Q1 2020 Earnings Call
Good afternoon, and welcome to the I GM financial first quarter 2020 earnings results call for Friday May eight 2020.
Host for today will be Mr. Keith Botir. Please go ahead so far.
Thank you Patrick and good afternoon, and welcome everyone to financial 2021st quarter earnings call.
Keep Potter treasurer, and head of Investor Relations I hope everyone has been staying safe.
Adjusting well to our new environments.
Joining me on the call today are just Carty, president and COO abide you wealth management.
President and COO by Jim financial.
Also very mcinerney, president and CEO of Mckenzie It investments <unk> Gold executive Vice President CFO abide you have potential. We also on today's call Mark Kinzel Executive Vice President Financial services had a bide your distribution network will provide a perspective on how the organization has I can get continues transitions model.
In the current environment.
Before we get started to like to draw your attention.
Cautions concerning forward looking statements on slide three the presentation slide four summarized noninterest financial measures used in this material on slide five we provided a list of documents that are available to the public on our website.
The first quarter results right you have financial.
And with that I'll turn over to Jeff Carter, who will begin his remarks on slide seven.
Thank you.
Lot of happened since our last call and I first want to express my hope that you and your families are doing well and staying safe.
I'll start the call by providing you with an update on how I GM has responded during cold, but 19 pandemic.
First and foremost we prioritize the safety of our employees and our advisors by quickly moving people into a remote work environment.
To eliminate financial uncertainty for our employees, we've committed to know job losses related to covert 19 and 2020.
Supplemented income for added costs working for this environment.
We've also implemented flexible work schedule and resources to support mental and physical wellbeing.
Looking at clients, we have significant increase communications across or companies to ensure clients remain committed to their plan and investment solutions.
In some instances clients are experiencing friendship our financial hardship and we're helping them access available government, an internal programs such as the mortgage payment deferrals NRG.
We also continue to support our communities through financial contributions and ongoing volunteer work of employees and advisors.
Some of the programs are specifically addressing national food banks needs are vulnerable people and pressures faced by small businesses.
We're fortunate to be in a business that can be conducted remotely and providing services that are extremely relevant kt ens during periods like that.
Turning to slide eight for Q1 to 2020 highlights.
Total at U.M. and anyway were both down approximately 11.5% during the quarter.
Seen a bounce back in April with a ramp up 8.1%, reflecting strong net sales and positive client investment return.
Investment fund net sales of 306 million or up from last year.
This is a solid result relative to the advice channel long term net redemptions of 3.9 billion.
Which marks the worst first quarter net sales on record for the industry.
I can't Q1, 2020 earnings per share of 68 cents compared to 70 cents last year.
With market volatility and the change in our environment, we're modifying our non commission expense growth guidance from a 3% increase to a 2% decrease in 2020.
Luke will speak more to this and his review of financials.
Finally, we're trillion in an environment, where financial planning and asset management Shine.
I'm proud to see I'd, you walk management continue to have a positive net client inflows during the Kobe pandemic.
And at the same time Mckenzie has posted its best performance in a decade measured by Morningstar four and five stars.
Slide nine highlights the performance of major equity and fixed income indices.
Q1, 2020, <unk> equity market declines in major industries around 20%.
One of the steepest market declines in history.
Financial remarks him markets improve meaningfully in April.
Hi, Jim average client returns are negative 6.2% year to date.
Diversification of our clients portfolios has helped mitigate this extreme market volatility.
Turning to slide 10.
Industry experienced long term net redemptions at 1 billion during Q1 2020.
It was really a quarter of two tails.
First.
January and February had momentum building from Q4 with long term net sales of 13 billion and then there with the cobot 19 impact in March where net redemptions reached 14 billion the worst month on record.
Industry advice channel experienced long term mutual fund net redemptions of 3.9 billion during Q1.
Turning to slide 11 on our results for the first quarter average AUM was 163.3 billion <unk>.
And the increased 4.7% year over year.
Investment fund net sales of 306 million during Q1 2020 weren't improvement over net sales of 260 million last year.
As I mentioned <unk> Q1, 2020 reported earnings per share were 60 HM.
Slide 12 contains the breakdown of items quarterly results across our segments.
I'd highlight that earnings at ITC wealth management were up in the quarter relative to Q1 2019.
Look we'll speak to some consultant compensation changes that came into effect in January 2020.
The corporate and other segment is down year over year are driven by 14.3 million decrease in great West life, Coes earnings and lower net investment income.
This was partially offset by an increase in China and fee earnings.
Note that Archie wealth management's net client flows were positive 381 billion for Q1, 2020, 300 million 19 million year over year.
Mackenzie experienced strong investment net sales growth of 147 million year over year.
Turning to operating highlights.
As a reminder assets under administration has become a key driver to understand our business as clients migrate to a fee based I GE advisory account.
In addition to starting in 2020 consultant compensation is now based on new client asset flows to the firm.
Hey, you at the end of March was 86 billion down 11.6% during the quarter.
As of April Thirtyth, a way is now at 91.6 billion down only fibrin, 8% year to date.
I'd use Q1 gross client inflows of 3 billion represents a 21.8% increase from last year and it's a record high for the company.
We also experienced net client inflows of 381 man, which was up 62 million in Q1 2019.
It's been an incredibly busy corridor as we transitioned our distribution organization I'd be offices and launched a campaign to contact Oliver clients.
And Mark will speak more to this in a moment, but I'll say, it's all gone very well and we're in a very strong position for our future.
Slide 15 highlights client flows in anyway.
These metrics incorporate our internal funds and third party investments such as high interest savings account.
Cash third party funds and stocks and bonds.
As I mentioned gross client inflows to ICICI wealth management hit a record high of 3 billion in the quarter.
And that client flows were 381 million up from 319 billion year over year.
You can see the client net flows include net redemptions of 50 million from I'd, you fund and net inflows of 431 million to high interest savings account cash and other.
On Slide 16, you can see on the top left chart that net client inflows were solid in Q1 relative to the past periods. Despite the challenging industry sales environment.
You can see the bottom left chart, we experienced client net outflows at 36 million in April which is also strat strong result for what is typically a slow month for us.
Well, we all continue to operate in certain times, we're maintaining our optimism for continued improvement in net flows for the rest of 2020 as our consultants continue to remotely work with their existing clients and prospects for new clients.
Slide 17 highlights the long term mutual fund redemption rate for the industry and the client outflow rate fried G.
Historically, the RG financial planning model has created stability during periods of market volatility.
