IGM Financial Inc.

Murray Taylor – Co-President and Chief Executive Officer Jeff Carney – Co-President and Chief Executive Officer

Gary Ho – Desjardins Geoff Kwan – RBC Capital Markets Paul Holden – CIBC Graham Ryding – TD Securities Scott Chan – Canaccord Genuity Tom MacKinnon – BMO Capital Markets

Thank you very much and welcome to our call. I’m Murray Taylor, President and Chief Executive Officer of Investors Group and Co-President and CEO of IGM Financial and I’m joined with Jeff Carney, President and CEO of McKenzie and Co-President and CEO of IGM Financial, as well as Kevin Regan, Executive Vice President and CFO for IGM Financial.

In your materials, I would draw you attention to our caution concerning forward-looking statements on Page 3. Our non-IFRS financial measures and additional IFRS measures on Page 4.

On Page 5, documents incorporated by reference which outlined numerous public documents that we made available on the recent period. And then I will take you to Page 7, where it summarizes our reported earnings for the quarter, $198.5 million for Q2, 2015 or $0.80 our earnings per share.

Both of which down slightly from 2Q 2014. This morning our board declared a dividend of $0.5625 maintaining the level of dividend and this dividend yield is approximately 5.8% based on yesterday’s closing price.

On Page 8, you can see that we had gross sales of close to $4 billion in the second quarter and $8.4 billion on a year-to-date basis. On Page 9, you can see the mutual funds and net redemptions of $497 million during the quarter and net sales of $41 million on a year-to-date basis for mutual fund.

On Page 10, you can see that our mutual fund assets under management increased by 3.6% during the last year to $129.7 billion. On Slide 11, you can see the trajectory of our long-term assets under management and a number of indicative indices with a number of negative yields on numerous indices over the second quarter.

You can also see at the bottom of the page that on a one year basis, the S&P/TSX was down 1.2%, but on three, five and 10 year basis up substantially and very enormous of ranges. On Slide 12, you can see that the advice channel experienced 13.7% increase in gross sales during the second quarter.

On Slide 13, you can see that the dominant favored asset class was balanced and that is continued for sometime, you can see the proceeding quarters there. Slide 14, the area of regulatory developments and recent research, we’ve made note of the fact that under the CRM2 column.

Investors group has now added performance reporting to most of our statements as of June 30, are now in the hands of our clients. A full two years ahead of requirements under CRM2.

Also during the period we’ve seen a continual discussion of other research that’s being conducted by CSA. You will recall from prior discussions, we’ve had on the topic that, there were two seminar studies that we are underway and it’s been commissioned by the CSA.

One is with Professor Doug Cummings are conducting research on mutual fund cash flow which is not yet been released. The other was an assignment for the Brondesbury Group to look existing literature on the topic of fee based versus commission based compensation, this report was released in June, and I will speak on that in a moment.

We will also point out that the CSA has said that they are going to take these items and feedback and discussions that have been occurring for sometime to provide some update to their views and comments for about future regulation, we expect that comment letter to come forward later this year. On Page 15, you can see a summary of the Brondesbury Group report.

This is issued on June 11, its mandate with look at the statements at the top of our page here, which is determined at the use of fee based versus commission based compensation changes the nature of advice and investment outcomes over the long-term. The report was quite comprehensive, in fact one of the best such reports that we’ve seen globally, very, very comprehensive and very, very balanced, in the executive summary there was a concluding statement, some of which has been partially quoted but the entire statement identifies that this evidence on the impact of compensation, its concludes and have to justify the development of new compensation policies our hones of compensation effected by an outcome.

There is crucial evidence that commission based compensation creates problems that must addressed. But the next sentence is fee based compensation is likely a better alternative, but there is not enough evidence, to state with uncertainty that will leads the better line from outcomes for investors.

And so there is a sentiment within the reports that there is issues that can be perhaps addressed to doubt with, I will put under this category of tweaky, but there is no evidence that moving to an entirely fee based system which solves the issues and in fact there are numerous clarifying comments within the report which we believe will temper any significant research based policy changes and one such example is on Page 20, where it says in our view no series of studies have been done to document whether investors are greater asset fee investment return with fee-based compensation instead of commission based compensation. Also not reported on this page but certainly in the work of research that’s been recently updated, investor economics and strategic insights have done a comprehensive comparison of U.S.

and Canadian fees for mutual funds and the dominant structure in the U.S., is a fee-based system and it’s very, very clear in that that for the smaller accounts the cost declines is somewhat higher in the U.S. that it is in Canada on a fee-based basis.

And so there’s starting to be quiet an understanding of the fact that in a fee-based environment the smaller clients will incur a higher cost. And as that discussion sees through on top of the Brondesbury report, I think it’s going to lead to a very fruitful discussion with regulators in the course of time as the other studies come forward this year.

Moving onto Page 16, you can see that average mutual fund assets under management at IGM were 6.3% higher than Q2 2014. And on Page 17, you can see that we hit a new record high of $131.4 billion for mutual funds, average mutual fund assets for the quarter.

