Q3 2024 IGM Financial Inc Earnings Call
Speaker Change: Thank you for standing by. This is the conference operator. Welcome to the IGM Financial Third Quarter 2024 Analyst Call and Webcast. As a reminder, all participants are in a listen-only mode and the conference is being recorded.
Speaker Change: After the presentation, there will be an opportunity to ask questions.
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Speaker Change: I would now like to turn the conference over to Kyle Martens, Treasurer and Head of Investor Relations. Please go ahead.
Kyle Martens: Thank you, Betsy, and good morning, everyone, and thank you for joining us.
for our third quarter earnings call.
Kyle Martens: Joining me on the call today, we have James O'Sullivan, President and CEO of IGM Financial, Damon Murchison, President and CEO of IG Wealth Management.
Kyle Martens: Luke Gould, President and CEO of McKinsey Investments, and Keith Potter, Executive Vice President and CFO of IGF Financial.
Kyle Martens: Before we get started I would like to draw your attention to our cautions concerning forward-looking statements on slide three of the presentation.
Speaker Change: Slides 4 and 5 summarize the non-IFRS financial measures and other financial measures used in this material. And on slide 6, we provide a list of documents that are available on our website related to our third quarter results. I'll now turn it over to James.
James O'Sullivan: Thank you, Kyle, and good morning everyone. Turning to slide 9. We continue to execute on our growth strategy across IGM, and we demonstrated great progress during the third quarter.
James O'Sullivan: Adjusted earnings per share for the quarter were $1.03, up 12% year over year, and our second best adjusted Q3 EPS on record.
Total client assets, including our proportionate share of strategic investments.
James O'Sullivan: increased 23% year-over-year to 462 billion at the end of September with each of the companies achieving all-time record high facet levels.
James O'Sullivan: Wealth Managers IG Wealth, Wealthsimple, and Rockefeller continue to execute on their strategies to deliver their client value promise, acquiring new client relationships, and driving scale through asset expansion.
James O'Sullivan: Specifically on IT Wealth, I am particularly pleased with the growing evidence that they have successfully pivoted.
James O'Sullivan: to delivering financial planning and investment management services to high net worth Canadians.
James O'Sullivan: Asset managers McKenzie, China AMC, and Northleaf continue to drive strong asset growth, leveraging their competitive advantages to deliver relevant investment solutions to retail and institutional clients in Canada and across the globe.
Damon and Luke will speak on these points.
James O'Sullivan: In a moment, while Keith will also speak to how Wealthsimple's ongoing success drove an increase in the fair value of our ownership position in the company.
James O'Sullivan: Turning to the current operating environment for our businesses, starting with recent financial market conditions on slide 10.
James O'Sullivan: Both equity and fixed income markets continued to reflect and support improvements in investor sentiment.
James O'Sullivan: On an LTM basis, our client experienced an average return of over 20%.
James O'Sullivan: This is an important point that emphasizes the value of long-term client relationships centered around financial planning and advice, especially considering the uncertainty that clients faced over that period.
James O'Sullivan: Continuing on slide 11, the operating environment in Canada continued to improve during the quarter with positive long-term mutual fund net sales overall.
James O'Sullivan: With improving investor sentiment, lower inflation, and moderating interest rates, the macro industry backdrop is likely on the cusp of becoming a tailwind for our Canadian retail-focused businesses after what has been a challenging two-year period.
James O'Sullivan: We continue to expect gradual improvement and persist over the coming quarters, provided financial markets remain steady and interest rate cuts continue to alleviate some of the pressure felt by Canadian households over the past two years.
James O'Sullivan: On slide 12, you'll see how our year-over-year earnings growth was driven by both the wealth management and asset management segments of 10% and 16% respectively.
James O'Sullivan: I want to pause on slide 13 to emphasize the strong double-digit plus asset growth across each of our businesses.
James O'Sullivan: which together drove the 23% increase at the consolidated IGM level. Each of our wealth and asset management businesses are executing well and driving growth within their unique industry context.
James O'Sullivan: And the horizontal connectivity across these businesses continues to unlock new learnings and opportunities to add value for our clients and other stakeholders.