Q1, 2020 was consistent with that past experience and we're now seeing gross client outflows decrease since early April.
Slide 18 include some additional perspectives on Q1 2020 gross sales.
Sales into our high net worth solutions increased 18% to 1.3 billion.
Similar to recent quarters, we continue to make progress acquiring new high net worth households, with Q1 2020 levels exceeding Q1 219.
We also saw heighten contributions from existing high net worth households during the period.
Better data also remains a focus with our managed solutions, representing 81% over a long term growth sales over the last 12 month.
Turning to slide 19, the productivity of our consulting network continue to increase during the quarter with a 22% increase consulting practice productivity relative to two Q1 2019.
As we discussed on prior calls we've been attracting a higher portion of experienced advisors and have included this group within the consulting practices category, which was stable during the quarter.
I'll now turn it over to Mark Enzo to discuss how we've been rapidly transitioning our distribution network to work remotely with clients and prospects.
Thank you very much Jeff and further to your comments the strong momentum and energy in Arkansas network as it continues through the first quarter and into April.
This is clearly displayed in our results I'll first of all turning to slide 20, and starting on the left hand side I'll draw your attention to the following key components.
First of all within days of moving all of our network home over 5000 people, we had a fully functioning remote access program.
Able to communicate effectively using Microsoft teams transact seamlessly with Docusign in E signatures and prospect with virtual seminars.
We've also successfully implemented dashboards to track individual practices.
Also provide assistance for required and incorporating our remote technology.
Finally, we're also affected the planning remotely with our clients.
In the second call them, we've expanded training and that's being used to deliver.
Accessible use of the programs that we provided.
Between Webinars digital tools and updates we've got thousands of consultants and teams educate themselves. The best practices are shared regularly with overall skills continuing to be enhanced.
At the same time in the third call long you'll note that we're also continuing to be focused on building our network.
Well in the near term actual appointments are slowing.
Our prospect pipeline has never been stronger with the number of candidates up by 30% this time versus last year.
In addition, the assets with experience true to establish client relationships that can be transferred hygiene is up 60%.
Responsiveness to inquiries has risen to record levels as a story of how we are operating is resonating with prospects.
As we continue to ramp up or use of social media and initiatives such as virtual national career fairs, we anticipate strong results recruits and in particular industry recruits as we move into the third and fourth quarters of this year.
Finally from me on send to the corporate 19 environments, we adopted a mantra to connect with their call. Every client. This program has been widely supported with the level of client contact reaching record levels.
Combined with virtual meeting Skandi updates weekly ideas sharing and responses to situations, where financial hardships have impacted certain clients. All this has been very well received.
Overall, I would say, we've effectively enhanced our model to better operate remotely so that our consultants can confidently work in the new environment that we find ourselves.
This is proving very effective and is attractive to work Kaiser exclusively in this model or in conjunction with the more traditional bricks and mortar offices.
I'll now turn things over to buried to speak on Mckenzie.
Thank you Mark and good afternoon, everyone.
Before I begin my prepared remarks on slide 22, I'd like to thank you all for taking the time to join us on todays call.
As Jeff mentioned, we're hoping everyone is healthy and safe and he is difficult times.
The first quarter financial market declines that Jeff spoke to earlier causes Mckenzie is totally U M decreased 10.1% to 63.1 billion.
April was about a month and we saw Mckenzie is a U.M. increased 11%, reflecting strong market returns continued investment fund net sales and 2.6 billion of sub advisory and institutional mandates that funded through the month.
We continue to engage deeply with her advisors strategic partners and clients to these market disruptions supporting each of them, where we can and achieving their goals.
We continued to gain market share with continued strength in retail and notable traction in the strategic Lions any institutional channels as well.
Terms of gross sales, we broke new record highs for both retail and totaling mutual fund sales.
Investment investment fund net sales for 437 million, excluding investments made by hygiene <unk> mutual funds into Mckenzie T S.
Retail investment fund net sales were positive 229 million in the quarter as you Mark the 14th and 16th consecutive quarter a positive retail net flows for mutual funds any T.S. respectively.
I can't these investment performance relative to peers reached levels, we haven't seen over a decade during the first quarter with our proportion of assets and top rated funds increasing meaningfully over the past corridor, which was already strong.
I'm really pleased to see the trying times like these strong discipline active management shines.
Slide 23 highlights Mckenzie is operating results record high mutual fund gross sales of 3.7 billion increased 46% year over year, which included strengthen retail as well as a 200 million dollar global equity mandate win on a third party strategic alliance platform during January.
Mackenzie is long term investment funds net sales rate was 3.2% during the 12 month ended April 2020.
On Slide 24, you can see in the top left chart that investment fund net flows in Q1 of 437 million as a second best result in the past decade during fun allocation, including fun allocation changes.
The chart on the right hand side of the page shows the small decline in net sales experience in a month and March followed by returns net sales momentum in April.
Investment fund net flows of 201 million in April is very solid even considering the fund allocation change of 109 million included in this figure.
And finally, while our sub advisory and institutional channel experienced net redemptions at just under 200 million in Q1, we were pleased to see the number of mandates for Onboarded during the month of April totaling 2.6 billion.
This is incremental to the investment fund net sales figures presented in the charts.
These wins were spread across a diverse range of investment strategies, including global equity U.S. equity fixed income and currency overly strategies.
Approximately half of the 2.6 billion related to the currency overly strategy, which we have developed a very strong at competitive capability.
As you'd expect the currency overlay strategy typically has lower sub advisory fee rates.
Our retailers also highlight on slide 25, Mackenzie is Q1 2020 retail gross sales increased 23.7% relative the same period last year driven by large increases in the balance and equity fund categories.
Mutual funds and each yes, both attracted positive retail net flows during the quarter.
On slide 26 positive net creations trove Mckenzie as each of them up 10.7% during the quarter to 5.3 billion net creations included 933 million from GE I P. C Mackenzie mutual fund investments into Mckenzie <unk>.
On slide 27.
See that Mckenzie said <unk> had a terrific quarter during Q1 Mckenzie at 80% of US Mutual fund assets in the first to second quarter mile for all series types and 90% for series F.
Turning to the medium and long term metrics presented on the slide at the end of March 77% Mackenzie Mutual fund assets were above median for all series over the past 12 months.
69% of assets were in the first or second quarter, all over the three and five year periods, and 74% or the 10 year period.
Looking at Morningstar ratings Mckenzie has 59% of fund assets in four or five star rated funds, which is the best in over a decade.
Out of our 20 largest funds 19 or rate or four or five stars for a series F and 13 of those are we to five star.
