IGM Financial Inc.

Paul Hancock - Vice President of Finance Investor Relations Kevin Regan - Executive Vice-President and Chief Financial Officer Jeffrey Carney - President and Chief Executive Officer Murray Taylor - President and Chief Executive Officer

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

Thank you, Michael. Good afternoon, everyone.

My name is Paul Hancock. I’m Vice President of Finance and Investor Relations.

I’m joined today by Kevin Reagan, Executive Vice president and CFO of IGM Financial; Murray Taylor, President and CEO of Investors Group and Co-President and CEO of IGM Financial; and Jeff Carney, President and CEO of Mackenzie Investments and Co-President and CEO of IGM Financial. Before we get started, I’d like to draw your attention to our cautions related to forward-looking statements on Page 3 of our presentation.

Non-IFRS financial measures that we’ve used in this material are summarized for your reference on Page 4. Finally, on Page 5, we provide a list of documents that are available to the public on our website related to the first quarter results for IGM Financial.

Kevin Regan will now take us through a summary of IGM Financial’s results and the industry environment starting on Page 7, Kevin?

Great. Thanks so much Paul.

Just a few highlights from Page 7. To start with, our operating earnings were $167 million versus $200.3 million last year and $198.2 million for the prior quarter, which resulted in operating earnings per share for the quarter of $0.69 versus $0.80 last year and $0.81 during the prior quarter.

Earlier today, our Board declared a dividend of $0.5625, maintaining the level of the dividend and this reflects the dividend yield of 5.7%, based on yesterday’s close of 37.72. And we have, as you can see on the bottom notes, I continued a fairly substantial repurchase shares during the quarter, the 104.3 million, which is returning capital to our shareholders.

Moving to Page 8, a few comments on the operating environment. The S&P TSX Composite Index rebounded from its January lows to the end of the quarter, up 3.7%.

In contrast, most major global equity indices declined in the quarter, which was compounded by depreciation and the Canadian dollar. The market volatility led to a softer RFP season this year, as many industries remained on the sidelines.

It’s useful to note that the bank channel experienced a 67% decline in net sales compared to a 40% decline in the advice channel over the quarter. And within in the advice channel itself, net flows into global balance and global equity categories were particularly strong.

So that’s the background that was informing the results for this quarter. And in that context, I’ll turn it over to Jeff Carney, who will review Mackenzie’s operations.

Thank you, Kevin. Good morning or good afternoon, everyone.

Mackenzie has continued to experience an improvement in our investment performance during the first quarter, led by Ivy, our growth capabilities, and our global and equity income boutiques. As part of our ongoing efforts to deliver competitive, consistent, and risk adjusted returns, we announced changes to our Cundill boutique that builds on our legacy of value investing.

And specifically, we hired Jonathan Norwood and Richard Wong, each with demonstrated successful track records and proven expertise in the value of investing and they will co-lead Mackenzie Cundill team. They’ve been out in the field meeting with clients across the country and have been extremely well received by the marketplace, and we think this will be a significant turning point for the Cundill franchise.

We have net redemptions trends improve in Q1 in Cundill, and this trend has continued following these personnel changes, so we are very encouraged by that. In April, we announced the launch of our four active fixed income ETFs, which complement Mackenzie’s reach and broad shelf and innovative fund lineup and the response from that has been fantastic.

This launch reflects Mackenzie Investments investor focused vision to provide advisors and investors with new solutions to drive investor outcomes and achieve their personal goals. We had the chance to ring the bell at the TSX on our launch, and we are encouraged by the purchase activity we’ve seen so far.

We announced also that yesterday that I have hired my replacement to run Mackenzie, his name is Barry McInerney. And he has been appointed President and CFO of Mackenzie.

We did a broad search, global search for talents, and and we were blessed to have some very strong candidates, and we’re extremely excited about having Barry join our team. He brings over 25 years of experience in Investment Management with expertise, both in retail and the institutional business.

He’s led BMO Asset Management in U.S. and internationally since 2009, where he oversaw more than $150 billion in assets.

And previously he was Managing Director at at Russell Investments and President of Mercer Global Investments. So he brings a very grounded, long experience into our organization, and he – I know will do a great job with Mackenzie.

Turn to the next page. I will touch on our flows.

Our mutual fund gross sales during the first quarter were $1.84 billion. That’s down 6.7%, which was roughly in line with the industry.

However, we are particularly pleased with our retail business, which was up slightly during that period. And based on the competitive landscape, I think, we had some strong outperformance as far as market share.

If you look at mutual fund net redemptions, we were $198 million, and finally our Mackenzie’s redemption rate on long-term mutual funds was 14.5%, which is – continues to be below our peer average in the industry. Turning to the next slide, our gross sales in the balanced category were $739 million, and excluding symmetry, we were up 9.1% in that category, and as you know that’s a strategic initiative that we really want to increase our penetration in that space that we are encouraged by the success we are having.

