IGM Financial Inc.

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00:42 Thank you very much and good morning everyone, and welcome to IGM Financials’ twenty twenty one third quarter earnings call. Joining me on the call today are James O'Sullivan, President and CEO of IGM Financial; Damon Murchison, President and CEO of IG Wealth Management; Barry McInerney, President and CEO of Mackenzie Investments; and Luke Gould, Executive Vice President and CFO of IGM Financial.

01:07 Before we get started, I'd like to draw your attention to our cautions concerning forward-looking statements on Slide three. Slide four summarizes non-IFRS financial measures.

And on Slide five, we provide a list of documents that are available to the public on our website related to the third quarter results for IGM Financial. 01:26 And with that, I'll turn over to James.

01:29 Well, good morning, everyone. I'm going to start on Slide seven, highlights for Q3.

I would start by saying that strong operating momentum is translating into strong earnings growth with contributions from all business segments. 01:47 We achieved record high AUM&A of two sixty five point two billion dollars in the quarter, driven by strong net flows and more modest client investment returns this quarter.

We also experienced record high investment fund net flows of one point seven billion dollars and total net flows of one point nine billion dollars which include record highs for both IG Wealth and Mackenzie. 02:14 And following the second quarter’s record high EPS, I'm pleased to report a new record high in the company's history of one point one three dollars for this quarter, up twenty six percent from adjusted EPS of zero point nine zero dollars last year.

Finally, the IGM board declared a common share dividend of fifty six point two five dollars per share, which provides an attractive dividend yield of four point five percent. 02:41 Luke will address our thinking around future dividend increases in more detail in his remarks.

Overall, I am focused on ensuring IGM has an appropriate level of capital allocation of flexibility and a clear path to sustained dividend increases as our earnings continue to grow. 03:03 Turning to Slide eight on investment returns, markets were a bit mixed in Q3 where we saw most equity markets declined slightly during the month of September.

Overall, IGM average client investment returns were positive zero point five percent in the third quarter, and seven point eight percent year to date September thirty, twenty twenty one. 03:27 We have since seen markets and average client investment returns rise in October, up two percent in the month, which is a good start for the fourth quarter.

03:37 Turning to slide nine, third quarter long term mutual fund net sales were twenty four point five billion dollars for the total industry and nine point nine billion dollars for industry asset management peers. Following a record Q1 and Q2 full year twenty twenty one is shaping up to be the best fund industry net sales in Canadian history.

04:04 Turning to slide ten on IGM’s results for the third quarter, average AUM&A of two sixty seven point four billion dollars increased seventy two point five billion dollars or thirty seven percent year over year, including approximately thirty billion dollars related to the acquisition of GLC and Greenchip, which closed in December of last year. 04:28 As I mentioned, Q3 twenty twenty one EPS of one point one three dollar is an all-time record high and is up forty one percent from last year and twenty six percent on an adjusted basis.

As a reminder, adjustments to twenty twenty Q3 earnings included the gain on sale of personal capital, offset by restructuring costs related to our technology transformation and acquisition of GLC. 04:58 Slide eleven then highlights net earnings contribution from each of our segments.

I'm very pleased to see that IGM’s year over year increase in net earnings has been driven by strong results across all of our business segments. We're seeing strong earnings growth at our operating companies, including IG Wealth, IPC, Mackenzie, and the same holds true across our strategic investments.

You'll hear more on the strong fundamentals of these businesses in remarks from Damon, Barry, and Luke. 05:34 Slide twelve, similar to the earnings growth story, we're seeing strong momentum and record net flows across all of our wealth management and asset management segments.

05:46 And with that, I'll turn it over to Damon.

05:50 Thank you, James. Good morning, everyone.

Turning to Slide fourteen and IG Wealth Management’s third quarter highlights. We entered the quarter with AUM of one hundred and fourteen billion, it's an increase of one point six percent during the quarter, driven by record high Q3 net inflows of one billion dollars and Client investment returns of zero point seven percent.

06:08 We also experienced strong net sales in the IGM products of six forty one million. Our strong momentum continued in October where we had another a record month with net inflows of three twelve million dollars and net sales in IGM managed products of one hundred and seventy one million dollars.

This represented the twelve consecutive month of positive net sales in the IGM products and the thirteenth consecutive month of positive net flows. 06:32 As I commented last quarter, we continue to see significant positive impact from our business transformation efforts to enhance our advisor and client experience, and we're certainly not done.

This quarter, we partnered with CapIntel to implement leading technology to help our advisors execute on client investment plans, including client facing proposals, built-in compliance support. 06:56 The partnership is designed to help drive adviser efficiency, improve our client experience, and allow us to meet the new client focused reform requirements coming in January.

07:06 We're also proud to have announced the launch of our new IG Climate Action Portfolios for doing our work ESG and adding to our strong roster of managed solutions. Finally, efforts to enhance the IG Wealth Management Solutions are paying off with forty seven percent of our AUM either four or five star and eighty percent of our AUM rated three stars or better.

07:29 Turning to slide fifteen. You can see the very strong results of the first ten months of the year, including October’s record debt inflows of three twelve million.

Twelve month trailing line chart on the right continues to demonstrate the clear and evident momentum in our total net flows and net sales into IGM products. 07:50 Turning to slide sixteen.

Q3 record high gross inflows were up nearly fifty percent year over year. On the line chart, you'll see our twelve month trailing net flows rate as it now reached three percent, and our client net inflows of one billion dollars are broken down in more detail in the net flows table, where you can see significant improvement in net sales into IGM products of six forty one million.

08:15 Like I have in previous quarters, I'll use slide seventeen to speak to the mechanics of our AUA growth and net flows by investment product category. Starting with the second column on the left, you can see that our Q3 net inflows of one billion dollars were primarily made up of six sixty eight million dollars of cash and short term savings and three thirty nine million dollars of third party in-kind transfers from other dealers.

08:38 Third column showed the significant outflow from these categories that resulted in net sales in the IGM Managed Solutions and Mackenzie funds totaling six forty one million. We expect to see this clear momentum continue as we acquire new client relationships and we work with our existing clients on comprehensive financial planning in delivering high quality managed solutions.

