IGM Financial Inc. · TSX:IGM
IGM Financial — Q3 2020 Earnings Presentation
51 slides from IGM Financial's earnings presentation, Nov 6, 2020
Slide 1: IGM Financial Q3, 2020 Results
IGM Financial Q3, 2020 Results November 6, 2020
Slide 2: Conference Call Participants
Conference Call Participants JAMES O‘SULLIVAN DAMON MURCHISON BARRY S. MCINERNEY LUKE GOULD 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 unde
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 – James O'Sullivan
IGM FINANCIAL JAMES O‘SULLIVAN PRESIDENT & CEO IGM FINANCIAL IGM FINANCIAL Q3, 2020 RESULTS
Slide 7: IGM Q3, 2020 Highlights
IGM Q3, 2020 Highlights 1 Record high AUM&A of $196.4B; up over 4% from Q2 • Client returns of 4.2% in the quarter and 1.0% year-to-date, with full recovery from Q1 declines 2 Solid overall net flows of $408MM and investment fund net sales of $610MM1 • Increase in IG Wealth net flows relative to las
Slide 8: Financial Market and Client Investment Returns
Financial Market and Client Investment Returns IGM Client Return Index1 Investment Performance 2.2 Q4/20 at Oct 31 Q1/20 Q2/20 Q3/20 Oct 31/20 2020 YTD IGM Client Investment Returns 2 (11.7%) 9.7% 4.2% (1.9%) (1.0%) Equity Markets: 2.0 Canada (S&P / TSX Composite) (21.6%) 16.0% 3.9% (3.4%) (8.7%) U.
Slide 9: Industry Operating Environment
Industry Operating Environment Industry Long-term Net Sales ($B) Total Industry Advice Channel 12.4 8.4 6.8 6.1 5.6 5.7 5.8 3.0 2.9 2.5 1.5 1.2 1.7 2.0 0.5 (1.6) 0.6 (0.7) (1.2) (1.7) Q3/11 Q3/12 Q3/13 Q3/14 Q3/15 Q3/16 Q3/17 Q3/18 Q3/19 Q3/20 Long-term Mutual Fund Net Sales Rate (Last Twelve Month
Slide 10: IGM Financial Realigned Three Reportable Segments
IGM Financial has Realigned our Three Reportable Segments so that Financial Reporting and Related Disclosures Better Characterize our Distinct Business Lines and Help Stakeholders Understand and Assess Components of Value Wealth Management Asset Management Strategic Investments AUA 68% AUM 20% & Oth
Slide 11: IGM Financial Q3, 2020 Results
IGM Financial Q3, 2020 Results Daily Total AUM & AUA ($B) Net Earnings ($MM) Net Earnings Per Share (₵) Total AUM&A Annual Average AUM&A 85 80 77 202 191 184 Quarterly Average AUM&A Investment Fund Assets 210 200 190 Q3/19 Q2/20 Q3/20 Q3/19 Q2/20 Q3/20 180 Adjusted Net Adjusted Net Earnings 170 Earn
Slide 12: Adjusted Earnings before Interest & Tax by Segment
Adjusted Earnings before Interest & Tax by Segment Asset $ millions Wealth Management Management Strategic Investments & Other Unallocated Quarter Capital Q3 2020 181.7 5.3 70.5 33.0 10.5 - (0.6) 300.4 Quarter-over- quarter change 17.5% 15.2% 28.9% (4.3%) 1.9% 16.0% Year-over- year change (5.7%) (18
Slide 13: Third Quarter and Year-to-Date Net Flows
Third Quarter and Year-to-Date Net Flows Wealth Management Asset Management IGM Consolidated Up $224MM Up $33MM Up $1,305MM Up $1,524MM Quarter ($MM) 627 408 (9) (233) (179) (146) (678) (1,116) Q3/19 Q3/20 Q3/19 Q3/20 Q3/19 Q3/20 Q3/19 Q3/20 Up $981MM Up $690MM Up $4,997MM Up $6,535MM 4,577 4,878 31
Slide 14: Wealthsimple Equity Fundraising Reinforces Momentum
Wealthsimple Equity Fundraising Reinforces Momentum and Enhances Value For IGM Shareholders • CAD $114MM equity fundraising led by TCV, one of the largest growth equity investors focused on technology • IGM is the largest shareholder with a 36% fully diluted proforma interest and, collectively, the
Slide 15: Execution of Transformation Program Continues in Q3
Execution of Transformation Program Continues in Q3 with New Initiatives to Modernize our Technology Platform by Partnering with Leading Firms Launched new dealer platform in Q4/16 for IG Wealth Management. Migration of all client accounts onto new platform substantively complete New fee-based accou
Slide 16: IG Wealth Management – Damon Murchison
IG WEALTH MANAGEMENT DAMON MURCHISON PRESIDENT & CEO IG WEALTH MANAGEMENT IGM FINANCIAL Q3, 2020 RESULTS