Truly an exceptional result, considering the diversity of asset classes and investment styles employed by our investment boutiques.
Turning to slide 28, you can see the strong morningstar ratings across a number of our investment teams, including the growth Blue water resources global equity income and fixed income boutiques. These teams and others deliver strong short term performance measured by six month and one year asset we didn't percentiles.
The IB team global quantitative equity team and the multi asset strategies team all had strong performance in recent months.
Looking to the future, it's impossible say with certainty where things will travel over the coming months.
We have seen signs of stabilizing redemption the trends during the latter part of April which is very encouraging.
We will continue to capitalize on the strong market position Mckenzie enjoys today I'll now turn over to Luke to review I Jim's financial results.
Thank you very good afternoon, everyone.
Turning to page three as Jeff mentioned today.
We reported EPS of 60 cents down slightly from semi since last year as it gets you in the first bullet, including our results is or books and share of earnings in Great was let's go which they report yesterday.
Primarily as result of Cold Tonight, T. related market impacts are shared brittlest labor and declined by 14.3 million relative to Q1, 19 50.6 million relative to Q4.
Also included our results or 6.1 million negative, thereby justin's on seed capital as well as 2.7 million to negative, thereby adjustments relate to our mortgage hedging activities.
Excluding net investment income or proportionate share in affiliates as well the favorable impact in the county change will discuss below our earnings increase from last year in line with the Spike was 7% increase in average invested fund assets.
1.2, you can see that we introduce new I can consult compensation changes that went into effect on January 1st 2020. This had an impact on several line items I'm going to review this and detailed list you slides as you can see the bullet point. These changes are focused on ensuring proper alignment with clean outcomes and a great client experience, while also rewarding that business gross.
And third importantly were announcing today that is one of our sponsors taken relations to cope 19 Pendennis. We're also we're revising our expense guidance for 2020 based upon a plan we put in place to ensure prudent expense management.
Typically revise Morgan down with my $50 million to a level of approximately 1.02 billion as you consume a slight.
This is a reduction from 2018 of approximately 2% compared to earlier guidance of an increase of no more than 3%.
As you've heard US say many times before it's in environments like this one where we solidify client relationships and ensure rich communication and a spokesman financial planning you can see we've listed the for guiding principles that we have had and approaching the expense management. This time.
This includes ensuring we're focused on nurturing client relationships and delivering delivering on our gamba promise.
Includes doing right, where people and as Jeff said, we've made public commitment to know layoffs during this period.
It includes delivering on our strategic priorities, we have a lot of work on transformation continuing but we've also embraced every opportunity curtail discretionary spending at this time.
The character places.
Where we are raising in their spending includes things directly impacted by the pandemic, including travel conferences as well as pertains to position the projects and purposeful reduction in certain elements of advertising promotion.
I'd also remind you that we have a business transformation program. That's underway that were nearly halfway through and were going up more initiatives completed in coming quarters that we'll announce.
We will provide an during benefits added to those that we announced between the team.
I'd also note we haven't yet provide expense guidance beyond 2020, and we do intend to do this during the coming quarters.
At this time or guidance would be that the reductions don't they are temporary and we would expect to be closer to our 2020 guidance in 2021 absent any new announcements and we do look towards providing updates on our transformation program in the coming quarters.
Moving to page 31, the poor concern to review the financials, we want to ensure we highlight a few accolades from Q4 Q1 that builds on Jeff in Merck's really comments around responsible management and corporate citizenship.
Many gypsies before on the left during Q4, I, just given a rating but of eight by the carbon disclosure projects for the second consecutive years as result of our efforts on environment to performance and disclosures.
We're very proud to this rating as we're one of only 180 firms that have over 8000 participants received as top rating and this year I Jim was the only Canadian companies are seeing this accolade.
Looking at the bottom you can see that this written partner as well with the task force unemployment really disclosures or Tcfifty, two which I just the signatory.
The second call them you can also see during the first quarter were recognized by corporate nights as one of the 100, most sustainable companies in the world between 20.
This is the rate among corporate citizenship broadly and sustainability and there were over 7000 corporations consider globally.
We're very proud of this recognition around how we treat our people our clients our communities in the environment and you can see were when its welcoming the proves to make the top 100.
We've also listed or inclusion in the switching for good and Janssen, social indices as walls or commitments responsible investing in women's empowerment.
So it appears to be too you only comment I'd have to mix. When the this slide is to remind that well financial markets of revolt held at April thirtyth or even when just down around 6% year to date to 159.4 billion, which is the level not that dissimilar to our average asset level in Q1, 2020 as well as full year 2019, as you consume the toward the right.
You've also heard from Jeff Merck and Barry emphasized upwards trajectory of net flows at both companies during a tough operating environment.
Well it appears 33 on the left I'd highlight this chart illustrates my earlier comments on net investment income and I'm sure Associates earnings, which you can see were 29.5 million.
In Q1 down from 53.9 million in Q4, as a result of financial market related declines.
Excluding this and the favorable accounting change all described in the second EBIT was up in line with the 5.7% increase in average assets from Q1 in 2019 on the right I'd highlight that are net revenue rate is 190 basis points and is in line with Q1 2019, and you'll also see the EBIT margin of 51 basis points impact.
From the same period last year as a result of unit cost improvements.
Turning if there's 34, you can see or consolidate income statement.
And at this time around only a three things that highly here to help folks understand results.
First you can see we've put a one dislike net investment income 9.4 million, which is down 11.9 million from Q4, and 10.8 million from last year. This amount includes negative, thereby adjustments on seed capital of 6.1 million as I mentioned as well make the fair value adjustments on mortgage related hedges of 2.7 million.
Second you can see we've highlighted our share great West life core earnings down 15.6 million from Q4, and 14.3 million from Q1, largely as a result of coping 19 market related impacts.
And third.
We haven't label with here, but I I would highlight or share results from personal capital in China that management are up in a highly to try and asset management for a quick second.
You can see our share of trying to asset management's earnings of 8.9 million are up 20% from Q4 and 20% from back from Q1 between 18.
I did you that trade AMC business has been performing very well, we only disclosed a woman a semiannual basis, both oneq or fewer marks now.
Over the last year average assets revenue and earnings are all up approximately 20% I.
I note that the company did adopt remote working conditions prior to us reporting to weigh in February and thrilled to pandemic. They can change wax after we launch new products and so good growth across product categories and distribution channels.