James O'Sullivan: With that, I'll turn the call over to Damon, who will speak to the performance in our Wealth Management segment. Damon. Thank you, James, and good morning, everyone. Turn to slide 15 in Wealth Management's third quarter highlights, including IG Wealth, Rockefeller,
Damon Murchison: During the quarter we saw record high ending AUM&A as well as 3rd quarter records for Total, New Client, and Existing Client Grows and Flows.
Damon Murchison: The record existing client inflows are important. We have proven our ability to acquire new clients through various market conditions.
Damon Murchison: This quarter, we also demonstrated our investments are supporting our ability to expand, share a wallet with our existing clients. This is an outcome that we're focused on and expect to continue going forward.
Damon Murchison: Focusing in on the numbers, IG Wealth ended the quarter with AUA of $136.4 billion, up a solid 19% year-over-year, and up 5.2% during the third quarter driven by financial markets.
Damon Murchison: Within that figure, million-dollar-plus clients now represent $58.3 billion, or 43 percent of our AUM&A, up 43 percent from a year ago. Gross inflows during the quarter were $3.4 billion, with gross sales in the IGM product at $3.3 billion.
Damon Murchison: Net inflows from the quarter were $330 million and were $144 million during October. Net sales into IGM product were $313 million for the quarter and $177 million during October.
Damon Murchison: It's now three of the last four months where net sales have exceeded net inflows.
Damon Murchison: As we spoke to all interest rates and cash balances are rising, we knew this point would come as our advisors work with their clients, we are confident that we will see clients continue to actively dollar average costs back into the markets driving net sales.
Damon Murchison: Total gross inflows from newly acquired clients were a billion dollars, with the mass inflow and high net worth segments representing almost three quarters of these inflows.
Damon Murchison: We continue to see strength in our insurance business and positive progress within our mortgage business. And once again, this year we ranked as leaders amongst our peers in the Investment Executive Dealer Report Card.
Damon Murchison: Both Rockefeller and Wells Simple had very strong quarters and I'll speak to both in the coming slides.
Turn to slide 16, you can see IG's Q3 floats.
Damon Murchison: As you can see on the left, both October and Q3 represented our best gross inflows on record, while on the right-hand side, you can see a continuation of positive momentum in both our net inflows and IGM product net sales.
Damon Murchison: This cuts dollar average costs back into the market. We are now seeing decreases in cash, GICs, and Heisens.
Damon Murchison: This court approves that we have and continue to make the right investments to allow our advisors to work with their clients to build, quantify, preserve, and distribute wealth as we move towards a more positive operating environment.
Turn to slide 17, two brief comments here.
Damon Murchison: The top left you will see an increase of approximately 11% in gross inflows, which is complemented by year-over-year decrease in our gross outflows rate, the first decrease since Q1-22. In the middle of the top, you can see the decrease in cash, GICs, and Heiser balances.
Damon Murchison: Turn to slide 18. As mentioned, the billion dollars of gross inflows from new La Croix clients during the third quarter represent our best third quarter for new client acquisition in our history.
Damon Murchison: We continue to execute well on growing our AUM&A. Within our target market, we fully expect to see further progress as Canadians' need for financial planning advice continues to rise.
Damon Murchison: Turn to slide 19, an illustration of our progress within our targeted client segments.
Damon Murchison: In 2018, we directed our focus to Mass Affluent and iNetwork clients, focusing on our investments, partnerships, and business processes to support these two important segments.
Damon Murchison: Through new clients and expanding our share of wallet with existing clients, both of these segments now represent AUM&A, which is well above $50 billion.
Damon Murchison: The Massive Float and High Net Worth clients now represent 83% of our AUMNA up from 69% at the year at the end of 2018. Correspondingly, these two important segments now represent 37% of our total clients up from 23% over the same period.
Damon Murchison: We expect to see a continuation of this growth as we build our business to align with the industry's wealth drivers.
Damon Murchison: Turn to slide 20. We've introduced a new slide here which focuses on our mortgage and insurance business.
Damon Murchison: While there are no new disclosures on this slide, it's important to surface these metrics as we show the important progress that we're making in both businesses, businesses that complement the needs of our target segments and support our expansion for share of wallet. We'll continue to provide updates for these businesses on a quarterly basis.
Damon Murchison: Moving to slide 21, ID Wealth ranked extremely well in the Investment Executive 2024 Dealer Report Card, including a net promoter score that continues to place us among the top half when compared to the full-service brokerage arms of the big five banks.