09:00 Turning to slide eighteen, similar to last quarter, you'll see significant improvements in our advisor network productivity, a key KPI for us for both our new advisors and more experienced advisor practices. We are seeing investments over the past several years paying off and we continue to highlight some of the initiatives which are seen on the right that have attributed to the increased productivity.

09:24 On slide nineteen, we demonstrate another strong quarter in acquiring new clients over five hundred thousand. Similar to Q2, we had four hundred and forty three million dollars in growth and net inflows from newly acquired clients over five hundred thousand dollars, which represents a sixty seven percent increase year over year and nearly a five hundred percent increase over the past five years.

09:46 On the right hand chart, you can see our increased focus on the mass affluent high net-worth segments along with a reduced focus on the mass market as it resulted in a trailing twelve months lows of over one point six billion. 10:00 Turning to slide twenty.

This highlights our new suite of climate action portfolios that provide clients with the opportunity to both support and take advantage of the global transition to net zero emissions. 10:14 Our new portfolios are aligned with the goal to reach net zero emissions by twenty fifty.

The portfolios will invest in both equity and fixed income securities offering our clients a suite of single solutions addressing different investment outcomes from protecting capital to providing income, to a focus on long term investment growth. 10:35 Portfolios will allocate investments to one or more climate related approaches, which include best in class companies with leading climate practices, thematic allegations to green solutions, lower admitters of GHD emissions, and the employment of stewardship practices to prioritize climate policies and outcomes.

10:55 With these portfolios, our clients can feel confident that their investments will strive to positively impact the world around them, while taking advantage of emerging investment opportunities in the sustainability space. 11:08 Before I turn the call over to Barry, I'll quickly touch on the positive impact of our ongoing efforts to further enhance our investment products in Managed Solutions on slide twenty one.

11:18 I mentioned on our prior call, our recent expansion of iProfile to include new private market investments, which is one of the many actions we've taken to revolve our investment product offering, which we believe is now industry leading is now being recognized as both a strength internally by our own measures and by third party through the third party dealer report card survey conducted annually by the investment executive. 11:47 I'd also like to highlight our strong investment performance as measured by Morningstar.

As of September 30, we had forty seven percent of our assets rated four or five star and eighty percent rated three star or better. Given where we started the year, with seventeen percent of our assets rated four or five star, we're pleased with our trajectory as it ranks us among the top firms in the industry.

12:09 Lastly, we created and filled a new role of chief investment strategist for IG Wealth Management with the hiring of Philip Petursson. This important new role reports directly to myself, and will lead our thought leadership both, internally in the organization with our advisors and high network clients and externally with the media into all Canadian.

This is an ideal complement to our comprehensive financial planning approach. 12:36 The IG edge stems from our ability to build long term stable relationships with our clients and our expertise in building, monitoring, and executing personal financial plan that leverage well-constructed managed solutions.

Our managed solutions are built around leading global asset managers that focus on both public and private asset classes. And all of this is supported by valuable insights on the capital markets and global economy.

13:05 We are excited about what we're able to bring to the table today and how it's allowing us to compete. And we have even more plan for next year so stay tuned.

13:13 So with that, I'll turn it over to Barry McInerney.

13:18 Thank you very much, Damon, and good morning, everyone. I'll take us to slide twenty three to review Mackenzie’s Q3 results.

Total AUM reached a record quarter end high of two hundred three point three billion dollars at September thirty, up point eight percent during the quarter with slightly positive capital market returns and continued strong net sales. 13:39 Q3 marked our twentieth consecutive quarter of positive retail investment fund net sales and total net sales were seven eighty two million, a record high third quarter.

Mackenzie’s momentum continues to be supported by both mutual funds and ETFs and has diversified across all major asset classes and categories. 13:58 We continue to gain market share from competitors in the Canadian retail channel and we received the twenty twenty one Environics Advisor Perception Study results, which also highlighted Mackenzie’s leading market position across all dimensions important to Canadian financial advisors, including another year over year increase in advisor sales penetration.

14:20 During the quarter, we also launched a number of new products targeting the retail segment along the five themes or growth catalysts we've identified previously. Finally, we were thrilled to announce earlier this week that Mackenzie has joined the net zero asset managers initiative, building on our existing strong commitment to climate.

I'll speak more to these last two points on the coming slide. 14:44 Turning to Slide twenty four, the strong net sales we reported on our last call has continued into the third and fourth quarter with our investment fund net sales remaining at nearly seven billion dollars on a twelve month trailing basis.

14:57 Given the very strong Q4 results last year, the comparative period for October and the remainder of the fourth quarter of twenty twenty one will be a very high bar. We were pleased though with October investment fund net sales of two eighty two million dollars reported earlier this week.

I should also mention as you review October sales that total net sales were impacted by net flow of about three fifty million dollars from a single institutional account. 15:23 Slide twenty five summarizes Mackenzie’s Q3 twenty twenty one operating results.

Retail mutual fund gross sales increased twenty four percent year over year. Mackenzie continues to gain market share as demonstrated by our ten percent long term investment fund net sales rate as of September 30, and fifty one percent of Mackenzie’s AUM rated by Morningstar were in four or five star funds and seventeen of our top twenty funds rated four or five stars for Series F.

15:53 Slide twenty six shows our retail mutual fund AUM investment performance and net sales across our investment boutiques. We continue to see strong overall performance in our growth oriented boutiques, while our global quantitative and multi asset teams have delivered strong outperformance over the past six months.

16:11 Our strong retail net sales are coming from a wide variety of boutiques, including equity, fixed income and multi asset teams and our third party managers category, which includes China AMC has also attracted strong inflows. 16:26 And finally slide twenty seven highlights the growth catalyst we’ve identified at Mackenzie that are reshaping the global asset management industry.

This quarter, I'll provide a few highlights across three of these themes, sustainable investing, alternatives in China. 16:41 Our momentum continues in sustainable investing with three point eight billion dollars in AUM as of September 30.

On our last call, I mentioned that we had launched our new better World Investment Boutique and we followed that with four new product launches in this space. The first two launches bring the better world's teams deep sustainable investing expertise to Mackenzie’s distribution for the first time in both Canadian equities and global equities.

