IGM Financial Inc. · TSX:IGM
IGM Financial — Q4 2017 Earnings Presentation
37 slides from IGM Financial's earnings presentation, Feb 9, 2018
Slide 1: Q4, 2017 Results
Q4, 2017 Results IGM FINANCIAL F E B R U A R Y 9 , 2 0 1 8 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, Investors Group 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: Transformation and Results Accelerated in Full Year 2017
TRANSFORMATION AND RESULTS ACCELERATED IN FULL YEAR 2017 1 Record total net sales of $4.8B and investment fund net sales of $3.7B; significant momentum at both Investors Group & Mackenzie 2 Market share gains • Each of Investors Group and Mackenzie capturing market share versus advice channel peers,
Slide 8: IGM Financial Q4, 2017 Highlights
IGM FINANCIAL Q4, 2017 HIGHLIGHTS 1 Best Q4 net sales in a decade and record ending AUM • Investment fund net sales of $749MM and total net sales of $1.8B • Ending total AUM of $156.5B, up 4.3% in the quarter 2 Q4 expense management ahead of guidance 3 Executing on strategy to enhance client outcome
Slide 9: IGM Financial Q4, 2017 Results
IGM FINANCIAL Q4, 2017 RESULTS Net Earnings Net Earnings Per Share ($MM) (₵) Adjusted EPS of 79 cents Net Earnings Adjusted Net Earnings 1 EPS Adjusted EPS 1 excludes one-time items 233.0 totaling $140.8MM or 58 199.0 191.4 97 83 79 cents per share1 50.6 21 Adjusted EPS includes pre- tax negativ
Slide 10: Operating Segments Q4, 2017 Results
OPERATING SEGMENTS Q4, 2017 RESULTS Adjusted 200.6 184.9 Earnings Adjusted EBIT down Before Interest & at Investors Group Taxes1 ($MM) due to mortgage fair 48.8 50.1 43.3 32.4 value adjustments. Corporate & Other Q4/16 Q4/17 Q4/16 Q4/17 Q4/16 Q4/17 Investors Group Mackenzie Corporate & Other incre
Slide 11: Investors Group
INVESTORS GROUP 11 11
Slide 12: Investors Group Q4, 2017 Highlights
INVESTORS GROUP Q4, 2017 HIGHLIGHTS 1 All-time quarter end high AUM of $88.0 billion; up 8.3% compared to Q4 2016 2 Strong mutual fund sales with emphasis on High Net Worth segments and managed solutions 3 Improving Consultant productivity with focus on teams and quality of Consultants 4 At Investor
Slide 13: Investors Group Q4, 2017 Operating Results
INVESTORS GROUP Q4, 2017 OPERATING RESULTS 1 Mutual Fund Gross Sales Long Term Mutual Fund Net Sales Rate ($MM) (LTM, % of Average AUM) 2,314 2,089 Industry Total Advice Channel Record Q4 gross sales; up 6% Investors Group 10.8% from Q4/16 Net Sales of $332MM; up Q4/16 Q4/17 4% 27.2% from Q4/16
Slide 14: High Net Worth Solutions
HIGH NET WORTH SOLUTIONS GROSS SALES OF HNW % of Total Sales HNW SOLUTIONS ($MM) 46% Gross sales of over $1.0B into HNW solutions, up 36% 1,045 40% relative to Q4/16 25% HNW AUM increased 25% +40% 746 year-over-year to $40.5B, Q4/15 Q4/16 Q4/17 now representing 46% of 463 Unbundled % Share of to
Slide 15: Managed Solutions
MANAGED SOLUTIONS MANAGED SOLUTIONS SHARE 71.5% of gross Managed Solutions OF LONG TERM FUNDS sales invested into portfolio solutions represents 71.5% of Q4 80% long-term gross sales 70% 41.8% of long term AUM 60% Share of Long Term Gross Sales in Managed Solutions at 50% 41.8% December 31, 2017
Slide 16: Consultant Network Productivity
CONSULTANT NETWORK PRODUCTIVITY Gross sales per Consultant Network Consultant Practice1 Composition Productivity Consultant Practice (# of Consultants at Dec 31, 2017) (Full Year $MM Gross Sales increased 37% during Per Practice) 2017 relative to 2016 4,146 Regional Directors 92 3.5 2017 enhance