Damon Murchison: Overall, we continue to rank above average versus our peers. This slide also illustrates the categories where IG ranked in the number one position.
Damon Murchison: These are meaningful as these categories represent where we have invested to build capabilities to elevate our advisor and client experience against the masterful and high network segments.
Turn to slide 22, some updates on Rocket Roller's progress.
Damon Murchison: Client assets are up 33% year-over-year and 6% during the quarter driven by strong inorganic and organic growth.
Damon Murchison: Over the last 12 months, organic growth has driven $6.8 billion in client assets.
Damon Murchison: Rockefeller also continues to add to their private advisor network with 52 new advisors being added over the last 12 months.
Speaker Change: Turn to slide 23 and Wealthsimple. It was another record-setting quarter of AUA growth at Wealthsimple. Wealthsimple's AUA increased by 8.5 billion dollars during the quarter ending with over 52 billion dollars in assets up 20 percent sequentially and 109 percent in a year-over-year basis.
Speaker Change: Client count also expanded by 60% year-over-year to 2.6 million Canadians.
Speaker Change: With that, I'll turn it over to Luke Gould. Great. Thank you, Damon. Good morning, everyone. Turn to page 25. You'll see a few highlights for McKinsey and asset management for the quarter.
Luke Gould: Record high AUM of $212 billion is up 13.8% in the last year and 5% in the quarter driven by continuing strong client returns.
Luke Gould: We're pleased to see improving investor confidence in the quarter with meaningful year-over-year improvement in gross and net sales. Net redemptions of $296 million in the quarter compared to $700 million last year and we saw similar improvements in October and positive net sales of $52 million in the month.
Luke Gould: We received the results of the 2024 Advisor Perception Study in September, and we're proud of the results.
Luke Gould: Our overall score improved, and we saw improvements across many dimensions. We remained number two in advisor sales penetration, the percentage of advisors actively selling our products, and we were number two across all three advisor types, brokers, planners, and insurers. We also maintained our number two rank on brand.
Luke Gould: Our overall score remains number 2 relative to large players, and out of the 22 rated firms we ranked number 4 this year, down from 3rd last year as a result of a smaller firm newly included in the study.
Luke Gould: In the fourth section, we had a busy launch cycle this period focused on active equity ETFs and quad. We launched four active equity ETFs in the period in places where we have strong capabilities in relevant spaces.
Luke Gould: This brings our total of year-to-date active ETF launches to eight, and this complements our successful active fixed income ETF offerings, which we introduced in 2016 to 2018.
Luke Gould: We also launched three mandates advised by our Global Quant Equity Boutique in the period. And we've launched nine year-to-date for this boutique as we trailblaze quant investing in retail with our very strong Boston-based quant team.
Luke Gould: In the bottom left, you can see we established a partnership with CGI during the period on back office processing to ensure an industry-leading client experience.
Luke Gould: Through this expanded partnership with CGI, we will automate and improve our platform to ensure a leading client experience for the thousands of advisors and over 1 million retail clients who rely on our plan administration and processing capabilities.
Luke Gould: This partnership builds on our proven track record of partnering to leverage the scale and expertise of global leaders and we're proud to partner with CGI, a Canadian firm with such strong capabilities and similar values to our own as an employer.
Luke Gould: Noteworthy in the quarter, obviously, was government stimulus focused on domestic equity markets, which led to stolen investment returns at the end of the quarter, with equity markets up 25% in the last week of the quarter and about 15% during the full quarter.
Luke Gould: Also noteworthy was continued market share gains at China MC, driven by their 96 billion yuan or around $18 billion in net flows this quarter.
Luke Gould: And in the bottom right, you can see Northleaf continues its trend of averaging around $1 billion in fundraising each quarter. And this quarter they raised $1.5 billion, and nearly $5 billion over the last year, diversified across their private equity, private credit, and infrastructure offerings.
Luke Gould: Turn to page 26, you can see the trended history of McKenzie's Net Flows.
Luke Gould: As mentioned, we've started to see our year-over-year growth sales improvements, with a 20% improvement in Q3 and a 30% improvement in October. This has been accompanied by a peak in redemption rates, and we've seen net sales starting to improve in the context of an improving industry environment.