17:07 We also launched the Mackenzie Global Sustainable Bond ETF and the Mackenzie Global Green Bond mutual fund, both managed by Mackenzie’s fixed income team. As I mentioned earlier, Mackenzie is now signatory to the global Net Zero Asset Managers Initiative, which builds on our existing commitments, including being a founding signatory to climate engagement Canada and signatory to the Responsible Investment Associations or RIA statement on climate change.

17:35 Moving to alternatives and private investments. Before getting into this quarter's achievements, I'd like to take a moment to comment on the breadth of Mackenzie’s capabilities and products in this rapidly growing area.

17:45 The Mackenzie’s Investment Organization has a long rich history of bringing private market investments to IG Wealth Management’s clientele, in the form of private real estate and private mortgages. Mackenzie managed a six point four billion dollars in these categories as of September 30.

18:02 As a reminder, back in twenty eighteen, Mackenzie made history bringing Canada’s first ever liquid alternative strategies to the retail market based on the regulators alternative framework, proposal for conventional mutual funds. Today, Mackenzie manages over four billion in liquid alternative strategies and asset classes.

18:21 And last fall, Mackenzie entered into a strategic relationship with a leading global private markets manager, Northleaf Capital Partners. Within the first six months of the partnership, we collaborate to bringing Northleaf’s credit investing capabilities to Canadian retail advisors and clients in a new way.

18:37 Last month, we launched Mackenzie Northleaf Private Infrastructure Fund. We have plans to bring all three of Northleaf’s private market programs to retail with private equity up next.

18:48 Northleaf itself had another very strong quarter of fundraising with one point one billion completed during Q3 growing their total AUM to eighteen point six billion. Finally, we launched two new mutual funds to further help Canadians seeking to gain investment exposure to the Chinese capital markets.

19:07 These two products will be advised by China AMC, and they joined our highly successful Mackenzie China AMC, all China Equity Fund to create a suite of products addressing the investment opportunities in the second largest economy and second largest capital markets in the world. 19:24 Overall, we continue to innovate as advisors look for new ideas and solutions for the clients and over the past three years, Mackenzie has generated five point five billion of gross inflows from new products launched during that period and three point two billion year to date twenty twenty one.

19:40 I'll now turn the call over to Luke.

19:44 Great. Thanks Barry.

Good morning everybody. So, I'll turn to page twenty nine and not much to stay on this slide.

I’ll just highlight in the chart in the left there was a very strong quarter, with average AUM&A up four point seven percent in Q3 relative to Q2. 19:58 I’d also note that we published October results on Wednesday and assets as you can see at the bottom left were up two point two percent to two hundred and seventy one point one billion from September.

And if you eyeball the chart and where assets are trending, so far, you'll see we're on track to see continued growth in average assets in Q4 as net flows continue to be very strong and financial markets have been favorable in October and into November. 20:21 Turning to page thirty, I just highlight the business is behaving the way you'd expect to.

On the right, you can see with the dark blue box that the net revenue rate of eighty seven basis points was very stable relative to Q1 and Q2. 20:33 On the bottom right, you can see unit costs have declined based upon grey scale and based on seasonality expenses.

And in the middle, you can see the results is that EBIT margin as basis points of AUM&A has increased to forty eight basis points. 20:46 I'd also remind as you look at this chart on the right, that the acquisition of GLC occurred January first this year, and that's the reason for the change in rates in Q1 twenty one.

Going to page three one, you can see our consolidated income statement as mentioned our EPS of one point thirteen dollars is a record high is up twenty six percent from last year and fourteen percent from the second quarter. 21:07 The only point I’d call out on the P and L and you could see what’s highlighted is zero point one on the right is business development expenses is seventy one point two million dollars in the quarter.

You'll see this is up slightly from last year and down eight million dollars from Q2. 21:20 I'd note that we do have an element of discretionary expense in this line and as you can see the pull-out box in the right, we produced our full year guidance on this line by thirteen point five million, and you'll see the full details on Slide forty three in the appendix.

This is worth about zero point zero four dollars per share after tax. I'd also remind you in thinking about the future, there's some seasonality in this line, so we would expect it to be a bit higher in Q4 relative Q3.

21:44 On Page thirty two, you can see on the right IG Wealth revenue and expenses as basis points of the relevant driver. The one item I’d highlight on the slide is the advisory fee rate and a top rate of one hundred and two point six basis points, down one point six basis points in the quarter.

You will remember that our advisory fee rates are schedules that vary based upon the level of AUA and client counts and we actually accrue at the client level every single day versus – based upon the asset low on their account. 22:14 With the ongoing change in composition of our clientele towards high network, we’ve guided to a decline of close to point seven basis points in the quarter.

I would remind during Q3 there was a meaningful increase in client account values with average AUA up almost five percent from Q2. These higher account values are what led to this one point six basis point reduction in the quarter, and we view this type of price reduction as obviously very healthy given as based upon the significant growth in client account balances.

22:42 Turning to Page three three, you can see IG Wealth statement of earnings. Our one hundred and forty point nine million in earnings in the third quarter of twenty twenty one is a record high, and we're up twenty percent from last year and eight percent from Q2.

The only line I'd highlight again is business development and you can see on this other business development line, we have a colored box on the right, that most of the decline in full year expense guidance for IGM is coming from IG Wealth and we've reduced our guidance here by twelve million in this other business development line item. 23:12 I'd remind you; we have discretion in this line on sales and promotional activities and the business and new client acquisition as you've seen are performing very well.

When you're thinking about our spend here, we'd guide you to consider all these four advisory and business development lines together and would highlight our people are very motivated and very resourced to serve their clients well and to acquire new ones. 23:35 On Page thirty four, I'll turn to Mackenzie’s results, and then the chart in the right, you can see our net management fee rate.

If you look at that yellow line, you'll see the weighted average fee rates of third parties has continued to increase up to fifty four point seven basis points and this is a result of strength in retail and strength in equity and balanced offerings, which tend to have higher fees. 23:56 And if you look at page thirty five, you've seen this chart before, there's a lot of detail on it and we do seek to use this slide to let you know how business development expenses will travel based upon the volumes that being put on at Mackenzie.

24:09 If you look at the chart on the left, you'll see that Mackenzie continues to put on very strong sales results and for expense guidance, we've anchored a four point one billion in a retail mutual fund net sales for the full year. On the chart in the left, you'll see that the light blue line and you'll see it is trending towards four point one billion, which would be about eight hundred million dollars in mutual fund sales during the fourth quarter.

