IGM Financial Inc.

Thank you, Galeen. Good morning, everyone, and thank you for joining us.

On the call today, we have James O'Sullivan, President and CEO of IGM Financial; Damon Murchison, President and CEO of IG Wealth Management; Luke Gould, President and CEO of Mackenzie Investments; and Keith Potter, Executive Vice President and CFO of IGM Financial. Before we get started, I would like to draw your attention to our cautions concerning forward-looking statements on Slide 3 of the presentation.

Slides 4 and 5 summarize non-IFRS financial measures and other financial measures used in this material. And on Slide 6, we provide a list of documents that are available on our website related to IGM Financial's second quarter results.

That will take us to Slide 9, where I'll turn it over to James.

All right. Well, good morning, everyone, and thank you for joining us.

Q2, I think, was a revealing quarter for IGM, one that showcased the strength and embedded growth in our wealth and asset management businesses as just about everything worked very well across our companies. Q2 was a quarter where we delivered strong earnings and clearly, I think, revealed the path to continued earnings growth over time.

Not only was the second quarter's adjusted EPS of $1.07, a record high second quarter, IGM's last 4 quarters adjusted EPS of $4.15 is also a record high for any period and was accomplished despite moments that were marked by uncertainty and volatility. Our performance is also, I'd point out, before we receive any earnings contribution from either Wealthsimple, where we are the largest shareholder or Rockefeller Capital Management, where we are the second largest shareholder.

Rockefeller's rapid growth trajectory positions it to begin contributing to IGM's EPS in the near-term, reinforcing our thesis of embedded value creation that will reveal itself in earnings contributions. Continued strong performance at Wealthsimple contributed to the 21% increase in the fair value of this investment, which is now valued at $1.5 billion.

As a reminder, our investment in Wealthsimple is currently classified on our balance sheet as fair value through other comprehensive income. As a result, IGM's earnings do not include the benefit of the significant growth in value of this business.

We also demonstrated value creation through our participation in Conquest Planning's secondary financing transaction. I think one of the unsung successes of IGM has been its participation in the Power Group's fintech ecosystem.

Our participation has allowed us to be on the leading edge of innovation as we establish strong commercial partnerships. And it has allowed us to be early investors in fast-growing innovative platforms.

Examples of this include Wealthsimple, Personal Capital, Conquest, nesto, ClearEstate and others that are being stood up as we speak. And we continue to return capital to shareholders during the quarter through both our strong dividend and our share repurchase program.

We are determined to repurchase more shares as we do not believe the current price adequately reflects the strength of IG, the very clear progress in Mackenzie nor the significant value embedded in our strategic investments. Let's move to Slide 10, where I'll speak to the broader operating environment.

The first half of 2025 was characterized by periods of heightened volatility, most notably the month of April. But as we moved through the second quarter in July, uncertainty and volatility subsided, returning markets to an upward trend.

Overall, while much of the underlying uncertainty remains, the average Canadian's diversified investment portfolio has achieved strong investment returns through July and over the last number of years, which has very much helped to support improving investor confidence. Slide 11 shows how improving investor confidence is supporting a stronger industry backdrop with industry net sales returning to their previous upward trend.

Turning to Slide 12. Here, you will see how earnings growth at all 3 of our reporting segments contributed to IGM's overall 15% year-over-year growth.

And on Slide 13, we have robust client asset growth across each of our wealth and asset management businesses, which combined drove IGM's AUM&A up 21% over the past 12 months. Contributing to this growth was Mackenzie's momentum in the institutional and strategic partnerships channel, which continued through the second quarter and into July.

There's no change there. Two, over the last 4 months is a very notable net flows inflection point in Mackenzie's retail channel, which I know Luke will be happy to speak to shortly.

But first, I'll turn it over to Damon to speak to the Wealth Management segment's operating results, including the continued strong momentum at IG Wealth.

Thank you, James, and good morning, everyone. Turning to Slide 15 and Wealth Management's second quarter highlights, including IG Wealth, Rockefeller and Wealthsimple.

The second quarter was defined by numerous records at IG Wealth and is a great example of our ability to execute our strategy and build momentum. IG Wealth ended the quarter with record quarter end AUM&A of $146.7 billion, up a solid 13% year-over-year and up 3.6% during the second quarter, driven by financial markets and strong net inflows.