Our five and four star rated balanced fund mandates attracted significant flows of $204 million this quarter, that’s up 119% over last year, which you can see highlighted in the table in the bottom right. And then we recall from the investor’s day the presentation that we made, one of Mackenzie’s key opportunities is this penetration, and we’re pleased to see our retail team and all the work they’ve done in the market to educate the advisors starting to get traction.

The weakness we’ve seen in symmetry balanced funds has been related to lower level of activity in the bank branch channel, and that’s consistent with broad-based banks across the Canadian marketplace. Also, our foreign equity sales were up 10.1%, which compares to a slight decline for the industry as we captured share.

And this strength was led by our five star rated Ivy foreign equity and our four star rated global dividend funds. Also, new products we launched in 2015 continued to attract flows.

For example, the Mackenzie diversified alternative fund is up $44 million – up to $44 million, and our private pool assets are over $40 million. Turning to the next page.

Our total investment product net redemptions during Q1 2016 were $387 million and our mutual fund net redemptions were $198 million. Looking at the breakdown by category, income oriented net sales declined driven by redemptions from floating rate funds, which is a category that has been out of favor as interest rates have declined.

The balanced category was impacted by lower net sales of symmetry in the bank channel. However, as I mentioned earlier, flows into our balanced funds excluding symmetry are improving as evidenced by the $38 million improvement in net sales that we see.

Foreign equity net sales have improved by $123 million, reflecting compelling demand for our top performing funds managed by Ivy and global equity and income teams. On the institutional net redemptions, we are $198 million in the quarter, primarily representing $170 million redemption by a pension client.

I would also like to provide some guidance on the second quarter institutional flows. In April, we had a $420 million redemption from Cundill, as MD reassigned a severed advisor’s responsibilities to another advisor following our change of personnel we made.

We don’t anticipate any more significant institutional redemption as we go forward on Cundill. I would like to advice that during the first quarter, we were awarded a $600 million mandate to our Ivy team from a prominent European pension plan, and this award will be funded in June.

We are very pleased with the progress we’ve seen developing our institutional awareness and the team’s been working very hard over the last 12 to 24 months to build our brand and our knowledge of our products in the marketplace and it’s encouraging to see the market taking advantage of that. Turning to the next page.

As you can see, we enjoyed very strong performance in our Ivy global equity and income and growth oriented teams, and you can see that through the chart and the colors that it represents. The products managed by our Ivy and global equity income teams have also been performing very well and are attracting net flows.

You can see the value style has been out of favor, and our value-oriented teams like Cundill have underperformed the prod indexes and categories. And as I mentioned earlier, we have seen improvement in Cundill and net redemptions in Q1 in 2016, and this improvement has continued following these personnel changes that occurred at the end of March.

Turning to investment performance in our mutual funds, as at March 31, 2016, Mackenzie’s overall mutual fund performance improved compared to last quarter. One, three and 10-year quartile performance metrics improved, while five-year remained unchanged.

The proportion of Mackenzie’s mutual fund assets in four and five stars improved during the quarter to 37%, compared to 31% at December 31, 2015. Percentage of assets in five star funds increased significantly to 18.2% at March 31, 2016, compared to 3.5% at December 31, 2015.

This is the highest proportion of five star related funds, Mackenzie has had 2011 and it’s considering about the Morningstar, five star category averages of 12.6. We’re now ranked fourth in the industry on this basis, up from eighth place at December 2015.

Turning to our average total AUM and fee rates, our net revenue reflects all line items that are primarily driven by AUM levels, including our fee revenues plus our commissions. The net revenue rate on this slide represents the amount expressed as a function of our average total AUM and with 78.7 basis points during Q1 2016.

This rate fluctuates with a change in the mix of our assets under management, including asset class and client mix such as institutional and high net worth. Relative to Q4 2015, the largest part of the rate decline experienced in the quarter was due to seasonality.

Turning to Mackenzie’s EBIT, you can see as we covered on the prior page that lower average total assets and slightly net revenue rates results in Mackenzie’s net revenue decline in 5.4% relative to the prior quarter. Non-commission expenses increased 1.8%, compared to Q1 of 2015.

This is really driven by timing issues, which were largely responsible for the limited year-over-year increase. As guided last quarter, we still expect non-commission expenses to increase by about 6% in 2016, which include the annualization of new investments we’ve made within the last year in our ETF launches.

I’ll now turn it over to Murray Taylor.

Thank you very much Jeff. We go Page 19, just a quick highlights for investors group.

Again our consultant network had a record high, continued moment in our high network segment and expanding product offering and we see continued success with our Maestro Portfolio funds, coming in at above 1.6 billion at the end of the first quarter, up significantly for the end of the year. Solid investment performance and we’re going through a very significant senior management transition which I’ll comment about more at the end.

If you go to Page 20, you can see the tracking of our consulting network growth. And as I have a chance to reflect upon my retirement today, I look back to the time that I become CEO in the middle of 2014 and our consultant network has grown 66% since that time to 5321 at the end of the first quarter.