Luke Gould: While we have year-over-year net sales declines within a few of our larger boutiques, with softer near-term best performance, which I'll review, we are seeing very good sales momentum in many of our other offerings that have very compelling performance within very large categories.
Turn to page 27, just a few quick remarks.
Luke Gould: In the top right you can see that overall Morningstar ratings at September 30th by share of assets remains relatively consistent with June 30th.
in the table in the bottom left.
Luke Gould: You can see we have seen improvements in both retail and institutional investment fund net sales. I want to call it institutional, where institutional investment funds have been quite strong with improvements through our partnerships with Primerica, Laurentian and WellSimple.
Luke Gould: And while retail started to improve, it remains in net redemptions and slightly behind the industry net sales rate as we referenced in the last slide.
Speaker Change: TriniPage 28, you can see our performance and net sales for our retail mutual funds and ETFs by boutique.
Speaker Change: As we spoke to last quarter, we are seeing some short-term relative underperformance within our Blue Water and Green Chip boutiques. Though I will reiterate, gross sales remains resilient, and these boutiques continue to manage in line with their discipline approaches and continue to have very strong long-term track records.
Speaker Change: Across other boutiques, I'd highlight the groin at sales within the Global Quan Equity and the Global Equity and Income boutiques, where we have very compelling performance within very large product categories.
Speaker Change: I'd also highlight in the top right the strong performance of our Putnam-advised U.S. All-Cap Growth Mandate, which is included in this column and is a very strong five-star fund.
Speaker Change: Over 55% of industry long-term fund assets are actually fixed income.
Speaker Change: And so that muted part of the increase that you'd expect from the stock market increases. On the right, you can see ChinaMC's continued strong market position, ranked number two in both long-term funds and overall investment funds, with very good increases in market share in the quarter and in the last year.
Speaker Change: Turning to page 30 you can see continued growth in China AMC's AUM with investment fund assets of 11% in the quarter and 34% year-over-year.
Speaker Change: Total investment fund net flows in the quarter were $30 billion and as mentioned earlier, long-term fund net flows were $96 billion or $18 billion Canadian dollars.
Speaker Change: As reviewed yesterday by our CEO, Yimei Li, Chai AMC is the market leader in ETFs in the Chinese domestic industry, and strong flows to ETFs in the period was the key contributor to these strong net sales.
Speaker Change: And on page 31 you can see another quarter of continuous strong growth at Northleaf with 1.5 billion in new commitments in the quarter and 4.8 billion over the last 12 months.
Speaker Change: The fundraising during the quarter was well diversified across Canadian and international investors and spread fairly equally across private credit, private equity, and infrastructure investments.
Luke Gould: I'll now turn the call over to Keith Potter. Thank you, Luke, and good morning, everyone. On slide 33, you can see key highlights for Q3. As James commented, adjusted EPS was $1.03, excluding other items at LIFECO.
Keith Potter: With a continued exceptional performance of Wealthsimple, which Damon spoke to already, we have marked up the fair value of our investment by 46% to $1.2 billion. I'll speak more of this on a later slide.
Keith Potter: Turning to slide 34, you can see our AUM&A and flows coming off a strong first half for market returns and asset growth.
Keith Potter: Q3 got off to a rocky start but ended up almost 5% with average assets increasing by a respectable 3.1%. And on a trailing 12-month basis, average AUM&A is up approximately 7%.
Keith Potter: Turning to slide 35, we have our consolidated earnings, up 12% year-over-year, and 11% sequentially.
on point two.
Keith Potter: As guided last quarter, operations and support and business development expenses were up.
5.1%.
Keith Potter: and we continue to guide into 4% growth for the full year over 2023. We look forward to providing our 2025 expense guidance on the February call.
Keith Potter: On slide 36 we present the key profitability drivers for IG Wealth.
I'll highlight a couple of points here on the left.
Keith Potter: You can see average AUM&A was up 3.7% over last quarter and on the right the advisory fee rate is in line with our guidance and reflects the quarterly increase in market returns.
Keith Potter: As clients moved up wealth bands, this includes our continued success with the acquisition of mass affluent and high net worth clients and strong flows from existing clients that Damon spoke to.
Keith Potter: On slide 37, IG overall earnings were 125.5 million in Q3, up 10.8% year-over-year and 12.3% sequentially.