No implemented to return to work a couple of weeks ago, and we do look forward to update you next quarter and we'll continue to work to provide disclosure enhancement to provide business metrics to a more frequent basis to help understand the business as it grows and becomes a more meaningful part of by Jim's results.
Turning to page 35.
You can have some consultant compensation changes to walk you through as well some comments on disclosure more broadly.
Right.
Along with their transition of all of our clientele that I'd just fee based accounts and then bundle pricing we had anticipated luxury segment. The disclosures in Q1, 2% hygiene ibcs wealth managers versus asset managers and to draw out advisory fees, which is the largest share of birth of a revenues and is driven by E 80 way as opposed to E U M.
As a result to cope with my team and the consequent changes and volatility me lines. We've deferred this lunch to a time when you'll have more time to digest the disclosure changes.
You sort of traditional disclosure there was still a few changes to programs that we need to now cadence through.
First in 0.1, we changed the basis for payment of sales commissions to be based upon gross inflows of 80, Wade's client accounts subject to certain eligible requirements, but remember that previously as result of being characterize as just filling an existing contract the mutual funds.
Emissions that we paid on bundled mutual fund products have been expenses incurred.
As it will result of this change we've made January 1st.
Drug that drive commission based upon new client acquisition and contribution to accounts of all asset types. These conditions are now properly capitalized and amortized over the expected like.
I'd highlight this had a fever winter impact on our Q1 results are approximately $10 million pre tax.
We've also enhancer disclosure in our supplements went though to provide a monthly history of EUR 80 way continuity, including gross inflows in gross outflows going back to beginning of 2018.
Second.
We discontinued certain ICICI consultant benefit entitlements that had previously been recorded within or non commission expenses and this value is now reflected within their asset based compensation rates. So what this means as the amounts of not change. The is just the geography that house you can see this table.
In the second row that this amount was 15.6 million in 2018 or roughly 4 million per quarter.
When we talk with expense guidance and give you guidance for the rest of the year. We're retroactively restating launch missed expenses for this adjustment and you should be anchoring to a 29 teens result of roughly 1.038 billion or three 9 billion noninterest expenses versus our reported number 1.05 score.
And as we provide a few slides earlier expense guidance is that will be no greater than 1.02 billion innoswitch expenses for the year.
Hi. This is also obviously a created an increase in our asset base compensation rates of approximately two basis points or $4 million per quarter.
Third.
And effective January 2020, as well weve, but you're not what we called or enhanced grid and we've talked to many of you a boat overtime.
And this grid did come into play based upon achieving the targets that were set and she during 2018 hundreds framework consultants, who meet targets based upon client engagement financial planning proficiency and high net worth client acquisition earn enhance compensation rates on all business that they conduct do the level of qualifiers during 2018 asset based compensation.
Let's have increased by approximately 1.5 basis points I would also guide you that you can expect this said to endure throughout 2020. The qualifying achievement levels are reset every year and we expect as as we continue to build the business and enhance our proposition the bar will get higher and higher.
Moving to page 36.
Fuel economy play G.
First you can see the annualized management that admin fee rate of 195.1 basis points.
You will see no financial statements and other documents, we Relabeled. This line management advisory fees and I'd remind you that a majority of are quite tell has now been transferred to fee based accounts and our nominee platform and the remainder will be transferred becoming months.
Let's remind approximately 60% of this be rate of 195 basis points is in respect of advisory fees and those advisory fees are applied to evaluate <unk>.
Second as you can see 0.1 or asset based compensation rate increased to 55.9 basis points up from 52.7 basis points last year for the recent described in the prior slight.
I'd remind as well the rates higher in Q1 has resulted in a quarter been annualized rate when it comes to asset base club, where we take our revenues based upon the number of calendar days in the quarter. So the right comparison into Q1 of 2019 of the to post acute Fortunately 19.
And on the right you can see the cash commission paid on gross client inflows of $3 billion. During Q1 was 110 basis points. This is the rate and driver should that should be used going forward and I'd guide that this rates do go down slightly once again in 2021.
Turning to page 37, you can see I use results from operations of 173.4 million I have few quick comment.
First we've highlighted net investment income of 8.7 million, which includes seed capital maybe at fair value adjustments of 2.6 million and also included the negative fair value adjustments of mortgage related hedges of 2.7 million referenced earlier.
Second you can see mid way down the page that sales base commissions expenses paid has is your entry for Q1 2020 as described earlier as all commissions are now being capitalized at a more tied.
And as I mentioned earlier the results of this is a favorable $10 million pre tax to watch where earnings period, I'd remind that the condition repaid declined noticeably in 2020, as previously announced and reviewed earlier.
Lastly, I'd highlight noninterest expenses and would note that within this 165.4 million there was roughly 2 million $2 million, an extraordinary costs related to corporate 19 related activity like getting everybody working remote which we have been at 100% at four up for weeks and weeks now as most conference cancellation fees.
Noted earlier, we haven't expense management plans reduced full year 2020 expenses by $50 million right you have financial relative to earlier guidance.
Turning to page 38, I don't have many comments from Mckenzie this quarter.
I'd remind that Mckenzie net revenue rate is impacted by the same treatment trailing commissions that I mentioned, a respected by GE with one quarter of the annualized rate paid in the quarter well we take a.
A calendar day proportion of the management and other fee and so what I'm, saying is the comparative period per at this rate is actually Q1 between 18 and you can see it is down very slightly I'd also highlight there was a slight shift in the sure fixed income assets within the waiting as a result of equity market declines during the quarter.
And then lastly on page 39, Mackenzie EBIT, you don't know where the Adam I have is the highlight the negative 2.8 million in net investment income as discussed earlier. This is mckenzie share of the of the negative mark to market on seed capital during the period.
That concludes my my comments I'll turn it over to patch or to take any questions.
Thank you well now take questions from the telephone lines. He said question and you're seeing a speaker phone.
Kitchen and sense before making a selection he's had a question. Please press star one on your kind of Funky Pat.
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Please press star one at this time.
If you have a question there will be a brief pause while the participants for answers to questions. Thank you for your patience.
First question from Gabrielle from <unk> capital markets. Please go ahead.
Thanks, Good afternoon, Luke Mistretta a quick question just on the new guidance on non commission expense, yet so which area is that mostly coming out of you did mentioned a couple of their travel expenses.
What's mentioned and conferences.
Where some of that related to that transformation efforts are you defer and some of that and I guess as it related question you know sweet should we see similar decreases that minus 2% across both MACI and Mckenzie.