We also have a significant growth in the number of CFPs and similarly qualified financial planners in Quebec with the – designation at 1,546. But we also have 779 consultants enrolled in these programs and the total of both numbers is up 23% year-over-year.

We’re expanding our number of offices with some moves in Toronto. In the greater Toronto area, we’ll be opening three new region offices over the course of this year and that will take us to 117 region offices.

On the next Page, you’ll see a trend in sales of investment funds and you can see that gross sales during the quarter were $2.27 billion, down slightly 4.1% compared to the same period a year before. We would observe that our competitors within the banks were actually down 20% in growth sales during this period and the overall industry was down 13%.

Net sales were positive at $4.67. Just down slightly from the same period, the year before and our trailing redemption rate 8.7% continues to be an industry low.

On Slide 22, you can see the tracking of growth sales to our high network series and pricing options and you can see we have a 28% increase relative to the same quarter – relative to the prior year and in terms of the total amount of the amount of assets, we have on an unbundled fees structure. We’re now at 7.2% of our total assets, and this exposure is up 60% over the same period last year.

On Page 23, you can see a healthy increase in our individual insurance sales of close to 11%. New mortgage business is actually up 39%, compared to 2015 and that’s a combination of our mortgages that we originate as well as the all-in-one mortgages that we originate under our solutions, banking arrangement.

Mortgages outstanding at March 31, 2016, increased 8.3% over $12 billion. On Page 24, you can see the tracking of our client accounts rate of returns as you recall, we started introducing rate of return reporting to our clients last June.

We’re fully CRM compliant for all our client named business and that’s – has continued quarter-by-quarter. You can see the type of returns and we experienced across our client base in the first quarter, with a median of zero for the quarter and a range that you can see on the top chart.

On the bottom chart it more reflects on several periods of time ending March 31. You can see the one-year return was minus 2.4 for median, but the three-year return and five year return were close to 5% and 3.2% respectively.

Page 25 shows a tracking of our Alpha against benchmarks and as we have demonstrated this chart in the past, you can see the Legend in terms of green being positive Alpha and a dominant green color on particularly the one year period, but also lots of green and three and beyond. Page 26, identifies our average mutual fund assets as well as the annualized managements and administration fee rate.

You can see how consistent that rate has been through the period. We experienced a period of lower average mutual assets as the general shape of markets through the first quarter with ‘V’ shape, where the average was more effective than the endpoint and you can see the relative comparison to prior years.

In the high network series, you can see a significant increase again in the first quarter represented share at 37.8%. Looking at our EBIT, on the next page, you can – just make a few comments as we go down to page, the most – one of the most significant items would be net investment income and other.

And really there was two primary issues occurring here. During the period we had lower than the period, the year before, use of gain of whole loan sales, which have – by way of that type of funding of the mortgages we originate the entire gain at the front end.

We dominantly fund our mortgages with more securitized vehicles, which inherently have the recognition of earnings over the course of time of the mortgage held. And so because more of our mortgages went that way than the whole loan sale during this particular period, we had a lower amount of earnings recognition, very much of timing issue by putting more into securitization of course, we supplemented future periods compared to the whole loan sales approach; Secondly on our hedging activities, we experienced some fair market value adjustments which were negative during this period.

And as you know, they move negative and positive from period to period and again it’s essentially a timing issue. And then a very slight charge because we had a very successful period from a sales point of view and we incur a little bit extra cost in terms of origination cost that flows through in those periods.

So that’s the essence of the changes on the net investment income line. I’d like to speak for a moment about the non-commission expenses line.

You can see that the increase compared to Q1 of 2015 was up 11.3% and this is largely due to the fact that true last year and period of last 18 months, we’ve been increasing our capacity in a number of areas and increasing our cost base in a number of area very essentially as I talked about in prior calls. As much of – many of those activities have come to fruition and are – in a more of a run rate environment, the increase to Q1 of 2016, compared to Q1 of 2015 is higher than the expectation we have for the full year.

We also had a degree of timing of cost in the IT area. Our expectation continues to be that year-over-year we will come in under 8% and you should expect a drop in the percentage quarter-over-quarter as we move through 2016 in accordance with that mathematics.

The next slide deals with some recent regulatory developments and as you may have been following the CSA put out consultation paper 33-404 last week. There’s been much discussion about the concept of that interest and related topics this was a fascinating report in that it continued the consultation process that the CSA is well known for.

It did not introduce any regulations, it introduced in fact multiple approaches to the issues, it identified the fact that various jurisdictions had different view points. And in particular by a majority of CSA jurisdictions indicated a concern that whatever they do it should not lead to unintended outcomes.

And so again a very thoughtful signal that they will think this through very, very carefully. And they will take input for the next 120 days and there will no doubt be further sets of dialogues coming along.