Page 18, you can see a slight decrease to $198.5 million in terms of operating earnings for the quarter and on Slide 19, you can see again the summary of $0.80 per quarter on a earnings per share basis. I’ll now turn my comments to Investors Group.

On Page 21, you can see the chronology of the growth of our consultant network we hit a new record high at the end of the second quarter, 5176. On Page 22, you can see our gross sales we hit another record high for the quarter, having hit a previous record high in the first quarter and of course on the year-to-date basis, we also published in the last couple of days our July sales of 658, which is a new record high for July.

Page 23, you can see that our redemption rate is stable at 8.5% on a trailing 12 month basis. Page 24, our net sales of $27 million in the second quarter and $650 million on a year-to-date basis.

On Page 25 is sales momentum of the various variables and you can see that the gross sales number continues to be very, very strong in terms of its upward movement on a trailing 12 month basis. Page 26, as I mentioned earlier we introduced multi-period account rate of return and reporting on most of our clients statements at the end of June, two years ahead of the deadline and we have shown 1, 3, and 5 year plus history for those clients who have been with us for those periods and we’ll continue to do that quarter by quarter.

On the bottom of the page, you can see the metrics around the rate of return experience of our clients, slightly down in the second quarter, of course with market conditions during that time on a year-to-date basis a median of 1.8%. Slide 27, you can see the history of our client experience survey, now that we’ve had the survey in place for sometime.

We will be reporting it on a trailing 12 month basis. So as you can see, the effect of surveying our new clients and also our existing clients on an annual basis.

Again very, very strong responses. Slide 28, you can see that insurance is up about 4.3%, mortgages is inline with prior years.

Slide 29, you can see that our average mutual fund assets under management is up 7.4%, a new record high at 78.6. And on Page 30, you can see that we’ve got an increase over the same quarter last year of 2.6% to 189.9 in terms of earnings.

Slide 31, gives you a breakdown of our earnings and I will make a few comments here. You can see that the average mutual fund assets under management was up 7.4% in contrast to the combination of our management fees and admin fees of 5.1%, the difference relates to the fact that during the periods there was a significant movement of assets into lower fee period for our clients with household assets of 500,000 or more.

You can see substantial increase in our net investment income and other year-over-year, this is effectively our mortgage business and in the combination of more gains on sale of mortgage, appearing in 2015 an improvement year-over-year and the impact of fair value marks and a slight increase in the net interest income on securitized loans. If I jump down to non-commission expenses, you can see that we’re up 11.9%, but it’s a box points out we have a continuing cost for our pension that will persist through the year in the absence of that cost, we’re up 9.8%, there is some seasonally high expenses during the second quarter and if I was to reflect on a year-to-date basis, we’re up about 8.9% and we expect that type of level to continue towards the end of the year.

The increase is expense is a combination of the expansion of our consultant network and other business development efforts in the annualization of a number of things we introduced last year. On Slide 32, we have announced so far this year the opening of four new region offices, take us upto 114 region offices, two in Montreal, one in Petersburg, one at Edmondson.

As I mentioned earlier our consultant network is an all time high of 5176. We have commented in the past, to both, some of our product introductions and developments and fees structures, Series U, which is an unbundled fee structure and iProfile which is also unbundled in combination have now increased to $4.4 million at the end of June, it’s one of our fastest growing areas.

And it certainly is very, very competitive against fee-based product in the marketplace and it now represents almost 6% of our mutual fund assets up from only 2.5% a year-ago. We also introduced a number of new mutual funds that actually became available for sales in the middle of July, two of them were low volatility equity funds, one for Canada, one for the global environment.

And they and another funds have been used in combination for a new family of funds called Maestro Portfolios, managed by Les Grober the ahead of our asset allocation practice and these will be dynamically managed in terms of the asset allocation strategy on a moment-to-moment time and we believe our great solutions for clients diversification. On that note, I will pass the comments over to Jeff Carney.

Thank you, Murray and good afternoon, everyone. I’m going to start my comments on Page 34 and I’ll start with a mutual fund gross sales which were $1.855 million that’s up 8% from 2014.

When you make an adjustment for rebalancing of $141 million, our gross sales were basically unchanged from last year. Turning to resales sales, we were up 7%, after some of the declines that we experienced in strategic alliances.

And retail benefit is from increased productivity of our new and existing wholesalers that I mentioned to you in the past that we’ve hired and it has some significant turnover and upgrading the quality of sales teams, as well. And they’ve now started to make significant contributions to our retail growth.

We also invest the benefit of our new product launch is driving increased sales in retail channel, as well and we’re pleased to see the traction that those new products are getting. Due to the timing of our new wholesalers, we’re still not at full productivity in the retail units as a lot of those people who joined us just in the last six months.

But I can tell you that we’ve called on 6,000 advisors that we didn’t have contact with in 2014, as of June 30 of this year and we have 1,000 new supporters that have come through our pipeline having done significant business with us this year and they are going to continue to grow as we in turn [ph] serve them going forward. Turning to Page 35, you can see the chart that explains where assets are held today with that pretty balanced an income and sector another and basically there is very similar behavior with our client based in Q1 versus Q2 and no relevant changes there.