Yes. Good question, Greg. So yeah, you should expect it equally I get Mckenzie and that and you can see our principal we use that were working so hard to keep everything in a transformation program rolling It provides great benefits and we're looking forward to it to give the results of continue initiatives coming to life over the coming quarters. So we really did look to everything in it that we could do.
Where we had discretion and could just random spending without affecting the ongoing the mentioned the business and without affecting quite relationships and our commitment to providing great gamma.
So travel conferences.
Anything that was volume related and we have the as I mentioned, a reduced the advertising spend purposely and prioritize certain initiatives on that that weren't as a as important to bring to life near term.
Okay, and then maybe related to to that as well so that would indicate it pretty sizable drop from Q1 levels should we be came to see that in Q2, and how should we think about that in terms of timing, particularly a fly g. I think you you highlighted that 165 ish was pretty high that was.
Thats can bump up in non commission expense in the quarter.
Yes. Good question, Gary So interestingly, we have incremental expenses, primarily in Q1 and you can expect yeah. The reduced the reduction required to bring us to 50 million down full year to be evenly over the next three quarters.
And I thought you could pass seasonality to help understand the quarterly I talked about.
Okay.
And then add Barry one for you.
Institutional wins in April that could see how can you provide a bit more color, which mandates that those come in or pertain to and he can comment a little bit on the pipeline as well.
Sure. Thanks Kerry. So we we started to mention of probably last three or four calls so some of the traction there were gaining on institutional side and we're working very hard to.
Focused additive, but very hard to start to gain some traction and get some wins a door because we think it's important to have a robust since two small business alongside of our you know very robust and large retail business in Canada. So some of those wins, we have announced in.
Prior calls and then you're probably familiar with institutional cadences, you, they're long sales cycle lumpy.
And then when you win and then sometimes as you know a quarter. So for the monies to be onboard. It has our client gets ready to for us to take the money from them. So.
It was quite a I wasn't by design by the way, but we had a number of our wins all onboard and during April 2.6 billion.
I mentioned previously we were happy that it was also a across four different strategies.
Global dividend equity with our tear mccarran and a boutique team.
It was U.S. equities with our quantities in Boston.
Our it was fixed income 13, metrano and I'm. The one it was interesting out of those also maybe little out of the ordinary was the active currency overlay mandate, which was about half of the 2.6 billion in terms of am size and we'd like about these wins is that they.
Really validate what we're doing on the retail side and vice versa. So you know we've been doing currency overlay for many many years on our retail multi asset products and we've been tracking the performance we actually been doing.
For a long time dynamic gasification really also for instance overhaul of our multi asset products and Mckenzie. The team. We have doing that is just tremendous CPP I'd be a world bank IMF pedigree. So the dividends for many many many many years and so we took that retail capability and we start to sell a institutionally and sort of pick up.
A very large sophisticated pension plan in Canada that now is hiring is for that so I.
I would say, we can't expect 2.6 billion every month.
We're very happy they came in but.
Suffice to say that pipeline is growing nicely right, there and in Canada, U.S., Europe, and China looking for opportunities very focused we've got a couple more small wins, we're just announced which bodes well announce next quarter, but again takes a while for the be onboard. So you should look to see continued success from us in that in that area and.
We're very pleased to have it happened.
Probably we had if I remember correctly as five.
Five wins, a just came in and one in January and for any pro and they were in Canada U.S. and then late last year had one that was on board from Europe, So geographical geographic diversification.
Hi, boutique as tries diversification and I'm pretty lumpy sizes to so they'll be all over the map, sometimes a wind 20 30 million sometimes a win as you know 600 million, sometimes you end up doing five so we can't really predict the size of it the pipeline has a variety of by country and by strategy My size and you know.
The fees are lower for institutional but they are usually larger mandates and also the money just kits onboarded onto our platform. If no increased costs right. So it's all accretive to the bottom line and we're not extending or expanding anymore manufacturing capabilities to two to handle these mandates.
She is in the same teams to handle our retail office institutional so they want to carry on little bit too much gum river, except very excited that have happened.
You'll see more coming they're lumpy and long sale cycles, who is a difficult predict.
If any you know accuracy.
All in timing, but.
But there are coming in and and we're very pleased.
Great. Thanks, there. Thanks for the color and then just lots into maybe numbers question again for Phil do.
Going back to slide 36 that 55.9 for the asset base comp and the 110 basis points for the sale space.
Compensation the commission should those speed relatively stable throughout 2020.
Yes, they will be going.
And then once again, but we'll see another drop in sales this comp in 2021.
Okay, Great. That's me thank very much.
Thank you.
The next question is from Jeff Kwan from RBC capital markets. Please go ahead.
Hi, good afternoon.
I know you talked a little bit about it.
Just wondering if there's more details you can talk about well side strategy is getting new clients just in light of.
19 working from home.
And especially given your primarily targeting these high net worth investors that may or may not be willing to look money sorry lose money in this environment.
Interacting if they're comfortable with that.
Sure I think that can you hear me.
Yep.
Great.
Thanks for the question.
Yeah. So I'm I think you've seen that we've been able to run like I. When I came to this organization early on.
What I discovered was the commitment to see a piece and then our whole strategy turn to well why don't we serve the sophisticated clients and move up and so that's probably that's what we've been doing action from there and we've been building out with Mike Dead and all the infrastructure and.
And capabilities to give the client a modern experience.
And give our consultants in modern experience and were we spent so much effort.
To get to their NJ, our sales force is almost implemented.
So that will have more scale and capabilities and capabilities for merck's team and and then we've got new tools coming in that we're investing in and other opportunities as well and so.
You know, it's it's a an exciting time for our company and I don't know from the industry really understands the momentum that we have.
And.
You know, we got more coming and and the quality of that can new recruits that are coming in our excellent.
The new people that are coming from mostly from the banks, but there's a they're coming to US love our culture and are excited to be here and you know we can hire a lot of people from the banks for a long time and they went even notice it but it's it's its an exciting time and.
You know we think we've got a lot of runway ahead of us and we're still investing in our infrastructure as you know with two other stuff what makes doing and so there's still lots of efficiency coming and so we're you know our plan to become a modern.
You know mass affluent high net worth company, serving Canadians is coming to fruition and you know it's exciting I'm <unk> for a lot of.
Our threaten carries into this with my team here and we're really proud of very our we can compete with anybody and its and then were distributed and in every community in the country.
We reach everyone and and so you know as our confidence goes up and we win more and more bigger mandates and it's going to go you know even go faster.
Jeff It's mark here I can add a little bit to a Jeff just mentioned as well.