So we wanted to point that out to you. I would also say as we point out on the slide that the Court for the last four or five months Jeff Carney, Rhonda Goldberg, and myself along with some others have been visiting with the chairs of the securities commission in the dominant jurisdictions as listed here.

And we have been spending time with them, and their senior people and having a very good dialogue about the industry, about our companies, about future regulation and we feel that that’s a very beneficial process that we have done over this period of time. And we think it will bear fruits in terms of an ongoing dialogue and ongoing good regulations.

On next the slide, you can see a layout of the transitions of leadership and I’m very, very pleased to have spent this last 40 years with the power group of companies and last 15 here at Investors Group and the last 12 as CEO. And as we announced in March Jeff Carney will be taking on the role of President and CEO of IGM financial today.

He will also be and is now the President and CEO of Investors Group Jeff previously announced that his successor at Mackenzie has been named and we’re very pleased that Barry McInerney is taking on that role and with a tremendous background. And so as we move through these transitions, we feel that this will be very, very seamless and in fact very exciting for the organization.

My wife and I are looking forward to our time of retirement with great anticipation and I wanted to take this moment to thank each of you in the analyst community for your thoughtful consideration of our company, the challenging questions that you’ve asked thanks for the easy questions from time to time. And no doubt we’ll have a few today, but I want to thank you for your serious coverage of our company and this industry.

And on that note I will turn things back to Jeff.

Thank you, Murray. And I’ll just conclude with some observations about sort of where IGM is today and the honor I have of leading this company going forward.

I think we’re uniquely positioned with our broad exposures to Canadian wealth management industry and our deep understanding of Canadian investors. We have a broad reach into so many communities across this country and deep legacy of being a significant provider to this market.

We, benefit significantly by being part of the power corporation, which enables us to have a long-term perspective and we benefit through the relationship with other power companies. Sometimes that’s strategic learning, sometimes that’s working together and partnering on products and capability, but it is definitely an asset that a lot of our competitors don’t have.

We have strong brands that are well known and trusted by Canadians that we continue to leverage and build on. We have strong leadership teams with broad experiences across the financial industry in Canada and U.S.

which I think gives us a North American perspective and I think that helps. We have tremendous investment skills that are providing competitive risk adjustment returns across both organizations and we’ll continue to harness the quality of those individuals.

And then we’ve been investing in the future as you know and that is laying a foundation for more growth over time and a better competitive offer in the marketplace as we go forward. And I know that those investments will pay long-term returns for shareholders.

So to summarize I truly believe our best years are ahead of us and that we’re uniquely positioned to capitalize with the leadership teams we have and the resources that we have to compete and I’ll spend the next few quarters getting to know the IG team. And I’ll be looking forward to providing updates on our quarterly calls as I learn about the varied world of Investors Group and any thoughts that I going forward on how we’ll evolve and as we move forward.

So on that I’ll stop and ask the operator to open it up for questions from the audience.

Good afternoon. Hopefully my questions would be skewed towards the easier side here.

First question just going back to the noncommissioned expense discussion where it sounds like the 8% still reasonable. Just wanted to know and Jeff wondering if the 6% is still a good growth number to use for 2016 if you can elaborate on timing that as well?

Yes, we had some one time issues to the positive in the first quarter and that will flatten out over the year so the 6% is the right number to use.

Okay, and then timings should that be pretty much spread out for the rest of the quarters?

Yes.

Okay, and then second questions. So looking at the cash balance here it’s the longest time IGM has been sitting at roughly billion of cash now it’s at roughly $600 million lowest level and number of years.

So partially I think that’s from buying back stock. But if you spend just over $100 million this past quarter rest was in mortgages this quarter.

Any other drivers are missing and how low are you willing to bring down the cash level here?

You’re right the major drivers of those two elements how low there’s a number of capital needs we have regulatory capital operating capital. There isn’t a specific number that we sit and say no higher than this, no longer than this.

We manage our cash the way we’ve described in the past very opportunistic, we need buybacks was one of those places we took advantage over the last little while. So even just this year we were pretty heavy in some buybacks and so far previous years as well.

You’ve seen that. So it’s a moment to moment discussion amongst management team as to where opportunity lies.

So you were right in terms of drivers and we do monitor the cash position on an ongoing basis.

Okay, and then next question on the industry flows that’s been weak year-to-date just want to hear your thoughts on the outlook for the balance of the year. And then maybe for Jeff and then Investor Day you’ve targeted kind of positive flows in 2016, but obviously the environments bit more challenged now.

Can you give us an update on that front as well?

So, it’s Murray I’ll start it and then get Jeff to add to that. From our advantage point as we look at the sales flows.

We see two dominant factors so far this year one of which we think will continue, the other it depends. So the two dominant flows are obviously the markets were quite jittery in the first part of the year.

And part of last year and the people were paying attention to the headlines and the changes in the stock markets and so forth as these were perhaps somewhat disconcerting for part of the investor community. And so the total amount of gross sales into investment funds for example was depleted to some degree, because of that through the period of time.