Turning to Slide 36, we continue with MG’s redemption rate on long-term mutual funds was 14.1%, at June 30, 2015, excluding identified fund allocation changes, asset retention remains strong and better than our peers. On Page 37, you can see that McKenzie’s Q2 results, our long-term mutual funds sales showed a stabilization of growth sales overall and positive momentum in our retail channel.

Turning to Page 38, on June 5, MD Financial Management reassigned a sub-advisory mandates that we refund so far in fourth – fixed income mandates and they were advised by asset McKenzie. The mandates had $10.3 billion in assets and the impact on McKenzie’s earnings as a result of the loss of these assets was immaterial, due to the scale and size of that mandate and the simplicity of the product that we were managing.

McKenzie’s continues to advise MD on a number of fixed income balance and equity mandates going forward and they are an important relationship for our organization. Excluding this transaction and mutual fund allocation changes by certain thirty-party programs, identified the footnotes.

Our total investment product net sales were $84 million in the second quarter. We had net redemptions at $89 million and $17 million improvement from that first quarter of last year.

Turning to Page 39, you can see McKenzie’s risk adjusted performance as measured by Morningstar has 60% of our mutual fund and 66%of our assets rated three stars or better. As I commented on the last call, our growth style equity strategy have recently been outperforming the value-style and this has continued to weigh on our numbers at McKenzie that is we have a larger proportion of our equity product in value funds.

Likely the last few days are treating us well, some of the markets volatility we are experiencing and we’re working hard to launch and grow our growth capabilities to get more balance between both of our styles. McKenzie’s product sales is very diversified across South, we have 27% of our assets and fortifies our funds with many of our growth funds outperforming.

We have also launched 16 funds in the past few years that have been making considerable contributions to our sales results. Turning to Slide 40, McKenizie has 59% of our assets rated in top two performance quartiles over the 10-year period.

On Slide 41, you can see that McKenzie’s average mutual fund AUM was at a record high, during the quarter, increasing 4.3% gross of same quarter last year. And average total assets under management was 3.4% higher compared to last year.

Turning to Slide 42, McKenzie’s operating earnings before interest and taxes were $54 million during the quarter and if you go to 43, make some comments on the details on this. Our management fees increased by 0.4% which is lower than the increase in average AUM due to a change in the compensation of our assets under management and the pricing changes we made to retail mutual funds which begin effective on September 29, 2014 when we made our price changes.

Our management fee raised in the second quarter was relatively – consistent with Q1. On the other side our administration fees declined 6%, lesser to Q2 2014, note that effective April 1, 2015 prior that resale pricing changes announced last October, we just continued the mechanism that we introduced in 2007, which maintained our admin fees at pre-specified scores.

This adjustment was just under $1 million during Q1 2015. Turning to Page 44, McKenzie developments, as part of our strategies result of the brand we launched our new six year sponsorship with PGA TOUR Canada, been a tremendous launch we had 410 articles with the announcement on McKenzie in it 1300 video hits, 510 million of presence today, 200,000 website visits and we valued all of the six closure that received as a result of this sponsorship and it’s been – just a fantastic return on investment, I have to say.

So we are very pleased with the impact accounting program and our brand awareness. As spoken in the past about product innovation for McKenzie and how important that is during the quarter we launched five new funds.

Each introducing specific to address specific client and advisor needs including a global investment grade fixed income fund that’s really targeted at IIROC advisors and giving them a unique skill set to use in a product in their particular instruction. And it relies on both qualitative and quantitative to approach investment process and then we launched four funds that we purchased and redeemed in U.S.

And these launches combined with our existing U.S. dollars the most comprehensive suites at the U.S.

dollar solutions in the marketplace today. We see a strong pickup in these five new funds since the May launch with over $40 million of net sales during Q2 and $70 million as of the end of this year.

New products and some right here two years ago have generated net sales of over a $1 billion as of July 31 of this year. One other development I want to mention – it’s not in the notes is that we recently hired Rick Wick who comes from U.S., a new quantitative team at McKenzie and we’re very excited about his broad base of experiences in the U.S.

and what he can bring to Canada’s one of our new teams as we explore opportunity utilizing his qualitative skills. I’m going to conclude my remarks on – by talking about our Investor Day.

So we are very pleased to announce that IGM’s first ever Investor Day will be held on November 20, in Toronto and we are very pleased about that. We’ve been evaluating our Investor Relations activities and recently conducted an investor specific study which is identified and obtain for better communication.

And we want to thank everybody on the call that participated in that feedback, because it’s been valuable to Murray. This event will be a great opportunity to hear the management teams of our operating companies discussed the long-term strategy and priorities within the context of the competitive and regulatory environment.

Have we been a created a market dating of calendar and we will be communicating with you shortly on all the details. The last thing I want to comment on that Murray touched in his comment is our operating expenses in our P&L and as you’ve noted that this probably low higher than you expected, and I wanted to just highlight that the quarter prior years was lower than it normally would be and then the quarter of this year is higher than it will be as we go forward.