24:31 As you could extrapolate from the four bars away over on the right hand side of the chart, and you look at that third row from the bottom business development expense, where we've guided to about four point billion would result in a full year expense of about ninety two million dollars and that is a reduction expense guidance of about four million dollars from what we’ve published in the second quarter. 24:57 Going to page thirty six you can see Mackenzie’s statement of earnings.

At the bottom, you can see that Q3 results of seventy one million dollars is a record high, and it was up forty seven percent from last year and twenty six percent from Q2 and I would remind there is a lot of operating leverage in Mackenzie business and it's [net] [ph] selling very well, so we would expect strong earnings growth to continue. 25:19 Turing to page thirty seven, just a few quick remarks on China and Northleaf.

On the left, you can see our Q3 twenty earnings of seventeen million from ChinaAMC or up sixty two percent from last year and fifteen percent from Q2. As you know, ChinaAMC is a consistent leader in the Chinese domestic asset management industry and it's been maintaining share and maintaining market position within a very high growth market.

25:44 You remember that half of the global net flows into the asset management industry in the next decade are expected to come from China. And while there certainly will be volatility for us along the way, we are very excited about the future ChinaAMC and very excited about our business relationship with them.

25:58 On the right, you can see the year to day growth in Northeast AUM. Q3 was another quarter of fund raisings in excess of one billion dollars bringing year to date fundraising to four point three billion dollars and driving AUM growth to twenty seven percent.

I'd highlight for you that revenue growth in these fundraisings comes not at the time the business is committed, but comes at the time that the money investing and puts to work. So, we do have a good line of sight into revenue and earnings growth over the coming quarters as a result of this fundraising activity.

26:27 Turning to page thirty eight. This slide is intended to highlight strategic investment and to demonstrate that these investments are conservatively worth four point six billion dollars at September thirty and I’m going to highlight some of the metrics on the next page.

26:43 Turning to page thirty nine, you can see that some of the parts view to our underlying businesses. I first highlight that everything on the slide is anchored to twenty twenty one, expected earnings and we have it repositioned to twenty twenty two.

I'd make two quick comments. The first on China, which you can see is the fifth column from the right.

27:02 We've approached valuation from a standpoint of our entry multiple when we did the acquisition four years ago of seventeen point five times next twelve month earnings, and we've applied this multiple to analyst consensus for twenty twenty one and this consensus obviously was before you having the information on the Q3 three results we posted today. 27:22 I'd also note that we did our acquisition on the basis of seventeen point five times next twelve month earnings.

So, this we view as a very conservative view of the value of ChinaAMC to actually apply that multiple to twenty twenty one expected. 27:35 In the bottom left, as we typically do, we've taken our forty nine dollars share price when went to press, we deducted off conservative value of each of our strategic investments from the market cap and we've done this to arrive at an implied PE multiple for IG and Mackenzie relative to their peers.

You'll see this approach would suggest that there's room for multiple expansion. These businesses have significant momentum and have posted solid earnings growth that we're very excited about.

28:02 And then turning to page forty, with the significant growth we've seen on our earnings, we didn't want to give some context on the dividend, which you'll see we've maintained at zero point five six point two five dollars this quarter. On the top left, we remind that traditionally, we've considered increases at a payout rate, of around sixty percent to sixty five percent of earnings.

28:22 You can see here on the bottom left table that we've introduced a new measure, cash earnings to profile the earnings is distributable. There’s currently about a one hundred and fifty million dollars difference between reported earnings and cash earnings and this reflects two things.

28:36 First the difference between the sales commissions we pay and our commission and amortization and with rising sales activity, this delta between the commission amortization and commissions paid is risen. And second, the difference between our proportionate share in the earnings of Great West, ChinaAMC, Northleaf and the dividends that we received from them.

28:57 You'll see in the third point in the top left, we highlight that we would consider recommending a dividend increase at a payout rate closer to sixty percent of cash earnings, and you can see in the table at the bottom we’re currently running at seventy one percent. On the right in the top, we've given a bit of context on our choice.

29:15 And I’d point out a few things, first, as you all know, and you can see in the chart right, our payout rate is unconventionally high relative to other Canadian financial service firms and global asset and wealth managers. And most important is point three, we see a many alternative product use for capital deployment.

This includes reinvestment of business, includes M and A and includes share repurchases. 29:37 So, there's a lot of room for us to deploy this capital and to create shareholder value and that is a big consideration for us in addressing the dividend.

On closing, I would highlight and reinforce, we're very committed growing earnings and we're very committed to growing our dividends over time, and we're feeling confident about the future. 29:54 That concludes my comments.

Ariel, I’ll turn it over for questions.

30:33 Okay. Thanks.

I wanted to start with a question on the accelerating growth of the earnings contribution from ChinaAMC in the quarter. Do you have any additional color or granularity you could provide on the performance of that business?

Maybe with respect to the net flows rate as a percentage of AUM, how that compares to the industry, anything notable on investment performance? There's clearly a lot of momentum there.

I'm just trying to get a better of read on what some of the key drivers have been.

31:03 Thanks Nik. It is Luke and I'll probably turn over to Barry as well.

I'd rather saying the last five or six quarters have been very strong in terms of net flows into the Chinese asset management industry, so long term funds. We've seen a net sales rate of thirty percent per year and ChinaAMC mentioned has been maintaining market share and maintaining market rank during a rapidly growing environment.

31:25 In the third quarter, in-spite of the volatility, we did continue to see very strong contribution from net flows and that's led to consistent asset growth in long term funds during the period. And as you also know there is offering leverage in this business and that is leading to the strong earnings growth results that we’re seeing put on.

I’ll turn it to Barry.

31:47 Thanks, Luke. Just had a – great question, I’d add a couple points.

It's important to recognize that ChinaAMC is well ahead of a very strong business strategy and model, we think well positioned for today and the future growth this as we saw the industry North America evolve. What I'm talking about is that they are multi-channel, so Luke's point of a very strong retail flows continue for ChinaAMC.

But they're also strong institutional and they're also strong in online. 32:21 So, they have really three main channels that all are doing very well.