I would suggest to you that that depletion looked at both 4% or 5%, 6%, compared to last year. But the other big dramatic factor I would suggest to you and I think it’s one to watch and they’re looking at is a 20% drop in gross sales amongst deposit takers.

So potentially all the banks prudential regulation through Basil III has introduced a an inherent preference at the banks for holding deposits, retail deposits to manage their capital requirements. And so we have seen over the course of many years a significant movement from balance sheet product to mutual fund products within the banks and it in fact speaks to a good piece of why the banks have appeared to be so successful in the mutual fund business.

And I would suggest to you that we see in the beginning of a new trend and that new trend will likely continue to exemplify itself in a number of ways. Whereby the flows may not be quite as strong in the banks within the mutual fund industry and for those very structural reasons.

So I leave that with you for your own examination into the future, but it will be interesting to see how that plays out the rest of this year has been very consistent in January, February, and March to the end of March the banks were down 18% sorry at the end of February they were down 18%, the end of March they were down 20%. So it wasn’t just the January type of phenomena.

Yes, and my comments would be I check sort of flows in the industry and all I can do is try to improve our offer every day. And so when I look at our competitors right now there’s a lot of firms out there that are struggling and I think it’s created a great opportunity for us, because as you know we’ve been in a transformation road here for about three years and I’m handing this over to there it takes to the next level, but I don’t think there’s a firm in the industry who has more momentum than we did.

And that momentum with the increased number of wholesalers we’re up to 39 that momentum with the new product launcheswe have that are getting traction in the marketplace so most of our active ATF effort, where we have more to come after our initial launch. And then and what’s going on inside our balance funds, the change in Cundill.

So as I can’t sit here and say what’s going to happen for the rest of the year in the flows of the industry. But I feel that we have momentum building, across our performance our product the teams and the quality of our offer in the marketplace and that should serve us well.

So Jeff just elaborate on that I was actually my question was towards more McKenzie like I think and then yesterday you targeted kind of in 2016 you hope to see flows turn positive does that target still stand and this kind of more challenged environment?

Yes, I mean I don’t think we can give up on a year in May as first part is the year is an important part, because the RFP season, which didn’t really develop this year and so it’s going to be harder we see that all as a result of not having the industry flows that we normally are used to. But keep working on everything we can do to try to get there.

Thanks and just lastly just the numbers question you mentioned the institutional redemption from MD that was 420 and the IV net inflow was at 600 that you said?

Yes.

Okay, perfect that’s it for me and Murray best of luck in your retirement.

Thanks so much.

Hi, good afternoon. Just my first question was on the changes that you guys made at Cundill it was done at the end of Q1 if remember on the timing there.

Just wondering if you have some color on what you’ve seen I see you reported your April numbers, but on the both on the intuitional and the retail side whether now there’s been kind of client feedback potential for redemption on the intuitional side and what’s been observed so far in the retail side?

Yes, on our institutional side what we had we don’t anticipate any major redemptions for Cundill so that’s encouraging. We’re really pleased with the quality of the PMs that we’ve brought in I think that will be down across the marketplace and it’s very well received by the market that these guys are very strong portfolio managers they’re working really well together with the team and we’re encouraged by the early results that they have been able to generate as well so it’s quite as good a situation as we can ask for the transition Cundill to the future and we’re going to do everything we can to make sure that Cundill gets back to the assets it had before and keeps growing from here.

Okay, and then just the next question I had was not that in a multitude is because of how the markets are, because adding on to Gary’s last question around trying to get to positive net sales for Mackenzie for the year. Just taking a looks at how the sales are happening in your different kind of categories if you take a look Q1 you could just kind of argue was really Cundill was the drag on the overall.

Is that kind of how to think about how you could get to a positive net sales thing in terms of Cundill struggled for a little while and it takes time maybe with the new team to try and get the sales traction there that it’s really these are other category or the other families and teams that is they may need to do to do better to offset what may be coming out of Cundill for the next little bit?

Yes, I mean I think what’s encouraging our growth sales has slowed down in Cundill, but the redemptions have improved to overwhelm that slowdown. And so we can start doing traction and grow sales that story is going to get really compelling and so we just had gross sales so we met with all the advisors we could find that on the Cundill as well as good advisors to share that introduce the team and we did a whole roadshow on that and they’ve been extremely well received and all the feedback has been really positive.

And again it’s going to come down to sort of how the market play out some different styles. But I think the way that this team manages Cundill is also going to improve the risk-adjusted returns, because I know Cundill has been pretty volatile in history and so in the way we’ve constructed brought in the talent in a way we’re managing that product and we expected that volatility will still be – there still will be some volatility in product, but it will be more drawn in and so with that we’re encouraged by the early start of the team.