And then you should be confident that we will come in at 5% or less, in our growth of our operating expense for the year. Operator, that concludes my remarks and we’ll now open it up to questions from the audience.

Thanks, good afternoon. I just wanted to dig deeper in your last comments then more of – I guess big picture question on margins, and I appreciate color on both sides, I would assume it can be, so obviously there are differences.

When I look at Slide 31, and Slide 43, the investors used to gravitate the benefit of operating leverage in the model earnings kind of growing at lease in line if not better than the AUM growth, benefitting from scale and whatnot. I know there is headwinds in the industry that you guys facing.

I want to get your thoughts on this over the near to medium term and how we should think about margins going forward let’s call it like two to five year timeframe?

I mean that is good point of view on Page 31, I think as we talked about in a number of calls we’ve certainly made significant and important investments in a number of areas that is increasing our expense base to some degree as we get that normalized and annualized and we work on those efforts as you know we’ve just come forward with – rate of return that was a huge project other large projects that one have to deal with in terms of the overall systems environment, there are issues that we have increased focus on such as investment management capabilities and talk about a number of the aspects of that in prior call, we’ve increased our stakes in advertising and marketing and so forth. And so in many ways, that is in combination with growth in our brand growth in our efforts competitive strength obviously you’ve seen over the last couple of years significant growth in our consulting network at the timing of the expenses and the timing of the productivity to emerge from all the results that come from that of course are slightly different.

So you will see the margin impact of that not in a cohesive straight line, but we are seeing very strong momentum in terms of our sales we’ve seen significant expansion into the higher net worth marketplaces. We have been resourcing into those areas as well.

We are one of the strongest groups in terms of advance financial planning, tax lawyers, accountants et cetera. And so we're seeing lots of good activity, we're seeing good growth in momentum.

We expect that to continue and in the meantime, we're moving along in terms of making sure, we're making the proper investments in the business. So hopefully that gives you a bit of color on it.

Yes, for a McKenzie, when a last years ago we look at our operating cost and said where do we have opportunities and we went after those and that we utilize some of that resources plus we’ve spending to position us to be competitive against the market for the long-term. And lot of that work has been done.

And I’d say the biggest spends really in all of that has been on investment talent and making sure that we have the resources that we need to keep everyday in the marketplace and deliver consistent strong performance on an online basis. So those – all those investments have been made, that doesn’t mean we are not to be opportunistic and opportunities that we see them that come along, but we feel that the majority of the spending that we needed to do to raise our value proposition in the marketplace has been made.

So we should see some in normalization in that expense base over the near term is sounds like.

Yes. As you add more you are going to roll through the one year before expense of those investments and you probably a little bit more through that, but as far as at new expenses on new projects and new things that’s can definitely slowdown.

Okay. Great, thanks for the color.

And then on the institutional side Jeff, just give us an update on how the pipeline looks given loss of MD mandate, do you need to right size that side of the business or are there things that you hope to back fill any color on that would be appreciated?

Yes. Most of the infrastructure on service and institutional business is already here in the investment team because that’s really our value proposition to that market.

And we have sales team but it’s a very small sales team that they cover some market for us. We are not over investing in that.

So we’re attachable and specific on where we think our products are best suited and who would be most interested in those. And then on the strategic lines of side which is important asset going for us as well.

We see our potential growth in that area and not just servicing existing clients but looking for new ones. So we have resources against that.

But I would say in both places that’s not been a significant investment for us. That’s been an upgrade of talent, and making sure we have greater resources in those areas.

But more of the investments made on retail and having more wholesalers and building out that team and our leadership team there, making sure they our resources successful. These sales are very important phase for us because that our margins that are available and we have a lot of market share, available to us to get.

And then in terms of the pipeline?

On the pipeline side that’s encouraging. There is some of the new teams that we brought in are getting enough tenure here now that we can talk to institutional clients we tend to look for a longer track records in their decision making.

So I'm encouraged by the tunnel that we have, and we look forward to giving you update since we commending.

Okay. Perfect.

Thanks so much.

Welcome.

Hi, good afternoon. First question I had was, you guys have been active on care buybacks year-to-date and you guys are generating a lot of free cash flow bu t the balance sheet is pretty clean.

And share prices arguably you know is not where you wanted to be. So just wondering to a sense as to your how active you plan to be, are you going to be effective on the share buyback over the next couple of quarters.

Because I'm guessing it’s from dividend perspective as you’re probably not quite there tomorrow it may be considering another dividend increase.

Geoff, it’s Murray, I’ll take that. I think we did a fair bit of share buybacks in the early part of the curve little while higher rate base and we had been doing previously, but not how to align with what we’ve done in the past.

As it is now available in public records. During in our blackout we continue to have an automated buyback approach and the level at which we’ve be buying back to that period is somewhat lower than what we had been doing in the earlier part of the year.

