IGM Financial Inc. · TSX:IGM
IGM Financial — Q4 2022 Earnings Presentation
47 slides from IGM Financial's earnings presentation, Feb 10, 2023
Slide 1: IGM Financial Q4, 2022 Results
IGM Financial Q4, 2022 Results February 10, 2023
Slide 2: Conference Call Participants
Conference Call Participants JAMES O‘SULLIVAN DAMON MURCHISON LUKE GOULD KEITH POTTER PRESIDENT & CEO PRESIDENT & CEO PRESIDENT & CEO EXECUTIVE VICE-PRESIDENT IGM FINANCIAL IG WEALTH MANAGEMENT MACKENZIE INVESTMENTS & CFO IGM FINANCIAL 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 & Other Financial Measures
Non-IFRS Financial Measures & Other Financial Measures This report contains Non-IFRS financial measures and non-IFRS ratios that do not have standard meanings prescribed by IFRS and may not be directly comparable to similar measures used by other companies. These measures and ratios are used to prov
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 JAMES O‘SULLIVAN PRESIDENT & CEO IGM FINANCIAL IGM FINANCIAL Q4, 2022 RESULTS
Slide 7: IGM Financial 2022 Highlights
IGM Financial 2022 Highlights 1 2022 EPS of $3.63, 2nd best annual adjusted EPS on record • Resilient business model and strong expense management contributed to financial results 2 Ending AUM&A of $249.4B; down 10% versus prior year record high results • Driven by client investment returns of (9.9%
Slide 8: 2023 Forward View
2023 Forward View PLANNING FOR IMPROVED MOMENTUM AT IG WEALTH & OPERATING ENVIRONMENT IN MACKENZIE EXECUTING WELL SECOND HALF • Position business for further earnings • IG Wealth momentum driven by continued growth as current period of heightened focus on high-net-worth client acquisition market vol
Slide 9: IGM Financial Q4, 2022 Highlights
IGM Financial Q4, 2022 Highlights 1 Fourth quarter EPS of 94 cents, 2nd best fourth quarter adjusted EPS on record 2 Ending AUM&A of $249.4B, up 4.7% during the quarter 3 Fourth quarter total net redemptions of $440MM (excludes Northleaf & ChinaAMC) • Solid IG Wealth Management net flows of $429MM •
Slide 10: Financial Market and Client Investment Returns
Financial Market and Client Investment Returns IGM Client Return Index1 2.6 2.4 Investment Performance Q1/23 at 2021 Q4/22 2022 Jan 31/23 2.2 IGM Client Investment Returns 2 11.9% 5.4% (9.9%) 4.3% 2.0 Equity Markets: Canada (S&P / TSX Composite) 25.1% 6.0% (5.8%) 7.4% 1.8 U.S. (S&P 500) 28.7% 7.6% (
Slide 11: Industry Operating Environment
Industry Operating Environment Fourth Quarter Industry Long-term Net Sales ($B) Total Industry Industry Asset Manager Peers 16.7 12.7 7.7 8.0 6.5 5.7 4.1 7.1 6.5 2.5 1.0 2.8 0.2 2.4 4.1 Categories Q4 2021 Q4 2022 $ Change Balanced 2.5 (5.2) (7.7) (0.5) Foreign Equity 2.5 (3.6) (6.1) (8.2) Canadian E
Slide 12: IGM Financial Q4, 2022 Results
IGM Financial Q4, 2022 Results Total AUM&A ($B) Net Earnings ($MM) Net Earnings Per Share ($) Daily AUM&A 269 1.11 225 0.94 Annual Average AUM&A Quarterly Average AUM&A 290 280 270 260 250 Q4/21 Q4/22 Q4/21 Q4/22 240 230 Net acquisitions Adjusted Net Adjusted Net Earnings 220 of $30.3B Earnings1 ($M
Slide 13: Adjusted Net Earnings Available to Common Shareholders by Segment and Company
Adjusted Net Earnings Available to Common Shareholders1 by Segment and Company ($MM) Wealth Management Asset Management Strategic Investments & Other2 IGM Consolidated3 Quarter 260.8 -14% 224.7 -26% 141.1 104.6 -21% +35% -46% 65.3 -16% +231% 51.3 40.9 30.4 15.3 6.1 3.3 12.8 2.6 8.6 Q4/21 Q4/22 Q4/21
Slide 14: Fourth Quarter Ending AUM&A (CAD $B)