Slide 17: November 2017 Investor Day Key Themes
NOVEMBER 2017 INVESTOR DAY KEY THEMES New Investors Group client-centric strategy to drive client experience and future growth: 1. Deliver on our value proposition, “better Gamma, better Beta and better Alpha” 2. Accelerate efforts in HNW segments and product solutions 3. Accelerate quality of Consu
Slide 18: Mackenzie Investments
MACKENZIE INVESTMENTS 18 18
Slide 19: Mackenzie Q4, 2017 Highlights
MACKENZIE Q4, 2017 HIGHLIGHTS 1 All-time quarter end high Total AUM of $64.6B; up 12.1% compared to Q4 2016 2 Strong net sales momentum across mutual funds, ETFs and institutional • #3 in Active & Smart Beta ETF net creations • Best investment fund net flows since 2005 led by important balanced fund
Slide 20: Mackenzie Q4, 2017 Operating Results
MACKENZIE Q4, 2017 OPERATING RESULTS Mutual Fund Gross Sales Long-term Fund Net Sales Rate ($MM) (LTM, % of Average AUM) Q4 total mutual fund gross 1 sales up 6.6%1 1,953 2,081 Total Industry mutual funds Advice Channel mutual funds Strong investment fund net Mackenzie mutual funds Mackenzie inv
Slide 21: Broad Demand for Mackenzie's Offering Across Asset Classes & Product Types
BROAD DEMAND FOR MACKENZIE’S OFFERING ACROSS ASSET CLASSES & PRODUCT TYPES Mutual Fund Gross Sales 1,2,3 Total Net Sales 1,2 Long-term mutual fund gross $ millions Q4/16 Q4/17 % Change Q4/16 Q4/17 $ Change Income-oriented 225 239 6.2% (8) (1) 7 sales up 8.3% and net sales up Balanced Symmetry 369
Slide 22: Continued Product Innovation
CONTINUED PRODUCT INNOVATION Innovative product launches Q4/17 and January 2018 launches: have delivered $3.6B in net sales since 2013 Three products focus on the growing demand for sustainable, responsible and Total $3.6B impact investments (2 mutual funds, 1 ETF) Three active ETFs (Ivy Globa
Slide 23: ETF AUM Growth Continued in Q4/17
ETF AUM GROWTH CONTINUED IN Q4/17 MACKENZIE ETF AUM ($MM) Over $1.5B at 1,296 End of January 368 906 333 622 282 928 234 573 113 69 340 45 71 165 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Mackenzie Mutual Fund Investment in ETFs 23 23
Slide 24: Investment Performance Highlights
INVESTMENT PERFORMANCE HIGHLIGHTS MACKENZIE MUTUAL FUNDS IN MORNINGSTAR STAR RATINGS1 1ST OR 2ND QUARTILE1 (Proportion of Assets at Dec 31, 2017) (Proportion of Assets at Dec 31, 2017) Mackenzie Q4/17 All Morningstar Rated 71% 41% 38% 32% 33% 30% 44% 42% 42% 26% 1 Year 3 year 5 Year 10 Year 1 & 2 St
Slide 25: Strong Performance in Highly Relevant Balanced Fund Product Offering
STRONG PERFORMANCE IN HIGHLY RELEVANT BALANCED FUND PRODUCT OFFERING BALANCED FUND CATEGORY REPRESENTS ~45% OF ADVICE CHANNEL LONG- TERM MUTUAL FUND AUM AND GROSS SALES OVER THE LAST THREE YEARS MACKENZIE BALANCED MUTUAL FUNDS MORNINGSTAR RATINGS IN 1ST OR 2ND QUARTILE1 MACKENZIE 8 CORE BALANCED FUN
Slide 26: Investment Boutique Mutual Fund Performance & Net Sales
INVESTMENT BOUTIQUE MUTUAL FUND PERFORMANCE & NET SALES MUTUAL FUND AUM BY MORNINGSTAR RATINGS ($ MILLIONS)1 12,500 Not Rated 1 or 2 Stars 3 Stars 4 or 5 Stars 10,000 7,500 5,000 2,500 0 % 4 or 5: 0% 13% 25% 87% 73% 4% 0% 87% 49% 17% 0% Fixed Managed rd Value-Oriented Quality Growth-Oriented Core &
Slide 27: Financial Results
FINANCIAL RESULTS 27 27