We are always going to be win, all the natural factor some of which you’ve mentioned in terms of decisions to use our cash in that way. We do feel very strong about always maintaining a strong balance sheet – stability, there are multiple uses for cash of course at any point in time including for its warehouse including financial flexibility generally on the balance sheet.

And so it’s not our intention by any means to consumer cash with share buyback. But we will take into account the – and for the moment and make our decisions on a day-by-day basis.

Okay. My next question was for Jeff on the flows that McKenzie on the retail side, I mean when you take a look at the past three months that seem to be showing good improvement.

I’m just wanting to get some color on it, is it certain funds that are selling better at certain categories or a twitch you talked about earlier is it just more seasoning of the wholesaler team.

I would say the wholesaler team is the biggest driver of that, because when you turn over more than half of the people you it takes time for them to understand our products and their territories and get to know their clients and all the things are happen in a transition like that and I'm very excited about the talent that are came to be on the track. So I’d say there is I think tremendous leverage and operating leverage available to us in that is that place out over the months and probably the next couple of years as you get fully operational.

And then there is some good things going on in our product line up and I’d say the new products billion dollars in net flows from new products since I’ve been here is very encouraging. So it shows that we do have relationships out there and we are getting people to listen to us and then talk about our new products and getting good traction in there.

And there are unique products that are doing similar different things, which you also got things like Darren McKiernan’s product that we launched when he got here and its done phenomenally well on each sides have done a great job with the existing assets you have given. So you got a combination of talents performing and then sort of new talents that’s got innovation build with it that we enhance to track like lemberger [ph] on for example and others.

So it’s kind of exciting because it’s not the one thing. I think you are going to continue to hopefully see improving performance across our lineup, which will continue to drive more sales for us and we have committed upside to that the new products we’ve already launched are still young and we got too many leverages with that.

And then we probably got more ideas than our pipeline as far as innovation and things that we will be bringing as we go forward. So I think there is going to be lots of different place that will drive some our market share both gross sales and net flows.

Okay, thanks. And then the last question I had was for Murray, when you take a look at the net sales growth, the sales performance has been consistently positive and when you take a look at the past, you guys have a right to think about $8 billion in growth sales on trailing 12-month basis.

And so I'm just trying to get a sense as to maybe how close are we to let’s call it IT firing on all cylinders. So if you kind of assume everything that is happened over the past year on that $8 billion like what do you think that could have been if you guys were executing on all fronts.

But it has been $10 billion or what that number might be and also from that how much of it is say improving consultant productivity versus fund performance?

Sure, I will take you, Geoff to Page 25, as there is a visual on which I will make my comments. You can see a very strong trajectory here, in terms of growth sales, since basically the late part of 2012.

And we’ve seen that become very, very consistent, as we moved our attention into a lot of expansion of capabilities in the high net worth area both in terms of pricing product process. But it is not a single issue, it is a combination of filtering down effect, because as we’ve been investing in those areas, we have been focused more on the retiree market, because we have a great overlap in the retiring market and the high net worth market.

We do continue to feel there is lots of opportunities to see growth in that area, and as our consultants get more and more involved in that area. They are finding that they are winning quite easily, quite frankly, especially in that sort of $1 million to $2 million case that is often being shredded or not particularly well serviced by the brokerage community.

And so those opportunities continue to move along through this period of time, we had strengthened investment performance. And as that occurs on a wide spectrum of funds and the introduction of new funds, so pretty attributes to it.

But we have also been seeing a growing, consultant network and of course as you have a lot of new people coming in. Your average down in terms of the average per consultant experience.

But they of course will grow and develop and mature. And we are seeing more teams establishing for succession purposes and so forth, for our more mature consultant.

So I am not about to give you a number, in terms of what that will become. But I would suggest that the upward sloping graph that you see on Page 25, I have no reason to doubt it is going to continue to increase.

And the way I would like to visually look at this page is that the triangle that is forming between the red line and the blue line is net sales. And so that net sales number continues to expand even faster than the growth sales, just geometrically.

Now of course that’s affected my market if you get a very strong market, then the redemption rate applied to a higher level of assets, tend to inflate that number a little bit and vice versa, the market comes down. Both of the dynamic sales I would offer.

Okay, thank you.

Thank you. Good afternoon.

Couple of questions for Murray to start. So the first one would be with respect to the goal of shifting of eligible high net worth clients into that – counted product I believe it was how to beginning of April or end of April so I just wondering if you can tell us of its mission accomplished.

Yes. Its mission accomplished and our MD&A we made the comment that virtually all.

So an extremely high percentage its however described that has been moved over. The vast majority of that for April 30 but then we continue to even move closer and closer to the 100% level by the end of June.

So that part is well in place as is our plans of the client distributions which will occur literally in the next couple of months.

Okay, good. And then with respect to the unbundled products nearly 6% of AUM there, do you have an idea long-term target in mind in terms of how much from a business perspective how much of your assets you’d like to see in unbundle product?