Keith Potter: And on point one, advisory and product and program fees are up year over year and relative to last quarter driven by AUM&A growth. On point two, other financial planning revenues reflect continued strong performance in the insurance business that are impacted by fair value adjustments in the mortgage business.
Keith Potter: During the quarter, the downward movement of swap rates drove a negative fair value adjustment of approximately $4 million from hedges on mortgages pending sale that did not qualify for hedge accounting but were effective economically.
Keith Potter: The insurance business had another quarter of growth relative to Q3 2023.
Keith Potter: and it was in line with our expectations following very strong growth in the first half of the year. As a reminder, other product commissions will move in a similar direction as revenue and you can see in the table under point 2 that this is 64% of revenue this quarter.
Keith Potter: Moving to slide 38 we have McKenzie's AUM by client and product type as well as net revenue rates. On the left you can see average AUM is up 2.8% and on the right all rates remain relatively unchanged versus last quarter.
Keith Potter: Turning to slide 39, you can see McKenzie's earnings of $59.4 million is up 5.1% year-over-year and 6.3% sequentially.
Keith Potter: With higher AUM, net asset management fees are up year-over-year and relative to Q2. And higher net investment income reflects seed capital returns from positive market growth in the quarter.
Slide 40 has TriniumC results, first on the left.
Keith Potter: AUM increased 9.2% versus last quarter, and growth came from very strong market returns in the last few days of September.
Keith Potter: And given the timing of the market rally, average AUM increased by only 2% in the quarter. And on the right, you can see China EMC's earnings, about $32.9 million.
Keith Potter: As called out in the slide, the late quarter market rally resulted in positive fair value adjustments from C Capital. There were also some other one-time items impacting the quarter, and adjusting for this, Q3 earnings would have been more in line with Q2.
Slide 41 has earnings contributions from companies in each segment.
Keith Potter: A couple of comments. First, Rockefeller was close to break even this quarter and expect to see continued progress toward positive earnings. A north of the earnings of $2.7 million are up from 2023 and also reflect continued investment in the business.
Keith Potter: Slide 42 provides a summary view of earnings and ownership and value of our strategic investments by segment.
On Wealthsimple, we have revised the fair value upward.
Keith Potter: based on public peer valuations and revisions to revenue expectations and in addition, as noted in our press release, our valuation of Wealthsimple is also informed by a secondary transaction with a third-party investor that is expected to close in the fourth quarter.
Keith Potter: From an IGM valuation perspective, our strategic investments now represent approximately $5.9 billion in value. And as a reminder, Wealthsimple is fair value through OCI, and Rockefeller currently does not contribute to earnings, but both have significant value.
Slide 43 highlights execution against our capital allocation priorities.
Keith Potter: We continue to execute on our share repurchases during the quarter while maintaining financial flexibility with leverage remaining at 1.6 times and unallocated capital increasing to approximately $450 million during the quarter. That concludes my remarks and I'll turn it over for questions.
We will now begin the question and answer session.
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Speaker Change: We will pause for a moment as callers join the queue. Thank you for your patience.
Speaker Change: The first question today comes from Tom McKinnon with BMO. Please go ahead.
Tom McKinnon: Thanks, good morning everyone. A question with respect to, if you can give us any indication as to what you're thinking about for the expense guide for 2025.
Tom McKinnon: You know, it might be a little bit premature, but is the 4% that you had sort of guided for for 2024?
What would...
Bye.
Speaker Change: Is there any, maybe you can give us some color as to whether that should apply for 2025 as well and how that might be related to if we had better markets or worse markets, how that might impact what you'd be thinking about for the expense guide for 2025. Thanks.
Great, Tom, it's Keith here.
Speaker Change: Yeah, no, we're currently working through the 2025 plan and we'll share more details in February, but we have been pretty consistent You know commenting that in the next couple of years we do expect to invest in the business as we have this year
Speaker Change: And I think as you're, you know, thinking about 2024 and modeling, you know, 2024 expense guidance, like you mentioned, 4% is, we're going to be in a reasonable range to that. So that'd be a good assumption as you think through 2025.
Speaker Change: To the extent that, you know, we continue to have market rally or, you know, we, you know, continue with that perspective and, you know, as we've demonstrated in the past with extreme volatility in the marketplace, we make decisions at that point in time, depending on the circumstances.
but we are committed to growing and strengthening our businesses.