They are also actually - actually a little bit like Mackenzie to their multi-vehicle. So, clearly mutuals fund is doing very well as we report and measure on an ongoing basis.

32:37 The institutional separate managed accounts SMA is obviously continuing to grow very well. And they are actually, we tend to forget about this.

They are number one ETF provider in China with a very strong growing industry ETFs as we know how strong that's growing globally. So, they are number one in China onshore and offshore.

32:55 And then finally, it just a terrific culture, well-resourced over two hundred investment professionals, investment led organizations. So, they're really research oriented on the ground fundamental focus and actually we are sharing that research with them on a regular basis, which is very helpful for us.

33:12 So just a twenty year firm that has really has a business model in a framework and a structure and a culture that you see now. We've seen this for years and years now, but it's just probably becoming more, we'll focus for you all because of their increasingly meaningful impact for earnings.

So, really remain very excited by ChinaAMC investment in the future of that firm in the industry in China.

33:42 Understood. Okay.

That's helpful. And then maybe on the domestic front, your net flows have remain consistently positive not only on a quarterly basis, but month to month as well, we've seen industry sales remain elevated.

I think that's benefited some extent from higher consumer savings and an improvement in household balance sheet as a result of the pandemic. Just wanted to get your read on the sustainability of that trend at a macro level.

Do you see that momentum extending beyond the RSP season next year or is it a bit too early to say?

34:14 Again, great question. I'll start and might have others chime in.

It is a very important topic for us, obviously at IGM. But you are spot on.

We've seen this Canada and other developed countries where savings rates are much higher, obviously because the pandemic and spending is down, obviously to your point, which has strengthened personal balance sheet, but that spending also has resulted in quite a reduction in industry redemption rates. 34:37 So, higher flows and lower redemption rates obviously results in much higher net flows.

And so, us across IGM operating companies are seeing, obviously, very nice gross flow increasing year over year, but you may have noticed our net flows are even proportionally higher than the growth because of the higher growth and the lower redemptions. 34:57 We're thinking this could be sustainable.

We're not sure at the levels that they are right now. Obviously, as the economy continues to recover a global synchronization of opening up the economies and getting back to some normalcy in terms of expenditures and consumer consumption.

We think though that there's going to be an increased focus on retirement and savings in Canada and maybe other countries as well. So, therefore, that savings rate we think can continue to be higher than it was pre-pandemic not sure was in land, but we think is going to be higher.

35:29 And the redemption rates, we'll see if they come up a little bit, but again because of the potentially increased focus on savings, and by the way, just the enormous amount of cash on the finance and liquidity that can come into the investment funds industry, which we think it will, we think should bode well, well into twenty twenty two and beyond. 35:48 So, we can't predict on the level of record levels that we're seeing in the industry today continuing at that level, but we think they will continue at a higher level for many years to come.

36:00 Okay. Very good.

36:00 It’s Luke, I’d add. As Barry said, the money like you mentioned in your question on them, on savings rate, the money that went to demand deposits in twenty twenty was [indiscernible], it was about two fifty billion dollars and that movement it demands deposits or that contribution demand deposits by Canadians have just continued consistently through every single month of twenty twenty one.

36:25 So, there's a lot of fuel to keep this fair going. All those demand deposits are earning nothing and their earlier less than money nothing when inflation is included across organizations.

We're working hard with Canadian’s to put that might've work. And so, there's a lot more fuel there to keep these strong investment fund flows going.

36:43 Okay. Thanks for taking my questions, I'll pass the line.

36:57 Hi, good morning. My first question was just on slide nineteen.

I was kind of taking a look at the part where [indiscernible] gross flows from less than one hundred thousand dollars accounts had been declining for a number of years, but been still a decent amount and has been actually increasingly lately. Just with the focus on the high net worth part of the market, just curious around whether the dynamics driving growth from some of the less affluent customers?

37:28 Yeah. It’s Damon here.

So, in terms of [Technical Difficulty] and you kind of natural organization to those segments. So, we are talking about doctors, lawyers, other professionals and part of our strategy is certainly to connect with those individuals early on in their careers.

And it does mean that early on, they will have lower portfolios in terms of dollar amounts, but the opportunity long term is huge. 38:13 So, a lot of that growth would be because we are doing a good job, really finding people that we want to focus on.

But early on and then working with them on their plans as they start their careers and start a family and buy a house and do all the things that you would normally do.

38:31 Okay, perfect. And then just more broadly in terms of the progress that you've made on the gross sales side for each of high net worth and then also just the overall business, when you take a look at where you are today, if we kind of use the baseball now like, what inning do you think you're in versus what you would view as being kind of full productivity of the consultant base?

38:57 Yes I'd say that we are in the second or third inning. And here's the rationale.

First of all, we are still in the fourth year of a five year transformation with the fifth year being next year. So, there's still a lot of things that we need to do to continue to improve our advisor and claim experience, continue to conduct our systems, continue to make sure that our advisors are the most efficient in the industry.

So, we up capacity. And with that, we are just going to get better at doing what we do.

39:26 When you take a look at our results, what is the most encouraging are, their broad based. So, we're doing a good job in terms of acquiring new clients, particularly in the massive high network t space as you just mentioned.

We're doing a very good job of working with our existing clients and share of wallet, a lot of Canadians diversify their advisors. And right now, we're finding that quite frankly, a lot of the competition is not stepping up, and if our clients have one or two other advisors, they're consolidating with us, which is great.

39:57 We're also doing a great job in recruiting experienced advisors, you know for a lot of advisors, they see the benefits now, particularly with the client focused reforms and everything that's taking place with regulation. In partnering with the firm that can add value to their business and help them compete in their market, particularly against the competition that tends to be fierce in this country.

40:16 And then because we're doing such a good job with our clients, our retention rates are dropping. So, we're doing a good job and certainly we're losing less clients that we have in the past.

So, we feel quite comfortable about where we're – our ability to compete and how we're positioned right now.

40:32 Maybe, ask you in other ways is, from a net sales as a percentage of AUM, where do you think that you can get to? Again, if you're having full productivity out of the network?

40:46 Right. So, if the forecasting of net savings rate for the country is around three percent and is forecasted to continue to be around three percent, and there'll the ebbs and flows on that.