Okay, and just one last question for me taking look at the distribution income revenue line for Investors Group do you have kind of an idea in your mind obviously you’re handing the torch over to Jeff, but how you think about what that growth of that could be on an annual basis and then also from the seasonality standpoint just generally speaking how to think about, kind of which quarter is tend to be stronger and few weaker versus others?

Yes, so our distribution fee line contains a few items one of them is redemption fee so that was around the tight time more difficult market sometimes with a little bit more activity although as you can see by the aggregates our redemption percentages came fairly stable. The other dominant component of it is on mutual fund revenues and so that would other than mortgages of course, which is isolated within the net investment income line, but insurance in particular would be a dominant force there and we’re seeing good growth in insurance.

And we anticipate that to continue to accelerate actually, as we move through the year. There’s a very strong interest in our financial planning and distribution world that would suggest that a lot more could be done in terms of insurance opportunities.

And so I would say that will continue to keep that line moving upwards. I would not start to speculate on amounts.

But I think you will see that dynamic. Now, of course, some of that is offset by non-mutual fund commissions.

So it’s a net of the two that becomes a valuable item on the income statement.

And then – so I guess from a seasonality standpoint are there quarters that tend to be a little bit stronger than others kind of in the aggregate?

It varies. I would say that like most of the sales patterns the third quarter would be a weaker time, obviously summer vacation, all those kinds of things.

Also, in a normal period, what tends to happen in the first quarter is that you’ll get more investment fund activity and less insurance activity. But then you get into more periods like we’ve had.

And this last period where there was a little bit more hesitancy on the part of some. That usually reads to higher than usual insurance and mortgage activity, which is what we’ve been seeing as well.

Okay, great. Thank you.

Thank you. Good afternoon.

Thank you, Murray for making us available for questions on day one of retirement.

Thank you.

So I wanted to ask you, first wanted to start with on the growth of the unbundled product. So coming off a little base, but very impressive growth numbers there.

So just wondering from a sales perspective how you are driving assets towards those products?

So it’s entirely through availability. So there is nothing that we are doing that is telling people you should do it this way.

And so the availability has improved and increased really in two or three ways. The products that we have – that have an unbundled fee structure are a profile product, which has existed for a long, long time, which we developed further, and just a number of product features around it in the last couple years, and so it’s been getting a lot of traction.

And then the other is our Series U, which is basically almost all of our funds, where you have over $500,000 of household assets, you can access Series U pricing, which is unbundled in its nature. And so we are finding that our growth in activity in the $500,000 and over category is leading to a growth in the suitable products that have a natural fit with that.

So a lot of it is just moving down the path of that natural consequence. And as we talked about at Investor Day, we have a five – I’m going back to the Investor Day numbers now, so if you want to ground it on dates, 5.5% market share across the entire industry of all choices, deposits, mutual funds, the whole nine yards for households under $100,000, we have about 2.5% market share in that zone that goes about in that $500,000 to $2 million range.

And that’s the category that we have identified as a very important sweet spot for the company in terms of moving up into that marketplace and the financial planning approach, and we are finding that to continue to be extremely successful. So it’s that broad spectrum of focusing a little more in the high net worth and continuing to do and gain market share in the smaller amounts.

But at the same time that then leads to more use of the unbundled pricing.

All right. And then would there be an all-in pricing difference between Series U and Series J, or is it more a matter of preference for clients in terms of how they’re charged?

It’s virtually a matter of preference in you how they’re charged.

Okay, great. And then wondering, Murray, if you could share your thoughts with us on the proposed measures, or at least discussion paper, I guess, I should say that came out of CSA, particularly on the targeted reforms in terms of KYC, KYP, et cetera, just wondering, if you have any initial thoughts there in terms of what’s being proposed?

Yes. So there’s a long and healthy discussion on these topics and to offer some suggestions and observations.

I would start by saying that at one point in the discussion, you will recall the term statutory best interest. Well, even the most aggressive suggestion in this paper has eliminated the term statutory and said, if there’s going to be a best interest standard, it’s best interest regulation.

And you might say that’s semantics of lawyers, that’s a very significant move. So even in the Ontario recommendation, shall we say, within this paper, there is a significant pullback from the concept that had been floated by some and in prior papers on the topic and so forth.

Then you get into the level of detail. And the level of detail is not particularly helpful in concluding upon where things may go, because there are a lot of options presented on titling.

Three different options that are presented and laid out. And if you happen to like option one, then you get quoted in the paper and say this is what’s going to happen in the world.

Well, it just means you didn’t look at option three which was completely different. And so, I think those kinds of things definitely need the period of dialogue and understanding what the implications are going to be.

I don’t know how they’re going to deal with this whole issue of Basel III that I raise. And you might say what’s that got to do with anything.

Well, it’s got a lot to do with everything, if what you’re doing by way of this regulation is with the best interest of the clients in mind, because the best interest of the client is not being served by simply regulating or heavily regulating or increasing the volume of regulation on certain products, which are sitting side-by-side in terms of choice for clients and nothing’s being done to expose the fact that a five-year GIC has zero liquidity, and so has harmed financial flexibility for people at older ages. We’re wondering who is going to bring out those papers and talk about them.