Specific to the covert environment, it's interesting I as we mentioned I think Jeff and I. Both talked about this we adopted a plan to really get out and ring the phones and our belief was well certainly you can do a lot of contacting.
Through a emails and so on a there's nothing like a call and what we've experienced is we have we've been working very intently at that and that is leading to referrals because when people a share and compare what they're finding is that they can add the connectivity from our folks Uh huh.
Been superior in terms of reaching out being in touch with them and that relationship building, they're telling other people about it. So we have stories continuously coming in about referrals.
Which is interesting because people are home and their answering the phone and we're calling them.
Second part is that hit on that Mark on the when Mark and I look when we ran into the volatility we both looked at each other and said we got a call every client.
And we've been on the phones ever since then it gets creates opportunities weve brings in funds and everything else, but but we did it because we want our clients to know that we care about him and we put the effort in it and marks team did an amazing job.
Well, it's working the other thing I would say is something that we have very quickly move forward with.
As a this concept to vote or really marketing from a virtual perspective, so using webinars seminars, a inviting people doing it by different targets. A this is happening across the country as people are home a they're watching their screens a they're engaged and a this is a we're starting to develop a lot of expertise.
In a very short timeframe one of the strengths. We have is that the network or sharing so coast to coast people are doing things share any ideas and then they're being utilized and and really refiners that go on so I would say those are two core drivers heavy contact driving referrals, and then going online with virtual programs such as webinar.
Ours and combine together its leading to new clients. So it's it's certainly something new in this environment, but it's working.
Okay. Thank you for that I, just my second questions for Barry.
You know you pointed out performance has been good flows have been good and don't want to look like him nitpicking here.
When you take a look at handle the systemic strategies and maybe to a lesser extent the most yet multi asset strategies.
Are the things that can be done to trying to improve the performance after those silos.
Yeah. Thanks, good question the.
No worries, we still firmly believe that it's important for investors to have a good balance between growth and value and we've been mentioned that's for last couple of years not just from a risk diversification perspective that probably with the run up in growth stocks and the high concentration on stock markets overall pickup in the U.S. market.
That there there could be you know, obviously quite pronounced overweight to growth stocks and portfolio. So it's difficult obviously to rotate or bounce a little bit towards value because value has had a real or just the style not just kind of style itself.
Since the financial crises has been consistently underperforming growth for over a decade now over 75 years. They both have produced roughly the same returns growth and value, but you have periods like we have where growth continues to outperform in an interesting enough. When we have this significant downturn.
In the marketplace from the from the KOVA crises, there was a flight to quality and there for a flight to growth. So value. It is still has underperformed so worse steadfast in and having a strong boutique focused entirely on value as Kindle does we do believe going forward that Uh huh.
Well be at some point can ever time at a rotation towards value, but you wouldn't want to time that more importantly have a nice well construct a portfolio as well balanced across styles and an asset classes. So so we're comfortable with them remaining true to the value style very few managers, probably left some kinda that focus trial in value and we're very proud of them there.
The quantities coming along nicely Kwan as you probably know lot account managers. So we're struggling probably last 12 18 months and so that's just the style again not necessarily the team's execution per se. So I'm just to keep doing they're doing a it's important that are boutiques are adaptive though and so.
Hi, I'm really pleased with the results of our performance as you've probably seen across the enterprise in that these active managers. They see opportune they've seen opportunities last 70 weeks to review the portfolio holdings and identify what a company sectors will outperform in the new norm and what underperform and making change.
Yes. So that's why you know some of our from our boutiques like a filled haulers mid cap growth and blue water have just continuing to power had the performance, which has been exemplary for five or six years now and they didnt status. It on her hands, so they're making moves so it seems there quantenna suppose so the quants spend a little bit of a headwind, but as it.
Tile, but where that's coming along nicely multi asset there the.
Oh, the the promises turning nicely and again you know the numbers you see some a short term numbers with you know with 90% of our assets and for second quarter <unk>, It's not a lot out value is the one that stands out.
In fact, not to Oh, you know kind of Peter Chesapeake, but if you look at the F series 24 of our largest 25 F series mutual funds or four or five star. So with the exception a condo, which I explained reasons why so the multi assets right. There a they've come back nicely, making some couldn't moves probably no more focused.
I'm being neutral ish across asset classes to try to continue to analyze and figure out Oh, the sort of long term shifts sentiment with a new norm in terms asset classes and sectors and styles, but a you know and I'll give you want exampled our monthly income funds, which acts are designed southern <unk> number.
Reasons, why a promise is even strengthening in the 2020. So I was just shy of our strategies are designed for downside risk protection from up income as designed with with downside risk capture Oh protect the puts in a as well as our unconstrained bond products, which again both.
Did very well, but the monthly income, which as multi asset as well as performed well so anyway. So you.
No I going on but a you know we were very proud of performance. We have worked hard to keep it it is pretty pretty high, particularly view again look at how restructure that mckenzie with a lot different boutiques and different styles and different asset classes, but hopefully that answers. Your question, Jeff on the three specific boutiques.
Perfect. Thank you Okay, you're welcome.
Thank you.
The next question from Tom Mackinnon from BMO capital. Please go ahead.
Yes. Thanks very much question just with two questions. The first is with respect to the 50 million a reduction in a non commission expenses, how much was realized in the first quarter of that.
Yes, no none so I'm not in the first quarter, we actually had incremental cold and related items.
Corporate translation fees, we had incremental that work from home cost. So it's all coming in the next three okay and then with the change in the Uh Huh.
The sales base commissions that AG.
Being now amortized a instead of expenses paid it seems like that with a 10 million benefit in the first order how should we be thinking about it would this just be would this be a reduction to a.
Or an increase in expenses going forward, how should we be thinking about modeling that.
So what will help you and that's one that is given the history and all of the Oh, the calculations that are going to be a more sites and they're being a more ties over at over 84 months and so you can build a model should just that's it is no with accounts Christians are in every period and to know how they're going to be more ties over overtime. So there will be very very predictable going forward with the expenses.
So net effect, which we'd probably be increasing those expenses, but removed them as paid but then increasing the amortization and is that right right on so all the kind of commissions <unk> that have been expenses incurred that will be removed and then those will be capitalized and amortized.
And would that it would that impact then be a well what I guess it all depends on what kind of expenses. We would have had a paid a in in Q3 Q4, but is your thinking that this is gonna be a boost to a.
Earnings and second third and fourth quarter as result of this change.