Speaker Change: Where do you see the most investments needed in the business?
Speaker Change: Yeah I think there's a few areas you know technology continues to be an area of investment you know Luke commented on our
Speaker Change: back office expansion with CGI. We've commented on middle office in the past, so you're going to continue to see investments there.
Speaker Change: at IG Wealth Management. It would be similar for advisor client platforms. We have a leading technology platform for advisors today and we'll continue with that. And then there's also commitment to build out our mortgage banking and insurance platforms.
Speaker Change: We're achieving what we want to achieve in terms of investments in these parts for business within that guidance that we provided in 2024, and it's just finding efficiencies along the way and reinvesting those to achieve these investments in these areas.
Understood. Thanks for the color. You bet.
Speaker Change: The next question comes from Graham Riding with TD Securities. Please go ahead.
The Wealthsimple Steak.
Speaker Change: Well, what can you share about this secondary transaction, if anything? I know it closes next quarter, but is there any detail that you can provide there? And then, secondly, like, of the three factors that you cited, peer multiples, then performance of the business, and then this third-party transaction, which ones...
Speaker Change: or which one would have had the biggest sort of impact on the fair value increase?
Keith Potter: Hi Graeme, it's Keith again here. Yeah, in terms of the fair value increase, maybe the last point, you know, the first thing we'd look to is an identifiable transaction.
Keith Potter: It is a meaningful third party transaction and you can think about the value that we're placing on Wealthsimple being right on top of that particular transaction.
Keith Potter: Having said that, we do look at, you know, the performance of the company, revenue expectations, as well as just what's happening in the industry in terms of market multiples, and it's all aligned. But really, the value that we put on Well and Simple is very much in line with the third-party transaction.
Okay, that's helpful. You did...
At IG Wealth, you flagged that I think 43% of...
Keith Potter: The assets there are being held by households with greater than $1 million.
Speaker Change: in sort of household assets. Is there much change to that sort of overall client mix or AUA mix year over year? I know there's been a big change since 2018, but what about more on the near term? Has there been much progress on that front?
Damon Murchison: Yeah Graham, it's Damon here. So we've been making steady progress over the last four years on this and quite frankly it's just accelerating.
Damon Murchison: So, when you take a look at our success in both Mass Effluent and High Net Worth.
Damon Murchison: Our advisors are doing a great job at first of all identifying them, second of all about sharing what we do as an organization and our value proposition and then bringing them in house.
Damon Murchison: We're also doing a very good job at recruiting advisors. It's something that we don't talk a lot about, but this is a destination of choice for a lot of advisors that are looking to focus on true financial planning for their costs. So I would say to you, over the last 12 months, we've made significant progress.
Speaker Change: Okay, so that 43% of assets that are in households greater than a million, that's...
That's likely higher than what it was last year.
It is definitely higher than it was last year.
Speaker Change: And then, great, and then my next question would just be for Luke. It looks like your EGF...
Speaker Change: Sales are solid. Your mutual fund sales, long-term fund, they tend to be, they seem to be lagging in the industry, long-term fund sales trend.
Speaker Change: And maybe just what needs to happen in your view to get those McKenzie Mutual Fund flows to sort of catch up? Is it heavily dependent on the performance here at Blue Water and Green Chip, or is it more than that?
Speaker Change: Thanks, Graham. On page 28, you can see the boutiques. And I remind, we have this boutique approach, and again, we believe it inhibits a whole bunch of things like groupthink, which are very good and gives us a diversified roster to have something relevant and compelling.
for all client needs and in all market environments.
Right now you hit the nail on the head.
Speaker Change: We've got some softness in blue water and in green chips in terms of flows.
Speaker Change: And that's what we need is for the places we have strength, in places with compelling performance, in relevant categories to overtake it. And we're starting to see that happen.
Speaker Change: So we've got both of those tailwinds, one being an improving industry environment, combined with a bunch of stuff on the shelf that has some real compelling performance in really relevant categories. So we think we are on the right track, but those are the two things it's going to take right now.
Okay, that's it for me. Thank you.
Speaker Change: As a reminder, if you would like to ask a question, please press star and one to join the question queue.
Speaker Change: The next question comes from Jamie Goyne with NBS. Please go ahead.