But as we’ve had a chance to talk to regulators about unintended consequences, we said to them, well, did the people sitting around the table in Basel, actually say to themselves, look, we’re going to find a way to encourage Canadian customers of banks to move their money from long-term investments in the equity markets into GICs or daily interest accounts. And we don’t think they said that.

But that is clearly the outcomes that are coming from their decision. So I use that as a good example and we’ve used this as an example of unintended consequences.

And so we’re very confident that that dialogue will continue and a lot of these specific areas that are talked about will go through the natural massage, they’ll go through the natural practical circumstances, what is that going to do. There is papers yet to come out that they’ve talked about, of course, on you mutual fund fees and we are interested in sort of where all that’s going to go.

We’ve been sharing and demonstrating to the regulators on, for example, our deferred sales charge product that Investors Group and how we give a lower fee to our clients who choose that route that it’s a client economic choice. And so we are doing that in the client’s best interest.

And so those kinds of things will come out as the details start to get nail down And again, maybe I’m going to the high level opinions as opposed to specific ideas that are presented there, but I think that’s what’s going to prevail and we’re very pleased with that process.

So these are three points very intersecting one, but also interesting that you bring up the discussion of DSC, do you think that’s something that the regulators are contemplating in terms of potentially banning DSC?

I don’t think so. I think there is a recognition that for older clients it may not be the right solution.

And, in fact, we’ve been having conversation with them to say, well, that’s all finding good, if you charge the same price for your DSC. But as soon as you say, wait a minute, we’re offering a client a lower price, if you choose DSC permanently for the entire life of your assets on our management fees and related management expense ratios, that changes the conversation manfully And so that’s an important factor to keep in mind.

Investors Group has quite a block of business within those programs and we believe we’ve been well listened to on that in terms of that important information. So if you just broad bush DSC and say all it, it’s a difference in how commissions are paid and then there’s an invoking of redemption fees for clients, you can easily get down the path that says that may not be the best for a lot of clients.

But when you say wait a minute, we are giving a lower fee permanently on these assets to the clients who choose to stay with us, that becomes a very, very different proposition. And in fact, even on the question of older clients and how they should be treated, we would argue that just because you’re in your 70s, that doesn’t mean that you want to pay a higher price.

And so our clients would say well, how come you won’t give me the lower price? Isn’t that age discrimination.

So that’s the kind of conversation we re having. So I don’t mind bringing it up at all, because that’s the kind of conversations we are having.

Okay, interesting. Last question related to the cash flow statement seeing significant pickup and investments both in capital assets and intangible assets.

So just wondering if you can quickly run through what those – what exactly those investments are?

Okay, on the capital side – it’s Kevin. On the capital side, this is primarily facilities related, Murray mentioned earlier though that’s on the come new offices in Ontario.

Over the past while you’ve heard and seen us describe new offices being built out as we increased the volume of consultants across Canada. There’s also obviously tweaks within the head office facilities at IVC, Investors Group, Mackenzie as we added staff and as you have to make sure you remain contemporary.

So that’s primarily facilities. And intangibles is the investment in software.

When we talked about that at Investor Day, these are tools and mechanics that are being put in place, this is primarily the consultants, either investors who or advisors at Mackenzie context with respect to tools to system and inserting their clients. So consistent with last call’s conversation, that’s the nature of those spendings.

Got it. Thank you.

And all the best, Murray.

Thank you so much, Paul.

Thank you. Good afternoon.

I’ll start – on the Mackenzie side, Jeff just the decision to start with line up on fixed income ETFs, just maybe a little bit of color and how you see those being differentiated from what’s out there on the market today.

Yes, we did some and – we brought into lead the effort, did a lot of research to figure out where we should launch first. If you look at that market, fixed income isn’t that well represented, and so we looked at an opportunity with Steve – and his team, fixed income organization and felt was the first place to bring our products out.

We’ve been going around visiting with a lot of the IROC advisors and reception’s been very positive. We started to get some early assets coming and we’re just encouraged by you the start.

But it was really – we felt that was an underserved part of the market at this point with the quality of talent that we brought. The pricing is not compelling.

Okay, great. And should we expect further product launches this year and anything that you can speak to at the moment or is it too early?

I can talk about it. We are going to be launching two new products in June, and we’re working with third-party that we’ve identified and we’re excited about the skill set they bring.

It’s a very unique product and we’ll share more with you as we get closer to the launch.

Great, thanks. Jumping to Investors Group, Jeff, I’ll stay with you – just can you give us an early overview of what you like about the platform and where you see some opportunities for improvement?

Probably I’m not going to go too deep into this today, but it’s a – I was talking to Murray about this the other day, I mean it’s one of the most recognized brands in financial services in Canada. So the breadth of its awareness and reach is in every community in this country.