Fourth Quarter Ending AUM&A (CAD $B) Wealth Management Asset Management1 IGM Consolidated Strategic Investments 2 3 +2% 338 331 277 -10% 249 -7% 129 -12% 120 111 113 -11% +24% 33 30 24 20 Q4/21 Q4/22 Q4/21 Q4/22 Q4/21 Q4/22 Q4/21 Q4/22 Q4/21 Q4/22 Q4/21 Q4/22 1) Excludes sub-advisory to Wealth Manag
Slide 15: Fourth Quarter and Full Year Net Flows ($MM)
Fourth Quarter and Full Year Net Flows ($MM) Wealth Management Asset Management IGM Consolidated Strategic Investments 2 Institutional Quarter SMA1 1,239 1,307 985 1,234 429 1,810 123 45 757 181 (576) (305) (576) (832) (135) (135) (440) (967) Q4/21 Q4/22 Q4/21 Q4/22 Q4/21 Q4/22 Q4/21 Q4/22 Q4/21 Q4/
Slide 16: IG Wealth Management
IG WEALTH MANAGEMENT DAMON MURCHISON PRESIDENT & CEO IG WEALTH MANAGEMENT IGM FINANCIAL Q4, 2022 RESULTS
Slide 17: IG Wealth Management Q4, 2022 Highlights
IG Wealth Management Q4, 2022 Highlights 1 Ending AUM&A of $110.8B increased 5.5% during Q4 • Driven by client investment returns of 5.4% 2 Q4 gross inflows of $3.0B were the 2nd best fourth quarter on record 3 Solid net flows of $429MM in Q4 2022 marked our 9th consecutive quarter of positive net f
Slide 18: Solid Net Flows at IG Wealth Management
Solid Net Flows at IG Wealth Management IG Wealth Management Gross and Net Flows1 ($MM) IG Wealth Management Flows (in $B) Gross Inflows Gross Outflows Net Flows (Last Twelve Month Trailing, as at January 31, 2023) Month of January 1,166 1,066 Total Net Flows IGM Product Net Flows 999 834 879 739 86
Slide 19: IG Wealth Management Q4, 2022 Operating Results
IG Wealth Management Q4, 2022 Operating Results Gross Outflows Rate Assets Under Gross Inflows ($MM) (quarterly annualized) Net Flows ($MM) Advisement ($B) Cash, GICs, HISAs 985 3rd party 3,437 IGM Solutions 3,031 9.4% 429 119.6 8.3% 3.0 5.0 105.0 110.8 3.8 5.3 5.0 5.4 Q4/21 Q4/22 Net Flows Q4/21 Q4
Slide 20: IG Wealth's Clients Remaining Committed to Financial Plans
IG Wealth’s Clients Remaining Committed to Financial Plans, IG Focused on Comprehensive Financial Planning Redemption Rates1 (Last Twelve Month Trailing % of Average Assets) 20% 18% 16.6% 16% Industry 14% (as at Dec. 31, 2022; IG Investment Return Index based on long-term fund redemptions & 12% AUM;
Slide 21: Sales Growth Driven by High-Net-Worth & Mass Affluent Client Acquisition
Sales Growth Driven by Accelerating High-Net-Worth & Mass Affluent Client Acquisition Gross Flows from Newly Acquired Clients Gross Flows from Newly Acquired Clients (Annual, $MM) (Last Twelve Month Trailing, $MM) By Client Assets Brought to IG Wealth By Client Assets Brought to IG Wealth Growth <$1
Slide 22: Strong Advisor Productivity
Strong Advisor Productivity Gross Inflows per Advisor Gross Inflows per Advisor Recruit with <4 years experience Practice with >4 years experience ($MM) ($MM) Key Initiatives Driving Productivity • Tightened recruiting standards 1.69 0.66 • National Service Centre to help provide 1.49 0.60 1.38 cons
Slide 23: Mortgage Operations Strategic Partnership
Mortgage Operations Strategic Partnership A key driver of success is the experience we provide to Experience 1 IG advisors and clients, now including next generation white label mortgage solutions Simplify and modernize mortgage operations Technology 2 • IG advisors equipped with new innovative tool
Slide 24: Mackenzie Investments
MACKENZIE INVESTMENTS LUKE GOULD PRESIDENT & CEO MACKENZIE INVESTMENTS IGM FINANCIAL Q4, 2022 RESULTS
Slide 25: Mackenzie Investments & Strategic Investments Q4, 2022 Highlights
Mackenzie Investments & Strategic Investments Q4, 2022 Highlights 1 Ending AUM of $186.6B, up 3.4% from September 30, 2022 2 Investment fund net redemptions of $832MM, in-line with industry outflows 3 Meaningful increase in Morningstar Fund ratings • 4/5 Star ratings increase to 57% from 50% at Q3/2