Slide 17: IG Wealth Management Q3, 2020 Highlights
IG Wealth Management Q3, 2020 Highlights 1 IG record high quarter-end AUM&A of $97.5B as at September 30, 2020, up 3.9% during Q3 • Third quarter client returns were positive ~4% 2 IG net flows of negative $9MM, an improvement of $224MM relative to Q3 2019 • Year-to-date September 2020 net flows are
Slide 18: IG Wealth Management Q3, 2020 Operating Results
IG Wealth Management Q3, 2020 Operating Results Gross Outflows Rate Assets Under Gross Inflows ($MM) (quarterly annualized) Net Flows ($MM) Advisement ($B) 3rd party IG mutual funds 2,189 2,132 10.2% 97.5 94.5 93.8 8.8% 3.7 4.3 4.6 (9) (233) Q3/19 Q3/20 90.8 89.5 92.9 Q3/19 Q3/20 (96.1%) (95.4%) (95
Slide 19: Momentum Accelerating in August and into October at IG Wealth
Momentum Accelerating in August and into October at IG Wealth IG Wealth Management Gross and Net Flows1 ($MM) IG Wealth Management Flows Gross Inflows Gross Outflows Net Flows (Last Twelve Month Trailing, $MM) Month of October: Net Flows Gross Inflows (RHS) 825 783 875 707 728 Starting in August, 54
Slide 20: Strong Recruiting in Q3 Leading to Growth of Consultant Network
Strong Recruiting in Q3 Leading to Growth of Consultant Network; Continued Improvements in Consultant Productivity Consultant Productivity – Gross Sales per Consultant Consultant Network ($MM) 0.40 0.41 3,486 0.32 3,318 3,363 Consultant Recruits 0.24 (<4 years 1,009 experience) Associates & 1,013 1,
Slide 21: Mackenzie Investments – Barry McInerney
MACKENZIE INVESTMENTS BARRY S. MCINERNEY PRESIDENT & CEO MACKENZIE INVESTMENTS IGM FINANCIAL Q3, 2020 RESULTS
Slide 22: Mackenzie Q3, 2020 Highlights
Mackenzie Q3, 2020 Highlights 1 Record high total AUM was $147.3B at September 30, 2020, up 4.5% in the quarter 2 All-time record high third quarter investment fund net sales of $946MM • Continued market share gains • Retail investment fund net sales of $840MM, marking the 16th consecutive quarter o
Slide 23: Mackenzie Q3, 2020 Operating Results
Mackenzie Q3, 2020 Operating Results Mutual Fund Gross Sales ($MM)3 Net Sales ($MM)1,3,4 ▪ $840MM retail net sales, up $491MM Retail Institutional Q3/19 Q3/20 ▪ 2.9% long-term investment fund net 2,903 Retail mutual Funds 242 441 sales rate over the twelve months 2,253 Retail ETFs 107 399 1,214 endi
Slide 24: Continued Strong Momentum at Mackenzie with a Record-breaking October
Continued Strong Momentum at Mackenzie with a Record-breaking October Mackenzie Investment Fund Flows1 ($MM) Mackenzie Investment Funds Net Flows1 Gross Sales Redemptions Mutual Fund Net Sales ETF Net Flows (Last Twelve Month Trailing, $MM) Month of October: 1,164 746 874 811 680 581 332 542 507 512
Slide 25: 2020 Advisor Perception Results Show Continued Momentum
2020 Advisor Perception Results Show Continued Momentum Mutual Fund Advisor Perception Study – Mackenzie 2013 2015 2017 2018 2019 2020 Results Overall Perception Rank 12th 5th 3rd 3rd 3rd 2nd Brand Equity Rank N/A 2nd 2nd 2nd 2nd 2nd Overall Quality of Sales 2 2 2 12th 7th 2nd 1st 2nd 1st Organizati
Slide 26: Five Areas of Product Emphasis for Mackenzie
Five Areas of Product Emphasis for Mackenzie Mackenzie Capabilities Areas of Macro Dedicated Selected Emphasis Thesis Leader/Team Capabilities Highlights Current AUM 1. Sustainable, Responsible $23T market with diversified retail and ✓ • • ESG integration across boutiques In-house capabilities suppo
Slide 27: Northleaf Capital Partners Strategic Relationship
Northleaf Capital Partners Strategic Relationship Expands Asset Management Capabilities and Strengthens Distribution Offering About Northleaf Key Terms 1. An independent mid-market global private equity, private credit and 1. Mackenzie & Lifeco jointly acquire 70% economic interest in infrastructure
Slide 28: Financial Highlights – Luke Gould