Right now, you can see that we're at that number or we feel quite confident at our ability to punch above that rate, and three percent plus. That's what this business is built to do.

41:09 Ultimately, we're building a business that we want to be stable and resilient that performs over various different market cycles and is going to gain share and particularly gain share in by massive high net worth market. So, punching above the three percent net sales, the percentage of AUM is something that – is our focus.

41:28 Okay. And just if I can sneak in one last question, is high net worth tends to be stickier assets, do you expect then the redemption rate to decline over time versus historically what we've seen at IG Wealth and also to – on another dynamic with boomers are retiring and kind of maybe spending a little bit more and therefore the savings are going to be less and then therefore have higher redemptions?

Like how do you think net-net these factors or any others that you see kind of impact the redemption rate versus what we've seen historically?

42:08 I think if you're building your business properly, I think massive high net worth, our focus is on making sure that our retention rate is obviously as fallen as possible. IG has always had a history of having a retention rate that has been lower than the industry, and I think everyone knows that.

These levels obviously right now, we're in a different circumstance, but we believe that we feel confident that we can continue to do a great job. 42:37 Now, as it relates to the aging population and [de-accumulation] [ph], this is the key here.

So, as long as you have a sales force that is diversified and you have a sales force where you're bringing on new talent. And you can continue to do that.

We feel quite comfortable that we'll have a nice mix of clients. The first question, you asked I talked about bringing on young professionals.

43:05 That's a prime example of what the future looks like. We're going to have obviously a significant amount of money in the industry pass on from generation to generation and our organization has proven over decades that we’re leaders and really working with multigenerational families, and not only having the grandparents, but having the parents, having the kids, having the grandparents.

That puts us in a great position to capitalize on the movement of these assets through generation to generation.

43:36 Thank you.

43:37 And Jeff, and Jeff it is Luke on the – just on the quantitative of that, you could see our gross outflow rate, our redemption rate overall is trending at nine percent trending down. You remember that about five percent of that redemption rate is really structural.

It's fulfillment of the product. It’s people who, they're saving with us for a long-term, which may include retirement.

43:58 So, we view that obviously as a four, at five percent to five point five percent, everything above that you can think of as being competitive on some front. And so, I’d guide that even with baby boomers retiring, you know a rate of eight percent is clearly achievable for us overall.

And that is where we trended in the best of our times, and we think that potential is available for us now.

44:22 Okay, great. Thank you.

44:33 Great. Thanks.

Good morning. First question just on the expense guidance update.

Looks like the biggest decline is within IG’s biz dev expense line, maybe can you comment on kind of what drove that in particular? I think Luke, you mentioned some discretionary spend.

Where these costs pushed out and just wanted to see what changes were made relative to the budget at the beginning of the year? And as a related question, can we also expect this two percent to three percent overall expense growth as we look out to fiscal twenty two?

45:06 Good question, Gary. I'll start with the last part.

On twenty twenty two and beyond, right now we've guide to that territory, like three percent is probably a good starting point to think of twenty twenty two. And on our February call, we'll have finished our planning for the year and we'll get much more robust guidance into twenty twenty two and beyond.

45:24 On IG’s other business development expenses, yes, as mentioned, as you know the things that are in that particular line includes sales, marketing, promotion around our facilities for our financial planners, training, technology, all the things that support on the ground business development and serving a clientele. 45:45 And I note that that is one of four lines that concerns what we've called advisory and business development.

The other lines are things like sales commission, asset based comp, and other product commissions. So, it's a twelve million dollar reduction in guidance that you see.

You could do that as reflecting mostly discretionary sales and promotional activities, but it's quite a small amount in the context of the broader spend that we have on advisory business development. 46:11 I'd also note, Q4, the guidance we've given, does have healthy spend in Q4.

So, I would guide you that you can take the expense guidance reduction we've given you to the bank, but I would note if there's seasonality coming in Q4 and you'll see when you do the math the guidance for Q4 is quite a healthy level of spend in this particular line. 46:31 And I would also highlight as we've considered our activities and what we're spending on the business is doing really, really well, and we think we're spending at a high enough level of doing the right things and we didn't have to go any further in the period.

46:45 Great, thanks. And then maybe moving on to slide forty, where you laid out the roadmap map for common dividend increase.

Luke, when you do the math on maybe a 3Q annualized numbers opposed to LTM, you would get to a number that's closer to sixty percent payout. Just want to be clear that you are looking at it when you decide it is on a LTM basis.

And then maybe on the same slide, maybe for James, how do you decided between dividend increases versus buyback or some of the other initiatives that you listen on that page?

47:21 Yes. I'll start and I'll turn to James, Gary.

So, you're quite right. On our guidance, and the spelling note where we consider recommending a dividend increase, we would be anchored to last twelve months, not in quarter annualized and that removes the impact of seasonality and that's what you should consider is last twelve months.

And I’ll turn it to James.

47:45 Yes, Gary, as we've said before, we believe we're in for an active M and A environment, given confidence levels given the macro environment generally. And so, we are thinking actively about deploying capital in M and A.

And as we've discussed before from a wealth management perspective, we view that industry organized around the world that's organized kind of nationally or regionally. So, our aspirations in wealth management would be very much focused in Canada, particularly in high net worth and ultra-high net worth segments.

48:27 And then on the asset management side for Mackenzie, of course, it's a statement of the obvious, but Mackenzie very clearly participates in a global industry and is competing in Canada against global giants. So, for Mackenzie, we were prepared to look more broadly geographically, if we can enhance its capabilities, you know that could be in Canada or outside Canada.

48:56 So, M and A is something we're certainly thinking about, but buybacks too are going to be part of the toolkit. But I would say at this point, more focused on an M and A opportunities than buybacks.

49:15 Great. And then maybe just follow on to that James just on the M and A side, for Mackenzie, that's mostly in Canada or are you looking at global as well?

And then a related part to that, obviously very strong on the retail side, how about on the institutional side, any interest in buying institutional managers?

49:34 Yes. I'll start and I'll let Barry add.

But Mackenzie very clearly participates in, competes in, what is truly a global industry. And we need to be mindful of that.

It's not a Canadian industry. It's truly a global industry.