Slide 26: Mackenzie Investments Net Flows
Mackenzie Investments Net Flows Mackenzie Adjusted Investment Fund Flows1 ($MM) Mackenzie Adjusted Investment Fund Net Flows1 (in $MM) Gross Sales Redemptions MF Net Sales ETF Net Flows (Last Twelve Month Trailing, as at January 31, 2023) 1,261 Month of January 994 981 804 Total Retail 652 698 716 6
Slide 27: Mackenzie Q4, 2022 Operating Results
Mackenzie Q4, 2022 Operating Results Retail Mutual Fund Gross Sales ($MM) Net Sales ($MM)1 ▪ (2.9%) long-term investment fund 2,229 Q4/21 Q4/22 net sales rate over the twelve Retail mutual Funds 478 (815) months ending December 31, 2022 is Retail ETFs 175 118 in-line with industry outflows 1,352 Ret
Slide 28: Investment Boutique Retail Mutual Fund Performance & Net Sales
Investment Boutique Retail Mutual Fund Performance & Net Sales Fixed Managed 3rd Party Value-Oriented Quality Growth-Oriented Sustainable Core & Dividend Income Solutions & Other North Global Global ChinaAMC, Fixed Multi-Asset Cundill American Ivy Growth Bluewater Resources Greenchip Quantitative Eq
Slide 29: Mackenzie to Launch ETF and Mutual Fund tracking CKG100
Mackenzie to Launch ETF and Mutual Fund tracking Corporate Knights Global 100 Index (CKG100) Investment Growth Since Inception3 (CKG100 v. MSCI ACWI) Highlights and Themes 410 CK100 a. Invests in the 100 global most sustainable MACKENZIE LAUNCHING companies according to Corporate Knights 360 ETF & M
Slide 30: Chinese Mutual Fund Industry AUM and Net Flows; ChinaAMC Industry Leader
Chinese Mutual Fund Industry AUM and Net Flows; ChinaAMC is an Industry Leader, and Consistently Among the Top Five in the League Tables Growth Chinese Mutual Fund Industry Long-term Mutual Chinese Mutual Fund Industry QoQ 1yr Fund Market Share2 (% at December 31, 2022) Ending 25.1 26.4 26.3 25.7 (2
Slide 31: A Leading Chinese Asset Manager – Total AUM Continuity
– A Leading Chinese Asset Manager – Total AUM Continuity ChinaAMC Ending AUM1 (RMB billions) Growth QoQ 1yr 1,740 1,733 1,722 (1%) 4% 1,662 1,607 1,581 1,599 1,536 1,461 604 591 584 1,294 623 1,248 630 594 1,186 610 ~0% 10% 642 1,137 1,142 1,137 1,032 657 1,038 1,004 976 971 561 608 895 870 880 509
Slide 32: Capital Partners
Capital Partners • Strong fundraisings of $3.8B and AUM growth of 23.6% for the year ended December 31, 2022 • IGM Financial and Great-West Lifeco have committed capital across each of Northleaf’s three global mid-market private market platforms (private equity, private credit and infrastructure) No
Slide 33: Financial Highlights
IGM FINANCIAL Financial Highlights KEITH POTTER EXECUTIVE VICE-PRESIDENT & CFO IGM FINANCIAL IGM FINANCIAL Q4, 2022 RESULTS
Slide 34: Total Assets Under Management & Advisement
Total Assets Under Management & Advisement IGM Assets Under Management & Advisement ($B) Change in IGM AUM&A ($B) Daily AUM&A Annual Average AUM&A Q4/21 Q1/22 Q2/22 Q3/22 Q4/22 LTM AUM&A excluding sub-advisory to Canada Life Quarterly Average AUM&A Opening AUM&A 214.1 224.3 216.8 195.5 193.1 224.3 I
Slide 35: IGM Financial Adjusted EBIT & Margins
IGM Financial Adjusted EBIT & Margins IGM Adjusted EBIT1 ($MM) IGM Adjusted EBIT Margin1,2 (% of AUM&A) Direct advisor/dealer 902.1 compensation3 & sub- 857.2 848.0 824.7 827.3 advisory expenses 253.5 Share of associates’ 1.24% 1.22% 1.22% 1.23% 1.23% 253.7 241.6 245.9 earnings and net 240.8 investm
Slide 36: IGM Financial Consolidated Profitability