IG's AUM of $129.5 million represented a quarter end record and was up 13% year-over-year. Our gross inflows, gross sales into IGM products as well as gross inflows from new clients all set new Q2 record highs.

Total gross inflows from newly acquired clients were $1.2 billion with mass affluent and high net worth clients representing close to 80% of these flows. Excluding a $24 million outflow related to an IG defined benefit plan pension transfer to an SMA account at Mackenzie, total net inflows for the quarter were $249 million and net sales in the IGM product was $513 million, representing an increase in net sales of over $1 billion versus last year in Q2.July continued this momentum with strong gross inflows and gross sales as well as strong positive net inflows and sales in the IGM product.

Our mortgage and insurance business also delivered strong performance, which I will speak to in a later slide. July 1, we reached an important milestone as we received regulatory approval to merge our mutual fund and investment dealers into one dual registered dealer.

I will touch on the operational benefits of this in a few slides. Turning to Slide 16.

You can see IG's gross and net flows over numerous periods. This slide shows the growing momentum that this business has.

On the left, you can see in all 3 periods, we are benefiting from both increased gross inflows as well as declining gross outflows, which is a solid combination. The graph on the right illustrates the ability of our advisors to work with their clients to navigate volatility and dollar cost average into long-term IG solutions.

As a reminder, during July 2024, we saw significant flows, which were partially related to the now eliminated changes to Canada's capital gains rate policy. We remain as confident as ever in our advisors' ability to negotiate the complex market environment with our clients so that they can build, preserve, quantify and distribute their wealth.

Turning to Slide 17. You can see our operating results, which provide a great view of the strength of this business.

Everything on this slide is pointing in the right direction, supporting our growth and our advisors continue to work with their clients to dollar average cost from cash, GICs and hybrid balances into the markets over time. Turning to Slide 18 and our gross inflows from newly acquired clients, which continues to be dominated by new mass affluent and high net worth clients.

Year-to-date, 78% of our gross flows from newly acquired clients are either mass affluent or high net worth and high net worth clients specifically represent 38% of these gross inflows, which exceeds our Investor Day commitment of 33%. Turning to Slide 19.

You can see the continued momentum in our mortgage and insurance businesses, both which have delivered strong year-over-year growth. Of importance in our insurance business, we are seeing different advisors leading insurance production than we did last year, reflecting our increased breadth and focus across this business.

This is in line with similar trends that we are seeing in the mortgage business, which we spoke to last quarter. Turning to Slide 20.

I want to provide a quick update on our segmented model with a focus on how it's driving productivity, enabling growth in our business. In the middle of the slide, you can see growth in each channel, including the corporate channel, which now represents approximately $10 billion of AUA and 34% of our clients.

The corporate channel has extended our entrepreneurial advisors' ability to focus on financial planning with their core clients. On the right-hand side, you can see the benefits of this as it supported our increased mortgage and insurance penetration and greater success in acquiring mass affluent and high net worth clients.

Turning to Slide 21. The merger of our legacy dealers into one dual registered dealer.

Moving to one dealer supports our future growth and streamlines our processes driving operational efficiencies. This new model simplifies the client experience, streamlines our business operations and makes it easier for advisors to focus on building their business regardless of their license.

Now turning to Slide 22. Let me provide some updates on Rockefeller's progress.

Client assets were up 22% year-over-year, supported by markets, inorganic and organic growth. Over the last 12 months, organic growth drove $5.9 billion in client assets, driven by Rockefeller's core wealth platform.

Rockefeller also continues to add to their private advisor network with 15 new advisors being added during the second quarter. Turning to Slide 23.

Wealthsimple's momentum continues, driven by their ability to attract new clients and grow client share of wallet. Wealthsimple has increased their clients served by 13% year-over-year, while their AUA has increased by $11.5 billion during the quarter and is up 94% year-over-year.

With that, I'll turn it over to Luke Gould.

Thank you, Damon, and good morning, everyone. Turning to Page 25, you'll see a few highlights for Mackenzie and for Asset Management for the quarter.

We ended the quarter with record high AUM of $224.6 billion, up 11% from last year and 3% in the quarter, and we had another 1.5% growth in July. On the left, we had investment fund net sales of $187 million in the quarter.

This is our best Q2 results since 2021 and a $900 million improvement from last year, driven by meaningful improvements in retail. Overall, we had net redemptions of $135 million.