And so that is hard to replicate. The foundation of financial planning as the core, the value proposition that Murray led is something that I’m incredibly passionate about as well.

Both of us are very aligned on this. And we’ll continue to invest in that and the skill sets of the advisors and evolution of their resources, so they can continue to enhance us as we go forward.

And then I think the momentum that’s already in embedded in the model with the investments that Murray and team has made over the last few years is certainly giving me momentum as I enter it. And it’s up to our team as I learn more about the model, because I’ve always listened on the calls with you and I’ve seen Murray at the Board meetings, but it will be just different when you’re actually running the business.

So what I plan to do is spend early months just getting out in the field and talking to the advisors and leaders of all the regions and really deeply understanding what they’re seeing and what the advisors are seeing and learning from them and as I get those observations similar to when I took over Mackenzie I’ll come and share those with you and from there we’ll see where we go and – but I feel very confident in the strategy that’s already in place and there is opportunities for hopefully for me to add more to that as we go forward.

Okay, great. And then one thing you did at – and I appreciate – it appears like a different mandate where you came into Mackenzie there was much more about turning around the business, but one thing you did at Mackenzie was you looked at the fees relative to sort of the products relative to the marketplace.

Is that something that you anticipate during the Investor Group?

I’m going to come in and look at everything, honestly and ground myself in the facts, and if I think something’s inhibiting our ability to drive more growth or get more referrals from clines or whatever else we need to do or enable advisors then I’ll come and share that with you and I think Murray’s done a lot of that already. And so I’ll be looking for anything else I can find and we’ve had different experiences in our careers so maybe I’ll see something that Murray didn’t see.

But I get the benefit of all Murray’s and then hopefully I can add some of my own on top of that. But I think we’re sitting on an incredible resource that’s built for more assets and anything I can do to enable the advisors to get and I’m going to do.

Okay, great. And Murray all the best for your time, thank you.

Thank you.

Good afternoon guys. Just on the SG&A guidance for 2016, either for Investor Group or Mackenzie, if that the markets remain volatile and there’s a continued net redemption trend over the summer is there any leeway at either entity to lower variable cost and kind of have lower run rate for 2016 or is pretty much kind of set right now with the current environment?

There is certain costs that are pretty fixed through year and then there’s some variable along the way that you can work with, discretionary technology spending would be an example or advertising spend but a lot of it is pretty much baked into the year and it’s investment process. But if we had to find money, I’m sure we can find some money in some place.

But I think we benefit with by having a lot of shareholders dollar and if they may get everything to do for long-term then we think it’s an advance for us when the markets are little more choppy because we have the resources to invest and that should be a big differentiator for us.

Okay. And Jeff, just going back to the income oriented category on Mackenzie, you mentioned the floating fund had a pretty big kind of attribution to the net redemption.

Can you quantify that for us? Just want to kind of get a sense of – if you take a floating, how the rest of the category did relative to your asset class category is taking place?

So obviously we were at solid across the rest of the platform. There wasn’t any – with the rest of the mandate that they have and floating rate has been a little challenged from a currency perspective.

But the underlying performance is still very strong.

Okay, great. Thanks a lot guys.

Yes, thank you. Good afternoon.

Murray thanks for your comments on the best interest standard proposed in the recent CSA consultation paper. And other – I think proposed in the paper was that firms must disclose the clients that their product list is restricted to proprietary funds, and that this could impact suitability?

I’m just wondering how you see this impacting yourselves and perhaps the banks going forward.

Sure, thanks Tom. I would put that again in a category of this, some idea is that are being floated that need to be stress test and assume there is lots of conversation there about titling around proprietary and again there is several options that are presented.

I think understanding fully how those disclosures are to operate and how the various models are operate. The one of the messages that we’ve been hearing from the regulators is that there is no intention to disrupt current models in Canada.

There is an intention to refine and help and – and so forth. And so I do not expect that the outcomes of all of this is going to eliminate models or eliminate complete approaches.

But they will need to be an understanding of how each one fits and what the ultimate regulations are going to be, and that’s going to be again the passage of time and passage of multiple reflections on these topics and again it’s a little too early to come to – at this point or exactly how we and others in the industry will respond to the commentary. But certainly when that happens those comments will become public and you’ll get a clear impression of it.

[Indiscernible] see it as leading to an entire open architecture system eventually down the road?

No in fact I will take the reverse, I would say that there was a complete recognition of proprietary and they’re struggling without – within the content of the sprit of what they’re trying to accomplish. And I wouldn’t say that they got it perfect in any way at this point.

But the fact that it [indiscernible] conversation and that it’s been floated and say an issue of the needs to be [indiscernible] with. I think is actually the powerful signal.

Okay and congratulations on your long clearer deposit and enjoy your timing.

Thank you so much.

Okay, thank you Michael at this point we’ll end the call. Thank you everyone for your participation we wish you a great weekend.