Not so much is a target, but of course what we did when we introduced Series U which we wanted to make that pricing structure more universally available and that is in terms of enormous of activity that our consultants are involved with. Now keep in mind Series U is only available for households and excess of 500,000.

But that is in fact of marketplace where fee sensitivity and structure of course come into play and so, as new clients coming much fast we want that to be very much in the mind of our consultants in terms of is at a suitable circumstances to that client and I think that’s been offered quite generously. Our clients as evidenced by our client survey are extremely well satisfied and they are not passively satisfied, they are actively satisfied.

They have very high scorers in terms of the satisfaction level in terms of the service they are getting, the overall planning they are receiving the outcomes they are having. And so our purpose here is not to go into third plans that are already satisfied.

With something that quite frankly has more semantics to it than reality in terms of pricing values. And so the extends of which new clients are more conscious of this and there is a conversation to be has I would suggest you that a larger percentage of those are going into the U Series and/or iProfile series because that’s becoming a little bit more enormous of in terms of the current competitive environment and then we will have degrees of course of clients who can convert over into that structured we choose it and want it and consultants who recommended to that purpose.

Understand, and would you be able to share with us what the fee structure would be on a series U ie how much gets charged at the advisory level and say for a typical equity or balance fund, how much we get charged on the management fee?

Yes, I don’t have the numbers really and but I could give you just a broad aggregate, so that – on an asset wages basis then mutual fund embedded fee any order in the mutual fund in the structure is approximately 1%. So you get sometimes higher, sometimes lower et cetera then that 1% but that’s a pretty good rough term and then the pricing – and I mean the pricing structures are public information has the down scaling component to it, in terms of size into the future, but at $1 million it would be exactly the same prices is our series J in total.

So the separate fee plus the MER would be comfortable.

Understand thanks for that. And then a question for both Murray and Jeff as well, in terms hedge fund sales we are seeing a recovery and net sales at the industry level, wondering if you’re seeing any pick up and demand for that product categories to your respective businesses?

I think comments on ours, yes, our sales were up and we think that’s a very good thing, we’re very conscious to the fact that 40% of financial assets is currently sitting in very low interest rate, daily interest accounts in GICs and not that all of that is suitable for a guaranteed investment fund. Certainly a portion of it for high net worth plans certainly is though and that’s an area that we are brining a fair bit of focus to and be a great opportunity for us overall a stake planning, and investment panning and so its very much part of what we are focused on, what we are talking about and, yes it’s a smaller part of our business of course, but so it doesn’t get the same degree of reporting and granularity, but we are seeing pretty healthy increase as the year-over-year.

And for McKenzie, we get our exposure through our partnership, with Great-West Life and their success we benefit from.

Okay and are you seeing a benefit yet, year-to-date or do you have an outlook on how you might benefit going forward.

Yes. I mean in their item I know with – they have got a strong growth strategy at Great-West and as they continue to evolve their business model will benefit from the initiatives that they have and I know they’ve made a lot of public comments on where they are ticking their organization.

So anything that helps them grow we are going to benefit from.

Okay. And then final question specifically for you Jeff, if I look at Slide 37 or you are mapping out the growth sales and the redemption rate just want to understand from your perspective on that growth sales trends sort of the drop off that happened around the beginning of 2015.

And I just want to understand and so maybe we can get a better sense of the key catalyst to see that improve higher.

Yes. I mean it was bit of a shock.

There is one sort of fundamental issue which was our footing rate fund we hedged our currency in our footing rate and our fixed income products we hedged across the board and some of our competitors don’t and so we got crushed with the $1 million fell so that had nothing to do with performance of the underlying products itself, it was really currency. And our rationale is that you don’t want the volatility of currency that takeaway from the performance of the product and then fixed income you don’t have a lot to work with.

So that was one and then two was, the global – our global equity strength which would be come to on IV which was service very well in 2014 had a tough 2015 and the whole category had a tougher start to the year and then we got flat more than anybody else because we tend to dominate in that space with the largest player. So I think it was a timing and sort of bunch of things that came together at the same time it was a pretty tough slowdown and what exciting is that we’ve been able to make it out and not to see – we want to see net income of the fantastic and continue to grow, but its great to see that we have other products that we can tell and work with clients on to make up for any of those types of moment.

So I feel that we have a more diversified product line up now then we did a year-ago or two years ago and that’s going to help us in our market.

Okay, great. That’s all the questions I had.

Thank you. Maybe Murray I could just start.

I appreciate your comments on the Brondesbury report that was put out in June. I'm just wondering if you see potential for this report to sort of swear move regulators to possibly push out any potential changes to mutual fund fee policy until further research is conducted around the impact of a fee based environment.

Actually I see the reverse; I see this report is going down the phase of any radical change. Everybody in the industry looking at these issues then those things that have been in discussion since the December 2012 reports and so forth.

All acknowledged that there is ways that we can improve the disclosure, we can improve and tweak here and tweak there and there is lot of discussions like that going on within the industry, between the industry and regulators and so forth. I think there has been way too much speculation at the regulator; you’re going to do something highly dramatic.

