Igm Financial Inc. · TSX:IGM
Igm Financial — Q3 2016 Earnings Presentation
33 slides from Igm Financial's earnings presentation, Nov 4, 2016
Slide 1: IGM Financial Q3, 2016 Results
IGM FINANCIAL Q3, 2016 Results November 4th, 2016
Slide 2: Conference Call Participants
IGM FINANCIAL – 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 Mackenzie Relations, IGM Financial IGM Financial President & CEO, Inv
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 unde
Slide 4: Non-IFRS Financial Measures and Additional IFRS Measures
NON-IFRS FINANCIAL MEASURES AND 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: – Operating earnings available to common shareholders; and – Other items, which inclu
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: Agenda for Today's Call
AGENDA FOR TODAY’S CALL 1. IGM Highlights 2. Investors Group 3. Mackenzie Investments 6
Slide 7: IGM Financial Highlights of Third Quarter Results
IGM FINANCIAL HIGHLIGHTS OF THIRD QUARTER RESULTS • Operating earnings were $197.6MM versus $199.0MM last year and $172.9MM during the prior quarter Financial • Operating earnings per share for the quarter were $0.82 versus $0.81 Results last year and $0.72 during the prior quarter • Quarterly divid
Slide 8: Operating Environment
OPERATING ENVIRONMENT • The S&P TSX Composite Index rose 4.7% in the quarter driven by strong performance from resource companies, particularly gold and Financial silver producers Markets • Other global equity indices also experienced strong returns • Canadian dollar weakness boosted foreign equity
Slide 9: Regulatory Developments in the Quarter
REGULATORY DEVELOPMENTS IN THE QUARTER CSA Notice and Request for Comment • The Proposal introduces a framework for broadening investor MODERNIZATION OF access to “alternative funds” through a series of amendments INVESTMENT FUND PRODUCT to National Instrument 81-102 Investment Funds REGULATION – AL
Slide 10: Expanding Fintech Portfolio
EXPANDING FINTECH PORTFOLIO • Fintech investments of $35MM which included an investment in Wealthsimple and Portag3 Ventures, a partnership with Power Financial Corporation and Great-West Lifeco Inc. to invest in early-stage innovative financial services companies • This builds on our other Fintech
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Slide 12: Investors Group Third Quarter Review
INVESTORS GROUP THIRD QUARTER REVIEW Company Highlights 1) Listening Tour Update 2) Enhanced competitive position with elimination of DSC purchase option 12
Slide 13: Enhancing Our Competitive Position – DSC Changes
ENHANCING OUR COMPETITIVE POSITION – DSC CHANGES Change in Gross Sales (year over year) Elimination of DSC purchase option enhances our competitive Sept. 19th, 2016 5.4% position and simplifies our offering within the marketplace Announced elimination of DSC purchase option making it easier for cl
Slide 14: Consultant Network Growth
CONSULTANT NETWORK GROWTH 5,380 • Consultant network at < 4 years 5,380, up 3% from Q3 2015 experience • Number of Consultants with CFP or F.Pl. designations stands at 1,581, with an additional 1,111 Consultants > 4 years enrolled in these programs experience which combined is up 34% from Q3 2015 20
Slide 15: Mutual Fund Flows
MUTUAL FUND FLOWS Quarterly Gross and Net Sales Trends ($ Billions) 2.5 2.27 1.81 1.82 1.78 2.0 1.63 1.5 1.0 0.47 Gross Sales • Gross sales during the 0.14 0.5 0.00 Net Sales quarter of $1.63B - (0.5) (0.17) (0.19) (1.0) • Net redemptions of $194MM Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Quarterly Annualized
Slide 16: HNW Segment – Key Growth Focus
HNW SEGMENT – KEY GROWTH FOCUS HNW Mutual Fund Gross Sales as 1 a Percentage of Total Gross Sales (YTD - %) • Mutual fund gross sales in 35% HNW series1 were $1.4B YTD 2016, a 6% increase relative to 30% the prior year (25% of gross 25% sales compared to 22% in the 25% 22% prior YTD period) 20% • 8%
Slide 17: Insurance & Mortgage Business
INSURANCE & MORTGAGE BUSINESS New Annualized Insurance Premiums (Nine months ended September 30 - $ Millions) 51.9 59.7 • New individual insurance Group Insurance product sales have increased 14.1% YTD 2016 45.9 Individual 40.2 Insurance • New mortgage business 2015 2016 YTD 2016 was $2.2B, up 14.0%
Slide 18: Investment Performance
INVESTMENT PERFORMANCE Client Account Rate of Return Experience (%) Quarterly 8 • Client account rate of return 6 4 90% of client for up to five years now 3.5 2 1.4 1.3 accounts had appears on quarterly 0.0 returns within - this range statements (2) (4) (6) • Median client account rate of (8) return