And so, when we think about kind of positioning Mackenzie, three to five years out, we think about how do we make it a stronger competitor in what is today a global industry. 50:04 And so, yes, for Mackenzie, we will be looking more broadly than just to Canada geographically for opportunities to both enhance its investment management capabilities and perhaps some distribution will come with it.

50:22 And I'll let Barry add that answer.

50:26 Great. James, got it spot on and thanks for the question, [Jeff] [ph].

It is really a combination of the fact that we like to continue where we think we have got. If we don't think we have a [gaps] [ph] rate now, but we're always in the first strong global investment capabilities to bring to Canada.

50:42 Northleaf obviously is based in Canada, but they're preeminently global. Greenchip the same.

As you know, we've lifted out a team in Boston, a wonderful institutional [quality quant] [ph] team they're doing very well up to five billion AUM last three years. We've got a team in Dublin, a team in Hong Kong from [legacy IGM] and they're just terrific.

Mostly compete institutional world. 51:06 So, we're obviously looking for investment talent capabilities as James mentioned anywhere around the world.

That's irrespective of borders. And then we can bring it into our obviously robust Canadian retail business, but also as James mentioned, you our institutional business we love our business and it really provides diversified sources of revenue.

51:25 We do it in a very targeted and limited fashion in terms of a handful of capabilities that we think are of interest to global institutional investors in Canada, United States, Europe and Asia, and so we continue along that journey. So, yes, if there’s anything that could help us speed it up a little bit, we'd certainly be open for consideration.

51:46 Okay, great. And then just my last question.

I know there's some talk about on these retail flows, just wondering the impact of higher rates or rates trending higher. If the rate environment can persist, we know the story the household debt, what clients favor paying down debt versus increasing the savings rate?

Is that a risk to elevated flows? I don’t know if that's a question for Damon or Barry.

52:16 I'll start and everyone who likes to jump in [indiscernible]. But I'll just speak from Mackenzie’s perspective and probably might be different on the Wealth side.

On the asset management side, again, we – first of all, we have as you know multi-boutique model with really a variety of building blocks. And so, what I've been saying personally and Mackenzie has been saying personally is to help advisors start the journey of a more future oriented portfolio for their clients, and that's why we've been bringing alternatives to the marketplace, not just liquid product, now you know private alternatives and obviously even if inflation is not transitory, we've got a lot of building blocks to put a strategic allocation portfolio to help achieve some of the potential long-term effects of inflation such as the infrastructure of course.

53:06 So, we’ve got tips. We've got commodities.

We've got REITs. We’ve got a whole plethora.

So, that's just one thing on – and I want to mention on the Mackenzie side, we actually performed fairly well irrespective of the economic environments. In fact, as [indiscernible] March of twenty twenty, we probably perform our best wind markets are choppy or downwards because we have a lot of protective downside.

53:30 In terms of impact on flows, I’m not sure. I'm not sure if that would – [Geoff] [ph] I would impact on our thesis that savings rates will be sustainably higher than pre-COVID albeit maybe not as high as today.

53:44 Again, that focus on savings and retirement for all Canadians more so going forward should be irrespective of the economic environment. I'll put in a little bit of plug as I always do.

These transitory inflation trends are – we're getting through them. They're going to take a little while right, well into twenty twenty two, and they heard some segments of the population.

54:10 So, we can be mindful of that, but long term, long term secular trends in developed countries like Canada is actually for low rates and low inflation going forward for demographic and technology productivity improvement reasons. So, probably something just to continue to think through long-long term, obviously, short and mid-term might be different.

So, I'll turn it over to anybody else who what's to comment.

54:31 Yeah, it’s Damon. I’ll jump in.

I’ll say that this is why we're in business. Questions like this is all about financial planning, and how we work with our clients.

And we’re involved in helping our clients make the right decision as it relates to paying down debt or investing or doing both. 54:53 The good news is, as you direct your efforts towards high net worth, high net worth individuals generally understand that and understand how to use that positively.

So, for us, we have not seen any issues with flows, nor do we anticipate any issues with flows. 55:11 Obviously, when you're talking about higher rates, it has more to do with markets and the environment and how do people feel about investing, but we feel quite confident that it's not going to get in the way in terms of future flows.

55:25 Okay, great. That's it from.

Thank you.

55:36 Yes. Thanks very much.

Good morning. Just a quick one here.

Luke, I think you said, in terms of looking for business development expenses for twenty twenty two that is three percent increase, for twenty twenty one would be appropriate, how should we be looking at operations in support for IG Wealth and Mackenzie?

55:55 Good question Tom. So, my guidance would be on three percent, would be overall.

The overall ops and support in particular, business development will obviously be variable. There is some durability with Mackenzie wholesale and commissions in particular, but that three percent is meant to be an overall, and in particular in ops and support.

And so, it's a very good question and I clarify for everybody. On three percent, we’re focused firstly and foremostly on ops and support expenses.

And Tom, as mentioned earlier too, in February, you can expect us to get much clearer guidance once we finalize our plans by a line item.

56:33 And that business development business expense would be a function to though of – there's some variable element in as well. So, if the gross sales continue to be strong, would we expect that business development expense, a portion of that overall could be actually higher than the three?

56:53 Yes. For sure, Tom, and the key elements of variability.

So, there's one key variable item in that line, which is Mackenzie wholesale and commission, and we'd expect to continue like we've done on page thirty five to give you guidance on how it's working. 57:07 And you heard very early in the year when we launched this guidance and then enhance this disclosure, remind that we reset the bar every year.

And the bar rises. And so, we'll help you understand how twenty twenty two will behave based upon different sales levels.

And so, there's that element that is variable. 57:26 There is some discretionary advertising out of promotional stuff in there and we will be finalizing that in giving guidance.

And then a bunch of the stuff in that line is more fixed and we would give the same type of guidance as we have on ops and support. So that's the one item that we will help you understand is the variability to Mackenzie be wholesale and commission, and we would remind that we do reset the bar every year on that one.

57:51 Okay. Thanks.

58:02 Hi good morning. Perhaps James, I'll target this one for you.

Just thinking about IPC, can you talk about the business model there and how it compares to IG Wealth? And is there any thought towards potentially bringing IPC into IG Wealth, is there a value creation opportunity there perhaps?