And this report says, if they are, they are not going to do it based on research they committed or committed to, at least this particular research is showing a very showing a very well balance, be careful what you do, type of message. Yes, maybe there are some issues but commission based but there are lot of issues that fees based as well and you see wise to – to make sure you think all that through or do more research or get more information.

And so I think from that perspective when you read the report and you going to the depth of it, even more so than the headline, it becomes very, very clear that is more cautionary than it is stimulate in action.

So, okay great. That’s what I will suggest and do you think this could lead to further research supposed to any policy decisions in the near term, which I think is your message.

I really find that two I thought you were saying will this research lead to change, that’s how I took your question begin with.

No, Will it lead to further research with that, that’s what I was said.

I think the follow on research, there is lot of research that’s already been done that can be pull together to take Brondesbury talked about there is very, very good research on the difference of cost from mutual funds in Canada and in U.S. So even though Brondesbury say is there is no empirical evidence that, cost would be different or the end user, the end investor would be treated better or worse on fee based.

There is strong evidence very, very, fact based evidence to show that on a fee based approach smaller clients hurt. So that discussion after before in part of this and one doesn’t have to go on commission a lot of research to come to that conclusion.

And the second corollary to that statement is, smaller clients end up with less advise, because the price is too high and because those who are providing, service to those channels cannot do favor smaller clients at same degree. And so those two realities are becoming much better understood, you can see even in the UK they commissioned the study, the tweak to look at the advise cap, has been created by changes in regulation over there, to smaller clients in particular.

So there is a lot of emerging data points that I think will help this discussion along and I really do believe Canadian regulators they are going to make the decisions.

Great. I appreciate that.

The report not saying that fee based is likely better. Although they encourage further research to figure out the full impacted in a fee based growth.

No, they didn’t quite say that. They says there is a view that fee based is likely better.

But they is actually no evidence to prove it. As stated in the summary statement.

Okay, great. You expanded your consultant network again fairly materially, and I know you had four new offices in 2015 is that a big part of are contributed to growing your consultant network and how does that work when you expand a new office do you taken an existing few consultants and sort of get them to head up a new office.

Yes. It sort of a circle if you want as we grow of course that increase of the density within our existing offices then therefore just for the sake of faith and the future at least through the addition of more offices.

On the other hand, when we add more offices it tends to help growth. And so our manner doing so is that our typical average office it’s probably somewhere in the 50% to 60% to 70% basis.

We find that to be optimal with some larger with some smaller. We can easily start an office very healthy way with about 25 or more consultants.

And so with tends to happen is in the particular regions involve we take opportunities when there is changes that management retires we give a consideration this is perhaps a good time that maybe have one more office in the area than we had before other times will decide to add another office in the particular regions in any case, we go to the nearby offices and there is an orientation of some consultants coming to the new office some staying in one there in. And at least vacancies in the offices from which they come, which then become our opportunities for those offices to expand and recruit consultants to the new office ends up with critical mass.

We’ve got lots of division directors who would love to become our regional directors. So we’ve got a depth of management they can be assigned to take on these new offices and have some driving growth.

So it’s a very good organic growth mechanism.

Great, thanks. Jeff maybe I could turn to you on the institutional front just the MD mandate was there any particular reason that was provided why they decide to move that money and is there any color around, maybe the impact that would have on your average management fee, going forward?

No, I mean they know – Steve Hawk [ph] they know him very well and his talent is – highly regarded by the industries so we had a fixed income. I think they just wanted to slightly different strategy than what we offered and also a chance to diversify against some of the assets they already have here and they made the decision.

And but it wasn’t – because of under performance at all, because you can look at the product and it was performing. So it’s was really just them deciding to diversify even other provider and they can add decision and that’s obviously there – they had a decision maker where the client, where the provider and they made that decision, but McKenzie we still have a lot of assets with them and have a great relationship with the teammates.

Your second question was?

Just the impact on your average management fee rate going forward?

Yes. I mean it would be significant they’ve sees on that type of a mandate.

If you look at up in U.S. and sort of that pricing is very low.

So the impact on our earnings and the revenue was generated by that mandate was not material to McKenzie.

Okay and then the institutional AUM that you’ve got. Can you give us a little bit, outside of what you advise for investors group.

Can you give us a bit of color on sort of – is that a few large mandates or is it a bunch of smaller institutional accounts or how many more sort of MD type accounts are there within. What’s left?

You know I said diversified, I’m not going into the name or anything. But I would say it’s a very diversified group of great ranks in the marketplace in different, some of those are power financial companies we have partnerships within some of the external.

But it’s a good mix of that and we’re actively looking for more relationships so we empowered, our strategic lines of team to find new mandates and we’re already in discussions with the number of people on those. So we see an opportunity to continue to grow that space.

But I’d say that we are diversified and that’s a concentration risk is not high in anyone to provider.

Okay, great and then, appreciate the color you gave on the SG&A side. It sounds like you’re sticking to our target at 5% growth year-over-year for 2015.

If I heard that correctly. Can you just give some colors to what was driving the elevated expenses year-to-date, is that largely investments in people and technology?

