-Based
MACKENZIE’S CONTINUED ETF GROWTH IS BROAD- BASED ACROSS CHANNELS & INVESTMENT STRATEGIES ETF AUM by Quarter ETF Net Creations by Quarter ($MM) ($MM) 2,963 2,949 2,600 IG Wealth 715 487 Management & 570 2,004 IPC Mutual Funds 848 Mackenzie 377 367 1,296 Mutual Funds Retail & Other 137 1,614 82 111 (5
Slide 25: Investment Performance Highlights
INVESTMENT PERFORMANCE HIGHLIGHTS 47% of AUM is 4/5 star; 17/20 largest funds are rated 4/5 star and 9/20 are rated 5 star (series F) Mackenzie Mutual Funds in Morningstar Star Ratings1 1st or 2nd Quartile1 (Proportion of Assets) (Proportion of Assets) 30-Sep-18 31-Dec-18 All Morningstar Rated 30-Se
Slide 26: Investment Boutique Mutual Fund Performance & Retail Net Sales
INVESTMENT BOUTIQUE MUTUAL FUND PERFORMANCE & RETAIL NET SALES Fixed Managed Value-Oriented Quality Growth-Oriented Core & Dividend 3rd Party Income Products North Global Systematic Global Equity Multi-Asset 3rd Party Cundill American Ivy Growth Bluewater Resources Quantitative Fixed Income Strategi
Slide 27: Financial Results
FINANCIAL RESULTS 27 27
Slide 28: Assets Under Management
ASSETS UNDER MANAGEMENT IGM Assets Under Management Change in IGM Assets Under Management ($B) ($B) Total Assets Quarterly Average Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 LTM Annual Average Investment Fund Assets Opening 150.0 156.5 155.8 159.1 159.7 156.5 Net Sales - Investment Funds 0.7 1.4 0.2 0.1 (0.2) 1.
Slide 29: IGM EBIT & Margins
IGM EBIT & MARGINS IGM Adjusted EBIT1 IGM Adjusted EBIT Margin1,2 ($MM) (% of Average AUM) 806.7 809.6 816.0 832.0 791.5 1.98% 1.96% 1.93% 1.92% 1.93% Commission Expenses 0.74% 0.74% 0.69% 0.67% 0.71% 270.1 270.1 288.1 286.1 272.4 56.2 55.8 Net Investment 36.7 52.1 47.8 506.1 Income & Share of 1.24%
Slide 30: IGM Financial Consolidated Profitability
IGM FINANCIAL CONSOLIDATED PROFITABILITY1 ($MM, unless otherwise indicated) Change QoQ Change YoY Q4/17 Q3/18 Q4/18 $ % $ % Days in the period 92 92 92 0.0% 0.0% 1 ▪ Total fee revenue Average AUM ($ Billions): Total decreased 4.2% 154.2 160.4 153.0 (7.4) (4.6%) (1.2) (0.8%) Investment funds 148.1 15
Slide 31: IG Wealth Management Key Profitability Drivers
IG WEALTH MANAGEMENT KEY PROFITABILITY DRIVERS Average AUM & Rates of AUM Gross Sales & Rates of Sales 1 ▪ Expect a 3 bps ($B, unless otherwise stated) ($B, unless otherwise stated) decrease in Q2 Annualized 1 2019, which is in 203.7 202.7 202.1 201.7 201.4 Mgmt. & Admin. Fee Rate (bps) 2.4% additio
Slide 32: IG Wealth Management Profitability
IG WEALTH MANAGEMENT PROFITABILITY ($MM, unless otherwise indicated) Change QoQ Change YoY 1 ▪ Management and Q4/17 Q3/18 Q4/18 $ % $ % administration fees Days in the period 92 92 92 0.0% 0.0% decreased 5.0% quarter- Average mutual fund AUM ($ Billions) 87.2 89.4 85.1 over-quarter (4.3) (4.8%) (2.1
Slide 33: Mackenzie Key Profitability Drivers
MACKENZIE KEY PROFITABILITY DRIVERS Average AUM & Rates of AUM Mutual Fund Gross Sales & ($B, unless otherwise stated) Rates of Sales 88.1 ($B, unless otherwise stated) 85.5 83.6 Annualized Net 80.9 80.5 Revenue Rate (bps) 1 67.6 64.6 Average AUM 0.32% 0.37% 0.26% 0.26% 0.24% Sales 65.2 66.1 Commiss
Slide 34: Mackenzie Profitability
MACKENZIE PROFITABILITY ($MM, unless otherwise indicated) Change QoQ Change YoY 1 ▪ Net revenue down 4.9% Q4/17 Q3/18 Q4/18 $ % $ % quarter-over-quarter Days in the period 92 92 92 0.0% 0.0% Average AUM ($ Billions): Total 63.0 67.6 64.6 (3.0) (4.3%) 1.6 2.5% 2 ▪ Q4/18 Non-commission Investment fund
Slide 35: 2019 Outlook
2019 OUTLOOK Market volatility is Leadership team We have IG Wealth testing investor driving high successfully Management’s and advisor performing culture transformed transformation in confidence, and “One IGM Mackenzie with the “fourth inning”; emphasizing the Approach” to sustained sales Actions t
Slide 36: Q&A
Q&A IGM FINANCIAL F e b r u a r y 8 , 2 0 1 9 36 36