IGM FINANCIAL Financial Highlights LUKE GOULD EXECUTIVE VICE-PRESIDENT & CFO IGM FINANCIAL IGM FINANCIAL Q3, 2020 RESULTS
Slide 29: Assets Under Management & Advisement
Assets Under Management & Advisement IGM Assets Under Management & Advisement ($B) Change in IGM AUM & AUA ($B) Total AUM&A Annual Average AUM&A Q3/19 Q4/19 Q1/20 Q2/20 Q3/20 LTM Quarterly Average AUM&A Investment Fund Assets Opening AUM & AUA 184.9 185.1 190.0 168.4 188.3 185.1 210 IG Wealth Manage
Slide 30: IGM Adjusted EBIT & Margins
IGM Adjusted EBIT & Margins IGM Adjusted EBIT1 ($MM) IGM Adjusted EBIT Margin1,3 (% of AUM&A) 744.3 760.0 753.4 Advisory & business 707.9 706.6 development and sub- 1.54% 1.53% 1.49% 1.45% 1.44% advisory 0.59% 0.61% 0.60% 274.5 289.0 271.1 Share of associates’ 0.58% 0.55% 276.6 262.3 earnings and ne
Slide 31: IGM Financial Consolidated Profitability
IGM Financial Consolidated Profitability1 $ Millions (unless otherwise noted): Change YoY Change QoQ IGM Financial Consolidated Q3/19 Q2/20 Q3/20 $ % $ % Days in the period 92 91 92 0.0% 1.1% ▪1 In Q2, 2020, net investment Average AUM & AUA ($ Billions) income included favourable fair Wealth Managem
Slide 32: IG Wealth Management Key Profitability Drivers
IG Wealth Management Key Profitability Drivers Average Assets ($B), Advisory and Key Revenue & Expenses as bps of Product & Program Fee Rate (bps)1 Respective Driver (AUA or AUM)1 95.8 94.9 97.0 110.4 94.1 Other AUA 109.5 106.8 Advisory 91.2 4.5 106.7 105.9 3.7 3.8 4.0 91.9 4.2 92.5 90.4 90.9 87.0 8
Slide 33: IG Wealth Management's Better Gamma Leads to Client Outcomes
Reminder: IG Wealth Management’s Better Gamma (better advice) Leads to 60-65% of Client Outcomes BET TER BETTER GAMMA BETA BETTER ALPHA 60-65% OF CLIENT OUTCOME 20-25% OF CLIENT OUTCOME 5-10% OF CLIENT OUTCOME Gamma – the value of all efforts that sit outside of investment portfolio Beta – the value
Slide 34: IG Wealth Management Profitability
IG Wealth Management Profitability $ Millions (unless otherwise noted):1 Change YoY Change QoQ IG Wealth Management Q3/19 Q2/20 Q3/20 $ % $ % Days in the period 92 91 92 0.0% 1.1% ▪1 Other financial planning Average Assets under advisement ($B) 94.1 91.2 97.0 3.0 3.2% 5.9 6.5% revenues increased as
Slide 35: Asset Management Key Profitability Drivers
Asset Management Key Profitability Drivers Key Revenue as bps of Respective Driver1 Average AUM ($B), Net Asset Management Fees (bps)1 (Third-party AUM or Sub-advisory AUM to Wealth Mgmt.) Sub-advisory AUM to Wealth 145.8 Management 76.9 76.7 139.2 140.2 138.5 73.7 135.6 72.1 Third Party 72.0 71.0 N
Slide 36: Asset Management Segment Profitability
Asset Management Segment Profitability $ Millions (unless otherwise noted): 1 Change YoY Change QoQ ▪1 Operations and support Asset Management Q3/19 Q2/20 Q3/20 $ % $ % expenses were down 7% Days in the period 92 91 92 0.0% 1.1% quarter-over-quarter. Assets under Management ($B) Excluding sub-adviso
Slide 37: Strategic Investments & Other Segment as at September 30, 2020
Strategic Investments & Other Segment as at September 30, 2020 • The Strategic Investments & Other segment has a fair value of ~$2.9B at September 30, 2020 Great-West Lifeco: China: _________Fintech:_________ Unallocated Total Capital 1 $ millions unless otherwise noted (TSX:GWO) WS: 36% fully IGM o
Slide 38: Q&A
Q&A IGM FINANCIAL Q3, 2020 RESULTS
Slide 39: Appendix
Appendix IGM FINANCIAL Q3, 2020 RESULTS
Slide 40: IG Wealth's Clients Remaining Committed to Financial Plans
IG Wealth’s Clients Remaining Committed to Financial Plans, IG Focused on Client Engagement & Gamma Redemption Rates1 (Last Twelve Month Trailing % of Average Assets) 20% 18% Industry (as at Sep 30, 2020; long-term funds; 16% 15.8% excluding IG Wealth) 14% 12% IG Investment Return Index IG Wealth 10
Slide 41: Continued Emphasis on High Net Worth Solutions and Managed Solutions