Yeah, Yeah, I think two things one just remember it's just cosmetic so so it's a timing it's all going to hit the piano sometime so when its cosmetic too yeah. It will certainly amplifier and this period on because you can think of amounts that would have been included in period, albeit not large amounts are now going to be a more tonnage over 2020 of course.
Okay. Thanks, very much for that.
<unk>.
Thank you.
The next question from Scott Chen from Canaccord. Please go ahead.
Hi, good afternoon.
Maybe I just want to follow up on Jeff's question.
Sorry.
Mackenzie.
What's the investment he can you give a very detailed went down as I net sales, but I'm just wondering over the last two mines.
You know 19.
Where where's people than putting that most sales like like hasn't been on the growth platform because it hasn't been that sales or or is it had been more defensive and more fixed income products I'm, just trying to see kind of where our.
Clients or advisors, putting their claims during this same is obviously difficult time period.
Yes. Good question. Thank you and it has been pretty broad based.
Obviously, the slide a 28 wishes Q1, and and but that include March as you know with where.
We saw the industry redemptions occur.
So I would say that we saw the overall the some redemptions on fixed income side.
Crises hit last last little bit of February into March.
And then.
We saw some weakness also coming in April probably of the first two three samples to a little weak, but but there was the redemptions firmed up a the gross sales overall or a quite a bit lower than they had been obviously the first six weeks at 2020, and then that started to pick up towards the latter part of April and now we see them into may so.
Back back this is the back into equities and multi asset actually we're seeing the flows into fixed income as well, but I think the I think there's been flows come into equities in that you know we don't know we reached the.
The first bottom or not but we certainly was quite pronounced bottom in the markets and end of February and so yeah. We saw somebody come back into equities pretty broad based but of course the ones. You can see on 28 those patterns continue to slide 28, where the the growth manager fill taller the blue water came in nicely on global X.
Net income a nice flows.
Since the recovery that we've had last month or so on the equity side fixed income has come in because some of the exits that we saw during the tough times in March has come back and the multi asset, though too we've seen the bounce products. So it's been pretty pretty broad based but I would I would say that are our stalwarts the grow.
Blue water global equity on the equity side have been continue to power or the flows coming in obviously their performance are all five star. So good for them the risks confidence by the advisors that we'll continue that value for them.
Is that okay. I can give you more in more detail about <unk> no dropped on that's great. That's me sorry, maybe Jeff.
He side.
How is.
I was getting impacted as we go through corporate 19 or is it stall door or is there some sort of process.
I think I didn't hear your question very well.
Sorry, my daughter's in the background.
Yes.
Just in terms of recruitment process has it been.
All.
The 19 as as people are more isolated or or is there still.
Kind of a process going on.
I did you consultant.
Yes, no worse still I'm, Mark I think I'd say talked about this a little bit but.
We're recruiting constantly.
We've.
Historically it as you know, we we were once that built.
People from start to starting out in their careers and build it up and we do that still now but now we have more on capabilities, where we can the truth from the from the from the bank and so we've been doing a lot of that recently and we're getting some great talent.
They love our culture, they love the resources that we have they have loved the product shelf.
There are.
They could be a up on entrepreneurial spirit of the company and our company and our culture is a sharing culture like so it's not that are in internal people can feed against each other they are really going out and trying to win market share for.
For for them and so so I think people just really you want to be at our company and Mark Kenzo Who's on this call has built a great culture and a great leadership team.
And and is they there there are really driving at end.
But right now, they're they're really confident when they go out and look at recruits and and their landing them, but I'll, let mark.
Talk about this as well sure. Thanks, Thanks, Jeff and Scott Thanks for the question.
You know it's interesting right now.
The activity and we track it very carefully in terms of not just recruits, but our pipeline and where folks are in the pipeline and as I mentioned earlier, our pipeline is up over 30% to same point in time last year. So our reaction recruits in that first quarter were very close to last year's record numbers, even though clearly we had.
Morning impacts.
Latter part of the March but our pipeline is up significantly and what's also interesting is the assets represented by that pipeline, so, particularly those who are industry prospects a that's up almost by 60% over the same number of assets at this point last year, we're finding that the response rate is up dramatically.
Oh people are they're paying attention or they are responding to our inquiries and I think there I think that's taking place is the success, we've had and really getting people into a a legitimate mobile while option in terms of running your business.
That's being viewed very positively and people in the industry are wanting to know more information. So we have never been stronger in terms of the pipeline as to where we are right now and so I anticipate going into the last half of the year that is this sort of sorted out and clarity I understand why someone is not going to move today in the.
Mr. This with their clients.
At a the depth of conversations at the engagement.
We have never seen it a this strong so I feel very good about where we're going with their pipeline.
Hey, maybe just lastly, I don't think I caught it's a seed capital and during the quarter was a quantified at all.
Yeah, It was $6.4 billion it looks thinking.
And obviously you can expect recovery of a lot of that in April give them the marketing improvement that 6.4 million.
They did that I also highlighted mortgage warehouse hedges, which is a timing related one that was also another 2.7 million in the period due to interest rate changes.
And how big is.
Peter marketable securities portfolio.
I did 60 only dollars.
60 million, Okay that makes sense so.
Okay perfect. Thank you very much right you're welcome.
Thank you and just remind you you May press star one he has a question. The next question is from Graham writing from TD Securities. Please go ahead.
Yeah, maybe I'll just start at the G consulted level, given what you're seeing it sounds like you pretty positive with the remote.
So thats the consultants or is there an opportunity down the road to they did have an increasing.
Number of consultants working remotely and perhaps having a smaller.
It's in Florida footprint for RG overall.
Sure. Yeah go ahead, Mark Thanks, Jeff sure it's Mark here.
It's interesting we're working our way through that right now and I think what's happened.
When you look at at the effectiveness people are starting to feel their way and realizing that they can run a very effective business.
When I'm using it teams conference call I can clearly I can be in touch with more clients. During the course of the days then in person.
And bring specialists remotely into those costs are as for the high net worth side of things. So I could bring a lawyer or an account enjoyed to join the conversation a U.S. decline can be seen home with your spouse or partner I'm, very agile and what I'm doing and my assistant team support team they can be in different areas. So they're starting to experiences.
We're actively engage right now we're actually talking to all of our network, our running surveys to get a sense as to how they see themselves going forward from what I'm seeing right now I think you're going to see a combination I believe there's going to be a group of consultants, who are going to a quite strongly moved to aim.
A more remote model on a on almost a full time basis.
Theres going to be a group, who like the bricks and mortar and there's going to be in or.
Sort of a middle group, maybe it was 95 five days a week and now it's going to be in the office three days a week.