It’s just timing really. It’s – it’s not one thing, I mean – you guys cover lot of companies you see that from time to time.

But its just the timing of the first quarter, its not there is – I think we’re in the chart they will higher in the first quarter anyway. But there is no silver bullet here its just a combination of a few things its driven higher.

Okay, great. Thanks.

We put a bunch in additional operating cost on our P&L because that was – when we going down in the next three quarters. And it was lower than last year as well or so that’s relevant.

I’m sorry it was lower last year. So we are comparing to a very low number last year as I mentioned in my comment earlier.

Got it.

Yes, thanks. Jeff on your last remark on the SG&A being 5%.

Did that apply to IG as well, are you just simply talking about McKenzie?

That was just McKenzie.

Okay, okay. And Jeff you talked about the wholesaler team you did – you said you placed 50% of the wholesalers from the last six months, did I hear that correctly?

Yes.

So that would mean that you replaced over 10 wholesalers?

We added net new we added 6, but we replaced 15, 16 wholesalers.

Okay. And then for that reason is that how you’d to contacted by – just that you guys haven’t been in touch before?

No. I mean that’s more leadership and so I got a great team with [indiscernible] and they are so process oriented and they just brought a level of discipline to our execution and so every wholesalers measures, every wholesaler is trained, how to the cannibal – they’ve got demerged with products and they are motivated, they’re energized and they’ve all coming to work everyday.

So it’s just – it kind of running faster some distribution and have something that’s repeatable process that you can counter it on an ongoing basis, and t hen obviously you want great products and other resources to support them and that’s we put in place. But it’s – I’d say it’s just better execution and better talent.

Okay and then you talked about potentially diversifying your value, equities. These are still had a favor in the industry.

You talked about potential growth. Is that something that you could do in house or would have the higher investment capabilities for – to do it.

Well – I mentioned Rick Wick, he is going to be focused on building out of growth capabilities for us with his skill sets so that’s an example, we got great growth products now that are performing. So you just have to tell that story more effectively which we are and we’re focused on that.

And I’m not – no way want to takeaway from continuing to grow our value fund, because you’re important too. But from a market share standpoint I have a huge opportunity in the gross base to diversify and then when we get into market cycles where growth is usually in favorites its certainly is an impact on our Morningstar ratings and in Canada the way that the sectors each individual category works as you’ve got value, global value and with global growth we are all in the same competitive set.

And they are competitive to each other and which I'm coming from the U.S. we would have had individual for value and individual for growth.

So the Morningstar process here is little bit for assuming that you’re comparing apples to orange just really even note product structure what they are trying to achieve.

Right.

So its how do you work around that and try to find ways to make sure that your stories getting out properly. And our teams work really hard about until we don’t just rely on the stars to drive the sales we educate the advisors and tell our stories but when the Morningstars relying with the story and it’s all easy.

Then it makes a lot more expansive in terms of sales opportunity. So I think it has been something that’s been a part of our process the long time that we were oriented to work value just through acquisitions and the history of the firm.

And I have a huge opportunity for growth in the growth base so that’s exciting from my management team.

Okay. Thanks a lot.

Yes. Thanks very much.

I got in this call late, but question for Murray and then one for Jeff and maybe guys have touched upon this, but if I look at the growth in SG&A Murray on Slide 31, you got non-commission expenses up understand there is a pension issue. But there up 9.8 excluding to that it was up 8% in the first quarter kind of under the same basis.

And its continues to kind of track lower than the growth in AUM. So maybe just a conceptual question as to what’s driving that and Jeff same kind of thing and what should we be looking at in terms of the growth in these non-commission expenses going forward as it relates to growth in AUM.

I’ll summarize it Tom it is featured earlier, but the year-to-date growth in our expenses that investors group excluding the pension is about 8.9% and I identify that’s probably a pretty good indicator of what we're going to see for the year. The combination of a number of things in terms of investment in the business that we’ve been taking about through a number of quarters the fact that we've up to our investments in investment management, we've introduced as you know, rate of return reporting two years early for CRM2 lots of other product innovation that we put into place we introduced mutual funds in the July of this year and so forth we've increased our advertising and brand development issue and some other things we’ve doing it sort of behind net worth marketplace such as resources of a variety of client have been coming on stream and are being annualized, as we moved through the years.

So its a combination of all those things, fully recognized and these are very, very wise investments for the growth trajectory that we’re seeing and plan to see in the future. And so we are more related to that, the growth in our consultant network of course which has been quite expense in the last two years.

But that take some time to get productivity, before we aware of that and hence you will get a bit of a drag between expense growth and the asset level growth. But we certainly expect very good overcomes in the future.

And perhaps are not commission expenses were 74.5 million compared to last years, but last years numbers were abnormally low because of timing and I told the group earlier was that you should expect full year expense growth to be approximately 5% which is consistent with my earlier guidance.

Okay, thanks.

All right, well, thank you very much everyone we wish you all the great weekend and summer holidays with that your next orientation. Thanks very much.