Slide 19: Investment Performance Based on Gross Returns Relative to Benchmarks
INVESTMENT PERFORMANCE BASED ON GROSS RETURNS RELATIVE TO BENCHMARKS September 30, 2016 1Y 3Y 5Y 10Y -2.4 Gross Returns Above Benchmarks -1.1 -0.9 -1.9 -2.2 -0.5 -2.2 -0.9 1.4 -7.0 -2.8 -2.3 -0.8 -1.3 -2.4 Fixed Income Equity & Balanced Canadian Equities -0.6 -9.8 2.2 -2.5 2.8 0.7 -0.4 0.5 5.3 -4.1
Slide 20: Average Mutual Fund AUM & Fee Rates
AVERAGE MUTUAL FUND AUM & FEE RATES 208.8 209.0 208.8 208.9 208.6 • Q3 2016 average mutual fund AUM increased 3.1% 78.1 compared to Q2 2016 75.4 75.3 75.8 73.5 • Proportion of mutual fund AUM in HNW series increased to 38.8% in Q3 20161 • Management & administration fee rate relatively stable compar
Slide 21: Investors Group EBIT
INVESTORS GROUP EBIT ($ Millions, unless otherwise indicated) Change Relative to: • Management and Prior Prior Q3/15 Q2/16 Q3/16 Year Quarter administration fees increased Average mutual fund AUM ($ billions) 75.4 75.8 78.1 3.7% 3.1% compared to Q2 2016 Revenues reflecting higher average Management
Slide 22: Mackenzie – Confidence in a Changing World
rN MACKENZIE CONFIDENCE IN A CHANGING WORLD 22
Slide 23: Mackenzie Third Quarter Review
MACKENZIE THIRD QUARTER REVIEW Company Highlights 1) Accelerating momentum in a challenging (but improving) environment - Improvement in Mackenzie’s Advisor Perception Study results - Improvement in retail mutual fund flows 2) New product launches – enhancement of Smart Beta ETFs and mutual funds su
Slide 24: Mutual Fund Flows
MUTUAL FUND FLOWS 1 Quarterly Mutual Fund Flows ($ Billions) 1.84 2.0 1.49 1.59 1.49 1.65 • Mutual fund gross sales up 1.5 11.2% relative to Q3 2015 1.0 Gross Sales 0.5 Net Sales • 7.7% increase in retail gross - (0.07) sales in context of advice (0.5) (0.18) (0.19) (0.20) (0.38) channel gross sales
Slide 25: Flows – Mutual Fund Gross Sales by Asset Class
FLOWS – MUTUAL FUND GROSS SALES BY ASSET CLASS • 19.5% improvement in core balanced fund gross sales Total Mutual Fund Gross Sales (Three months ended September 30 - $ Millions) 2015 2016 $ Change % Change • Foreign equity gross sales remain strong at $533MM Money market 84 107 23 27.4% Income-orien
Slide 26: Flows – Total Investment Product Net Sales
FLOWS – TOTAL INVESTMENT PRODUCT NET SALES Total Investment Product Net Sales (Three months ended September 30 - $ Millions) • $85MM improvement in 2015 2016 $ Change balance fund category Money market 15 10 (5) excluding Symmetry Income-oriented (139) (85) 54 Balanced • ETF net creations of $25MM S
Slide 27: Advisors Are Engaged – Mackenzie's APS Score
ADVISORS ARE ENGAGED – MACKENZIE’S APS SCORE MOVES HIGHER IN 2016 STUDY 2016 Advisor Perception Study • One of only two top ranked companies to increase overall score Overall Company Score • 5th place ranking, and increased overall score Overall Ranking 5th • Strong brand equity ranking Brand Equity
Slide 28: Investment Boutiques – Performance & Flows
INVESTMENT BOUTIQUES – PERFORMANCE & FLOWS Mutual Fund Assets by Morningstar Rating at Sep 30, 2016 ($MM) 1 10,000 7,500 1 or 2 Stars 3 Stars 4 or 5 Stars Not Rated 5,000 2,500 0 % 4 or 5 0% 5% 87% 81% 63% 62% 85% 14% 0% 0% 24% 34% 3% Fixed Managed Value-Oriented Quality Growth-Oriented Core & Divid
Slide 29: Investment Performance – Mutual Funds
INVESTMENT PERFORMANCE – MUTUAL FUNDS 1 Mackenzie Mutual Funds in First or Second Quartile (Proportion of Assets) 65% 62% 45% 42% June 30, 2016 40% 42% September 30, 2016 33% 32% 1 Year 3 Year 5 Year 10 Year 1 Morningstar Ratings – Proportion of Morningstar-Rated Assets (As at September 30, 2016) 38
Slide 30: Maximum Diversification ETF/Fund Launch
MAXIMUM DIVERSIFICATION ETF/FUND LAUNCH TOBAM’s Approach Greater portfolio diversification improves risk- adjusted returns TOBAM has developed a proprietary patented quantitative strategy to maximize diversification in order to deliver Exclusive retail partnership in the full risk premium of an asse
Slide 31: Average Total AUM & Fee Rates
AVERAGE TOTAL AUM & FEE RATES 80.1 78.7 Annualized Net 76.5 76.8 76.9 Revenue Rate (bps)1 • Q3 2016 change in average AUM versus Q2 2016: − Mutual funds up 3.7% 62.2 63.5 61.7 59.8 60.8 Average Total AUM ($B) − Institutional up 6.4% Institutional2 Mutual − Proportion of average 49.2 48.5 46.7 47.8 4
Slide 32: Mackenzie EBIT
MACKENZIE EBIT ($ Millions, unless otherwise indicated) Change Relative to: Q3/15 Q2/16 Q3/16 Prior Prior • Net revenue up 5.5% Year Quarter compared to Q2 2016 due to Average AUM ($ Billions): Total 62.2 60.8 63.5 2.0% 4.3% higher AUM level Mutual funds 49.2 47.8 49.6 0.9% 3.7% • Non-commission exp
Slide 33: Q&A
ISM, Q&A 33