58:26 That's a good question. But I think the answer is no.

It is a very different business model. With very different, you know you have advisors who have a different contractual relationship of course with IPC than IG Wealth Advisors would have with IG Wealth, you have a very, very different grid.

You have a very different allocation of expenses. So, I do view the businesses as being quite a bit different in many respects.

59:04 In many respects IG Wealth is a unique and I think a uniquely successful model within the industry, but I think what you should anticipate with IPC and look, it's executing well here as you can see from the results. But there is a big push on as we speak to, to purchase practices, convert books where it makes sense to more of a salary plus bonus model as opposed to the current quite high grid payouts.

59:39 And they're also exploring indeed more than exploring started to execute on an [IPC model] [ph] where money is being managed on a discretionary basis. So, as I've said earlier, I like IPC because I think this industry is in for a lot of change over the next several years as the generation of advisors who helped build this industry in the 80s and 90s approach retirement and think about succession and what they're going to do with their books.

60:10 I think new industry architecture, new economic models are going to emerge and we very much view IPC as our opportunity to experiment and participate in those new models, but to go back to the core of your question, as we sit here today, I do view the two models as quite a bit different. Each has their own strategy and each we think can achieve very significant growth in years to come.

60:48 Okay. Thanks for that.

Damon, I'll jump to you. IG, you're showing good sales growth momentum and you give some advisor productivity numbers there, which shows some increases.

We're still seeing some attrition in the number of your advisors, sort of typically at the greater than four years experienced level, can you just provide a little bit of color on what we're seeing there is that just a reflection of natural attrition not being replaced with the advisors that you recruiting into IG?

61:19 First off, I would say that it's important that everyone understands we are focused on quality and quantity and our KPIs are all around productivity and not the size of our sales force, but the numbers you are seeing, it's just natural attrition. We continue to work with our existing advisors and make sure that we're focused and make sure that have everything they need to really attack the massive [indiscernible] and the high net worth segments of the marketplace.

And we like the fact that we're leaner, quite frankly, than we have been in the past, let's say over the last three or four years because it's really allowed us to focus our efforts. At the same time, we've done a very, very good job recruiting.

62:01 And we're really attracting experienced advisors that really want to focus on planning and really want to enable their business and their teams and their clients to have an elevated experience. So, we feel quite confident and excited about what the future of our sales force looks like.

62:22 And Graham, I'd add. If you look at the supplement disclosure, we've got the line with the consultant practices and you can think of that as being that the practice owner.

We've got another line called associates, and those are employees of the practice and they are licensed professionals or financial planners, they're serving clients. So, we guide you as well to look at those two lines together as far as the force of people who are serving the clientele there.

62:45 And so, you'll see that a concerned practice, to the [concerned] [ph] owners has declined by seven, I believe this quarter, while the same time the associates has risen by twelve. So, when you look at the actual [four serving clients] [ph], it has been growing slightly.

62:59 Okay. It’s a fair point.

My last question would just be Northleaf fundraising this quarter, could you give us some color of how much that, I think it was one point one billion, how much is third party versus commitments from Great‐West or IG?

63:16 We're very pleased to say that we're actually seeing good and you've seen the products being brought to market, really good support of Northleaf across the group of companies and we're on plan there. But in spite of that substantially all of this fundraising is from outside the group and it is well diversified across private equity, private credit infrastructure.

And I'd say one of the bright lights that we're seeing as well that the Northleaf team is excited about is we're starting to see more foreign clientele within the numbers. 63:47 Traditionally Northleaf has been their investments to the global, but their clientele has been primarily Canadian.

And so that's one change that we've seen in twenty twenty one that's very healthy. Is there executing well on their vision of having a lot more clientele outside of Canada.

64:06 Great. Thank you.

64:20 Good morning. Maybe just going back to Northleaf, you know the asset growth has been impressive.

You know, almost twenty five percent since you acquired it. What proportion of those commitments I guess year to date would be within versus kind of external and I'm just trying to get a sense on looking forward in terms of Northleaf [indiscernible] kind of the stability in growth within that?

64:48 Yes, of the four point three billion you can think of the group having furnished around five six hundred million dollars of that. So, substantially all of that new business has come from third parties, and we see that growth continuing.

And we're going to obviously support Northleaf with all we've got, and you can see us actively putting Northleaf into our managed solutions launching products at Mackenzie and Great-West Lifeco is also supporting them wherever they can, but the bigger opportunity is obviously with third party business and the team at Northleaf is very focused on growing the clientele. And as I mentioned, [bringing their] clientele outside of Canada, which is a huge opportunity for them.

65:26 In the earnings of Northleaf it seemed a [point] [ph] above your original guidance, is there like an updated guidance that we should think about for twenty twenty two? It seems like the assets are probably attracting a bit better than expected in my view?

65:40 Yes, it's great. We've got very good line of sight on the revenues for this business.

And so, when you see the fundraising, as [indiscernible], those are new commitments. The revenue comes on when the money is put to work and invested.

And so, we have these treatments in hand and the revenues are going to grow and the earnings are going to grow asset as the money invested. 65:58 So, right now, our original guidance for twenty twenty one was ten million dollars contribution from Northleaf.

And I’d guide you for twenty twenty two, you can probably expect about double that. So, about twenty million dollars and that is a function of all the business activities that’s been put on this year.

66:18 That's super helpful. And just one back to the SG and A question for twenty twenty.

I just wanted to make sure, and I know you're going to line it next quarter, but are you talking about the overall three percent, including business development and operations and support, acknowledging that business development has that variability?

66:36 Yes, that's right. So, you can think of it three percent overall with the qualifier on business development and the fact that Mackenzie wholesale and commissions are in there.

66:47 And just lastly, James, just on the capital, you talked about NCIB or share repurchases is being a bit lower that priority, when do you expect to renew your NCIB or initiate why [indiscernible] rate now?

67:00 Yes. No, you're correct.

There is not one right now, but look let's see how the next several months unfold in terms of capital deployment, but that's certainly something we're thinking about for some time in twenty twenty two.

67:18 Right. Thank you very much.

67:33 Thank you, Ariel. And thanks to all of you who joined the call today.

We wish you a great upcoming weekend and Ariel with that, we'll close out the call.