Slide 28: Record High Assets, With Momentum From Both Investment Returns and Net Sales
RECORD HIGH ASSETS, WITH MOMENTUM FROM BOTH INVESTMENT RETURNS AND NET SALES FOR IGM IGM ASSETS UNDER MANAGEMENT CHANGE IN IGM ASSETS UNDER MANAGEMENT ($B) ($B) Total Assets Q1/17 Q2/17 Q3/17 Q4/17 FY 2017 Quarterly Average Opening 142.7 147.5 148.6 150.0 142.7 Annual Average Net Sales - Investment
Slide 29: Investors Group Average AUM & Fee Rate
INVESTORS GROUP AVERAGE AUM & FEE RATE 208.1 Annualized Q4 2017 average mutual 206.3 205.7 204.7 203.8 Management & Administration fund AUM increased 9.3% Fee Rate (bps) compared to Q4 2016 85.0 83.8 87.2 79.7 82.8 Average Mutual Fund AUM Proportion of mutual fund AUM in HNW solutions increased
Slide 30: Investors Group Profitability
INVESTORS GROUP PROFITABILITY ($ Millions, unless otherwise indicated) Change QoQ Change YoY Q4/16 Q3/17 Q4/17 $ % $ % 1 Mutual fund revenues and commission expense increased Average mutual fund AUM ($ Billions) 79.7 83.8 87.2 3.4 4.0% 7.5 9.3% relatively in line with average Management fees 337.8
Slide 31: Investors Group Mortgage Banking Operations and Other Net Investment Income
INVESTORS GROUP MORTGAGE BANKING OPERATIONS AND OTHER NET INVESTMENT INCOME 1. Fair value adjustments relate to warehoused loans held Investors Group Net pending sale, and largely reflect lending rates increasing by a greater rate than funding rates while loans are Investment Income & Other warehous
Slide 32: Continuing to Align Investors Group Consultant Compensation with Client Outcomes
CONTINUING TO ALIGN INVESTORS GROUP CONSULTANT COMPENSATION WITH CLIENT OUTCOMES EFFECTIVE JANUARY 1, 2018 Asset-based • Compensation agnostic across asset classes compensation level • Also amended compensation to include components driven by across asset classes net practice growth and client satis
Slide 33: Segment Disclosure Changes Effective October 1, 2017
SEGMENT DISCLOSURE CHANGES EFFECTIVE OCTOBER 1, 2017 Investors Group & Mackenzie Segmented AUM ($B) During October 2017, announced combination of September 30, 2017 December 31, 2017 investment management functions of Investors Group Mackenzie advisory to 133.6 1 and Mackenzie Investors Group Fund
Slide 34: Mackenzie Average AUM & Net Revenue Rate
MACKENZIE AVERAGE AUM & NET REVENUE RATE 82.9 82.5 81.6 Annualized Q4/17 total average AUM 80.3 80.9 Net Revenue Rate (bps)1 increased 9.9% versus Q4 2016 Net revenue rate1 relatively 60.7 60.1 63.1 Total Average AUM 57.5 58.7 7.3 Sub-advisory, unchanged during Q4/17 6.4 6.6 6.6 institutional &
Slide 35: Mackenzie Profitability
MACKENZIE PROFITABILITY ($ Millions, unless otherwise indicated) Change QoQ Change YoY Q4/16 Q3/17 Q4/17 $ % $ % 1 Change in net revenues Average AUM ($ Billions): consistent with change in Total 57.5 60.1 63.1 3.0 5.0% 5.7 9.9% Investment funds 50.6 53.5 55.8 2.3 4.2% 5.2 10.3% average assets fro
Slide 36: Non-Commission Expense Management Better Than Guidance, Reiterating 2018 Guidance
NON-COMMISSION EXPENSE MANAGEMENT DURING Q4/17 BETTER THAN GUIDANCE, REITERATING GUIDANCE FOR 2018 ANNUAL NON-COMMISSION EXPENSE GROWTH 2017 2018 2020 Guidance Actual Guidance Target Investors Group 6.5% 6% 5% 3% Mackenzie 7%1 7%1 5% 3% IGM 7% 6%2 5% 3% 1. Effective October 1, 2017, Mackenzie seg
Slide 37: Q&A
Q&A IGM FINANCIAL F E B R U A R Y 9 , 2 0 1 8 37 37