Speaker Change: Like I, you know, we've heard about the blue water and green chip I think for a few quarters now, but like what
Speaker Change: Where is the gap here? Why is it lagging so significantly over the last few quarters here, basically since 2024, relative to the industry?
Speaker Change: That's a good question, Jamie. So right now we've got about 6% of our assets in five-star funds.
Speaker Change: And when you look at flows right now in this quarter and the last one...
Speaker Change: Those have been extremely concentrated within very few products in the industry.
Now, right now, we are very fortunate.
Speaker Change: with our Global Quant Equity Team, Global Equity and Income Team, the Puckham Advised Mandates, we have some very strong performance in these categories and we're pushing, but right now if you wanted one single tagline, we don't have as many five-star funds as we typically do and there has been a lot of concentration and a very few key mandates in the industry.
Speaker Change: Okay, and is there anything from like a, let's say like a distribution channel where you're seeing that miss the rest of the industry?
Speaker Change: Not at all. We feel we're well set up in terms of distribution. We like where we're at. I'd also highlight, if you look at our peers' net sales rates and how they travel,
Speaker Change: With our boutique approach and we don't take it for granted, we've got the most resilient net sales in the industry. And so right now we're lagging by a little bit the industry rate. But for most players in the industry, it's kind of feast or famine in relation to us.
Speaker Change: So we've got a very resilient net sales. We're always very close to the industry rate in good times and bad times. And right now, we are focused on getting back above the industry net sales rate. And we are pushing on the things that are most compelling in this environment.
Speaker Change: Yeah, so just on what you said there, like the feast or famine, could you just give us a little bit more color in terms of like who's feasting and who's starving out there, assuming McKenzie's kind of in the middle?
Speaker Change: Very strong performance in in a lot of mandates a lot of five-star funds
Speaker Change: and so they've captured a lot of the flows in the last period if you look. PIMCO is another fund company that's obviously done quite well and Dynamics had success in their premium yield offering. So we're focused on what we do well, we've got a very broad offering and yeah, there's been some very concentrated flows in the industry the last two quarters.
Speaker Change: Okay, understood. Then quick one for the IG Wealth. Net promoter score looks pretty good relative to the big six banks. Has that been consistent? Has that improved over the last few years? Can you give us a bit more of a timeline on that?
on how that Net Promoter Score has progressed.
Damon Murchison: Yeah, Jamie, it's Damon. I believe over the last few years we've seen very strong net promoter scores.
Damon Murchison: Relative to to what the banks have been have been producing on the full-service brokerage side so you take a look at I would say in 2000 and In 22 we started to make a move 2023 was quite strong and in 2024. It's also quite strong. So I'd start with 2022 so it's a bill that follows kind of what we've been doing
Damon Murchison: and the build of our platform, the build of our advice capabilities and what we're doing at the organization.
Speaker Change: Just to refresh on the dividend payout ratio, I believe you kind of said you want to see it get to adjusted cash earnings of 60% or below. Is that something you'll look at more on a like a retroactive, so looking backwards, as opposed to maybe looking out at the next year and having some more confidence in markets?
Speaker Change: and the potential earnings coming off of that, cash earnings coming off of that. So what's your frame of mind? Is it looking backwards or will you look forwards in terms of thinking about that dividend?
Keith Potter: Hi James, it's Keith here. Yeah we're currently at about 68% on an adjusted basis looking at LTM. That's historically how we've looked at it when we've said we you know
Keith Potter: Obviously approach the board and have that conversation, but I would say we look at it We look at a number of factors. We look at you know the past you know the future You know running off of the current run rate, but I think all when we start getting closer to 60% You know that we'll be looking at from a number of different dynamics
James O'Sullivan: James, it's James. I would just add that it continues to be my view that we need more growth.
Speaker Change: more than we need more yield. And so you should expect our focus to continue to be in drawing EPS.
Great. Thanks, guys.
Speaker Change: This concludes our question and answer session. I would like to turn the conference back over to Kyle Martens for any closing remarks.
Kyle Martens: Thank you Betsy, and we'd just like to thank everyone once again for joining us on the call this morning, and wish everyone a good weekend here. Thanks Betsy, and with that we'll end today's conference call.
Kyle Martens: This brings an end to today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.
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