Continued Emphasis on High Net Worth Solutions and Managed Solutions HNW Solutions % of Total Sales Managed Solutions Share of Gross Sales of HNW Solutions ($B) (Last Twelve Month Trailing) Long-term Funds HNW - Bundled Share of Long- HNW - Unbundled term Gross Sales (last twelve month Other 52% tra
Slide 42: Mackenzie Retail Investment Fund Net Sales
Mackenzie Retail Investment Fund Net Sales $MM Mutual Fund Gross Sales Net Sales % $ Retail Investment Funds Q3/19 Q3/20 Q3/19 Q3/20 Change Change Mutual Funds ▪ Retail investment fund net Income 206 308 49.3 24 172 148 sales were $840MM, Balanced 705 700 (0.8) 207 236 29 Canadian Equity 127 110 (12
Slide 43: Mackenzie's Continued ETF Growth Across Channels
Mackenzie’s Continued ETF Growth Across Channels ETF AUM by Quarter ($MM) ETF Net Creations by Quarter ($MM) 7,467 IG, IPC, & Mackenzie Mutual Funds 6,642 1 1,015 Institutional 937 621 Retail 256 5,255 4,138 646 4,749 597 524 933 4,051 282 444 489 502 208 39 399 163 191 107 69 2,827 (302) Q3/19 Q4/1
Slide 44: Investment Performance Highlights
Investment Performance Highlights 61% of AUM is 4/5 star; 18 of 20 largest rated funds are 4/5 star and 10 of 20 Mackenzie Mutual Funds are rated 5 star (series F) Mackenzie Mutual Funds in 1st or 2nd Quartile1 Morningstar Star Ratings1 (Proportion of Assets) (Proportion of Assets) Jun 2020 Sep 2020
Slide 45: Investment Boutique Retail Mutual Fund Performance & Net Sales
Investment Boutique Retail Mutual Fund Performance & Net Sales Fixed Managed Value-Oriented Quality Growth-Oriented Core & Dividend 3rd Party Income Solutions North Global Global Systematic Fixed Multi-Asset 3rd Party Cundill American Ivy Growth Bluewater Resources Quantitative Equity & Strategies I
Slide 46: Wealth Management Segment Key Profitability Drivers
Wealth Management Segment Key Profitability Drivers (reflects IG Wealth and IPC) Average Assets ($B), Advisory and Product Key Revenue & Expenses as bps of & Program Fee Rate (bps)1 Respective Driver (AUA or AUM)1 104.4 103.1 101.8 101.5 100.6 Advisory 123.2 121.8 124.3 121.2 117.1 Other AUA 25.5 25
Slide 47: Wealth Management Segment Profitability
Wealth Management Segment Profitability (reflects IG Wealth and IPC) $ Millions (unless otherwise noted): 1 Change YoY Change QoQ Wealth Management Q3/19 Q2/20 Q3/20 $ % $ % Days in the period 92 91 92 0.0% 1.1% Average Assets under advisement ($B) 121.2 117.1 124.3 3.1 2.5% 7.2 6.2% Average Assets
Slide 48: IPC Key Profitability Drivers
IPC Key Profitability Drivers Average Assets ($B), Advisory and Key Revenue & Expenses as bps of Product & Program Fee Rate (bps)1 Respective Driver (AUA or AUM)1 110.6 111.9 111.0 108.1 107.2 27.4 27.3 Product & 27.2 26.9 Other AUA 25.9 program fees 21.8 22.0 21.7 22.1 21.0 84.8 83.3 80.9 82.8 81.8
Slide 49: IPC Profitability
IPC Profitability $ Millions (unless otherwise noted): 1 Change YoY Change QoQ IPC Q3/19 Q2/20 Q3/20 $ % $ % Days in the period 92 91 92 0.0% 1.1% Average Assets under advisement($B) 27.2 25.9 27.3 0.1 0.3% 1.4 5.2% Average Assets under management ($B) 5.4 4.9 5.1 (0.2) (4.3%) 0.2 4.4% Revenues Shad
Slide 50: China AMC's Growth has Accelerated in 2020
China AMC’s Growth has Accelerated in 2020 CAD/RMB = 5.1942 China AMC Ending AUM1 China AMC Net Earnings (RMB billions) (RMB millions) Very strong AUM growth over past Earnings reflective of four quarters 1,248 growth in AUM 398 407 1,032 906 918 349 870 880 309 310 296 287 298 284 254 Q4/17 Q2/18 Q
Slide 51: New Presentation of Wealth Management & Asset Management Business Operations
New Presentation of Wealth Management & Asset Management Business Operations Compared to Prior Disclosure Presentation Three months ended September 30, 2020 Management Administration Distribution Net Investment Proportionate Commission Non-commission Adjusted $ millions Prior Fees Fees Fees Income &