IGM Financial Consolidated Profitability $ Millions (unless otherwise noted): Change QoQ Change YoY 1▪ Net investment income & other up IGM Financial Consolidated Q4/21 Q3/22 Q4/22 $ % $ % Days in the period 92 92 92 0.0% 0.0% $11.7MM year-over-year, primarily Average AUM & AUA ($ Billions) due to h
Slide 37: IG Wealth Management Key Profitability Drivers
IG Wealth Management ▪1 Reminder: Asset-based compensation is paid based on the simple average of opening & ending monthly AUA and based on the # of months in a period (whereas advisory and product & program fee revenue is Key Profitability Drivers earned on daily average AUA based on the # of days
Slide 38: IG Wealth Management Profitability
IG Wealth Management Profitability $ Millions (unless otherwise noted): Change QoQ Change YoY IG Wealth Management Q4/21 Q3/22 Q4/22 $ % $ % Days in the period 92 92 92 0.0% 0.0% Average assets under advisement ($B) 117.4 108.5 109.6 1.1 1.0% (7.7) (6.6%) Average assets under management ($B) 109.5 9
Slide 39: Asset Management Key Profitability Drivers
Asset Management Key Profitability Drivers Net Asset Management Fee Rates1 Average AUM ($B), Net Asset Management Fees (bps)1 (as bps of respective AUM) 207.1 205.5 Sub-advisory AUM 82.1 82.0 82.3 Third-party 195.5 to Wealth 79.0 80.5 Excluding 187.3 186.3 Management Canada Life Third Party AUM Over
Slide 40: Asset Management Segment Profitability
Asset Management Segment Profitability $ Millions (unless otherwise noted): Change QoQ Change YoY Asset Management Q4/21 Q3/22 Q4/22 $ % $ % Days in the period 92 92 92 0.0% 0.0% ▪1 Year-over-year increase in net Average assets under management ($B) Excluding sub-advisory to Wealth Management 126.8
Slide 41: A Leading Chinese Asset Manager – AUM and Earnings
– A Leading Chinese Asset Manager – AUM and Earnings ChinaAMC Ending AUM1 IGM Share of ChinaAMC Earnings2 (RMB billions) (CAD millions) 1-Year Growth 17.0 1,740 1,733 1,722 4% 1,662 1,599 14.8 14.7 14.2 13.5 604 591 584 (6%) 623 594 359 382 383 29% 297 316 741 688 778 761 754 2% Q4/21 Q1/22 Q2/22 Q3
Slide 42: Adjusted Net Earnings by Segment and Company ($MM)
Adjusted Net Earnings Available to Common Shareholders by Segment and Company ($MM) Wealth Management Asset Management Strategic Investments & Other IGM Consolidated Adjusted Net Earnings Available to Common 260.8 -14% Shareholders1 224.7 Q4/21 Q4/22 141.1 -26% 104.6 -21% 65.3 +35% Other adjusted 51
Slide 43: Adjusted Net Earnings and Valuation by Segment and Company ($MM)
Adjusted Net Earnings Available to Common Shareholders and Valuation by Segment and Company ($MM) Wealth Management Asset Management Strategic Investments & Other IGM Consolidated Adjusted Net Earnings -1% Available to Common -4% 867 862 Shareholders1 437 Other adjusted 419 +138% 2022 -38% net earni
Slide 44: 2023 Expense Guidance – Continued Focus on Prudent Expense Management
2023 Expense Guidance – Continued Focus on Prudent Expense Management Guidance and Outlook: Combined Operations & Support and Business Development Expenses IGM Consolidated1 (year-over-year change) 5-year technology & operations 9% 9% transformation announced 7% 6% 5% 3% ~3% 2.2% 2 2.3% 1% 3 2014 20
Slide 45: Q&A
Q&A IGM FINANCIAL Q4, 2022 RESULTS
Slide 46: Appendix
Appendix IGM FINANCIAL Q4, 2022 RESULTS
Slide 47: Wealthsimple AUA and Clients
• Wealthsimple’s AUA was flat year-over-year and increased sequentially by 4.6% • The number of clients served by Wealthsimple increased 16% in the last year to 2.0 million (excluding users who only use Wealthsimple Tax)1 Wealthsimple AUA of CAD $18.3B1 Wealthsimple Clients of 2.0 million1,2 (AUA, $