But I think there's going to be a change in the demands on space. The other thing. It's that's working for US is the receptiveness of the public I think all of US right I mean.
You're at home were ordering stuff are doing more things online.
There is a receptiveness and it is regardless of age seniors as well, who typically command a higher percentage in terms of assets, a very receptive to having a dialogue in the comfort or their home virtually.
The systems now where you just send the link knowing the downloading anything there clicking on the lane. So yeah I'm I'm pretty excited about this I think this creates a real strong alternative model that you can either go fully remote or are you can go sorry pardon Park.
So I I think this is really really exciting stuff and the efficiency. This drives if I think about me running a practice in heavy people coming in and queuing up and driving in parking and then I go into how many people I can actually connector. During the course of the day. That's significant I'll give you. One example, I was talking to a.
Client high net worth line of ours, but you know on at historically.
Three times here I'm in person with my consultant I now see that going to want to year because of experiences virtual side of it for me and my spouse and is fantastic. So I think that's really what's going to happen a will we get rid of in person absolutely not but the amount of in person I think's going to change and that's going to make.
It's more efficient and that's going to drive effectiveness and that's going to drive a business [noise].
The other one mark and you and I, both visited but as personal capital. They have this exact model. So so they are distributed that they all work out of their homes.
And it and say the virtual and so it you know they they didn't miss a beat when that anything happened. They just kept going because it's all digital and a they've now at it having problems.
You're absolutely right, Jeff and I think the thing that were working right now is a really effectively driving the planning components. So if you think about me as a a practitioner number one cannot communicate remotely yes. They can teams is very positive number two can I transact remotely yes. They can I can use docusign all my digital form so which we have all in place.
Number three can I prospect remotely Nigel mentioned earlier, we're starting to really drive down that path to virtual seminars webinars and and a lot of creative things that are taking place. So yeah. It goes up then you put number four I can I do plans remotely, which we can do I can now effectively run at remote business.
Far more efficient than a in person.
Great. Thanks to color and the number of consultants isn't that greater than four years. It was flat quarter recorded but I think the historical numbers.
Change a little bit was there a change of methodology or or nothing or do those things driving though.
Yes that if we use that we've done a restatement crude lumpy quarters for up to the people make reference to experience recruits and these are people that we recruited in who came in with more than four years experience.
If you compare relative to previous reported you'll get a sense for the number of people that we brought in with those criteria and as Mark said earlier, we see that as being a much much larger component of a group going forward with people, who have an experienced business with an existing bracket.
Okay that makes sense. So if you've got more more than four years' experience, a new joint Angie fall into that.
That bucket.
Yeah right on okay.
Just on the.
Look on the expense side, the noncash expense, just I want to make sure and getting the message right.
It sounds like there's suddenly travel incompetence up to some expenses here that.
Our dropping off just because we are in a cold and 19 remote environment is.
The $50 million guidance of expense reduction, it's a permanent reduction in your expense base or some of this.
You know just gifts that result of the environment. We're in this year and make may come back next year.
Great Great question, So right now with according to 50 million is temporary as a result of corporate 19 and not just the activity declined as a result, the measures we put in place separate distinct from that we want to make sure. We remind we have a transformation program going on and overcoming corridors, we will be declaring a more be initiatives come to life like that.
On the services outsourcing with that you see meld that we that we announced in Q4 and so we want to make sure that you have that in the back your minds, we haven't given 21 2021 guidance yet or beyond.
So a the highest guidance we give is this $50 million comes back online and 2021, but we are working very hard and bring included transformation initiatives to life.
Okay. That's a that's important and that's helpful.
And then my last.
Question is just on the.
On the T. upside very it looks like.
There's some.
Our momentum and more emphasis perhaps on the on the basic EPS versus historically it was a bit similar mix between.
Told them and you're smart beta you can you just talk about maybe some color on the upside and what is the I guess, what's the strategy and what what seems to be in demand are resonating.
Oh. Thank you. Good question. So you know some you know obviously, we offer active and.
Smart beta and passive and sometimes you know some do better than others, depending on the quarter or them on spot they're all.
Selling well actually the the smart beta sort of smart that's principally part by told them a really encouraged by told them they being account manager, though and.
There's they're approaching style or they were hindered a bit their performance based on more constrained markets, but they've come back very very nicely. This year seal products, probably start to see more flows coming into the smart beta.
The active is principally fixed income, it's a great lineup and a again it mirrors. The lineup we have on the mutual fund side, but we have you know we've got a big fixed income.
This is Tony Jeff about two thirds very chips are fixed income as I mentioned Oh. Good. Prior question chefs I'll just ask lobby chip provider. So not just not just sort a lot of fixed income providers such as each aspect, but mutual funds. A there were some somebody flows here in Canada, U.S. as well so.
That's coming back for nicely, though just last few weeks in terms of the active fixed income being more bolstered the floating the floating rate was the one that's probably sold very well about who would have three years ago, and but the last year year and a half given the interest rate environment going forward, that's softened leakages about that because train bond selling very well and and the Oh there.
Hi, you'll know selling very well.
The passive yeah, the Passover or just building blocks right and there are used a lot by our internal managers have mckenzie that manifest you know the Mckenzie mutual funds as well as subadvised significant amount of the GE mutual funds and so they are used for exposures and other there their price well and they'd attractiveness as well and so we're very pleased that we have out as well.
Only been about a couple of years now we launch timing, we did them to round out our building block approach. So that fomenters can use them feel comfortable and so they can use all three anytime they want so so what you'll see from US going forward is equal support of all three multi channel now Iraq enough <unk> institutional I'm sort of starting to see nice track.
And in MF, T., and and institutional whereas the first couple of years, we are focusing more on Iraq, which is considered to be very strong for us and we're gonna launch a quite a few this year, which I think it's going to show a sign of strength.
Mark was saying others for working very well remotely. It's it's remarkable helpful for operating this business or eight weeks now completely remotely and there was working very very well together him to so I won't stop our momentum in terms of a product launches book meet your mother nature. So it's looked to see some nice launches from Mckenzie with the rest of year and across the entire spectrum of <unk>.
Yes, Thanks for your question.
That's it for me thank you.
Thank you you owner for the questions at this time I would like to turn the meeting back over to Mr. Bob.
Hi, Thank you Patrick.
Sort of run a little over time today, but obviously lots to talk about thank you for everyone. Joining the call and hope you have a great weekend and with that I will now in the call.
Thank you. The conference has now ended please disconnect your lines at this time. Thank you for your participation.
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