Previously announced awards in our institutional business funded during July, and we had institutional net sales of over $700 million coming just following the quarter end. In the top right, we've highlighted the meaningful momentum that we experienced in retail during Q2, which has continued into the third quarter.

And as James noted, July was the third consecutive month of positive retail investment fund net sales with significant year-over-year improvement. As reported yesterday, overall net sales in the month, including institutional awards were $910 million.

We also launched 9 new investment funds in the quarter, focused on areas of merchant growth and shelf completion. This supplements 15 launches during 2024, which have helped drive our recent success in retail.

Q2 launches include expansion of our successful holistic quant offering with 4 new quant mandates, including Canadian Balance, Canadian Equity, Global Balance and our long/short U.S. Alpha extension strategy.

We've added to our fixed income offering during the quarter with target date fixed income ETFs as well as a AAA CLO ETF that brings proven capabilities we have in this space to retail and has a compelling yield that is currently over 6%. We have also augmented our fundamental equity product offering with an international equity fund that brings our Asian and European teams to Canadian retail.

We've also launched Putnam's flagship U.S. value mandate here in Canada.

This successful mandate has amassed over $50 billion in the United States. And at the bottom, you can see both ChinaAMC and Northleaf continued to generate good growth in the quarter.

ChinaAMC's investment funds are up 34% from last year due to strong net sales and market share gains, while Northleaf continued to have strong fundraising of $1.7 billion in the quarter and $5.2 billion in last year. Turning to Page 26, you can see the trend in history of Mackenzie's investment fund net sales.

As mentioned, on the left, you can see that this is our best second quarter investment fund sales since 2021, and this represented $900 million of improvement driven by those meaningful improvements in retail, which were net positive in May, June and July. Also on the left, you can see that a noticeable part of our net sales were into our ETFs.

Our top-selling ETF was our international equity ETFs managed by our quant team. This is an actively managed product and our pricing is agnostic between the mutual fund and ETF structures.

I'd also note that we don't disclose gross sales on ETFs due to data challenges, but we estimate that overall investment fund gross purchase activity was up 20% in Q2 '25 relative to Q2 '24. On the right, you can see the last 12 month trailing net sales overall and for retail.

I had a question last quarter on whether our outlook is for positive net sales for investment funds in 2025. You can see that we are now there as we close out July and net sales are increasing nicely, driven by acceleration in retail.

On Page 27, at the top right, you can see our net sales segmented between retail and institutional and by delivery vehicle. The team circled the improvement in retail year-over-year, and this has largely been driven by the full-service brokerage channel with meaningful net sales into active equity ETFs there.

Also noteworthy was declines in redemption rates across our shelf during the quarter. As touched on already, our institutional SMA net sales in Q2 was impacted by the timing of the funding of one of our previously announced awards, and this came in, in early July and was $600 million.

At the bottom left, you can see our last 12 month trailing net sales rates, where you can see we're nicely closing the gap to the industry. And in the bottom right, we experienced a number of Morningstar rating improvements to 4 and 5 star during the quarter, including our quant global equity fund being increased to 5 star and our Greenchip environmental flagship fund upgraded back to 4 star on the strength of very strong performance over last year.

Turning to Page 28, you can see our performance in net sales for our retail mutual funds and ETFs by boutique. In the bottom half of the slide, you'll see that noticeable improvement in flows occurred across a number of boutiques, including Ivy, resources, global quantitative equity, global equity income and fixed income.

I'd also highlight we have compelling investment performance relative to peers across many of our boutiques. On Page 29, we thought it was important to provide another update on our global quantitative equity boutique following the last update a few quarters ago.

I'd remind everybody that GQE has a holistic quant approach that seeks to be all-weather across market environments. This team has continued to deliver exceptional performance through the recent volatility across their broad roster of offerings and continues to experience strong business growth, as you can see in the middle.

In the top right, we have been very focused on trailblazing and quant in the Canadian retail space. And with our Q2 product launches, we now have 13 different mandates offered in retail across the mutual fund and ETF delivery vehicles.

Net sales are strong, growing and not yet near our potential. We had over $500 million in net sales in Q2 and $850 million year-to-date.

I'd also note on the bottom right, as previously announced, we had $4.3 billion in partnership and institutional awards that have all now funded. And I'm pleased to announce today that we have another $1 billion in awards across 3 clients that's going to fund over the coming months.

Importantly, we're pleased with the diversity of these clients by type and geography, and the clientele includes some of the largest public pensions in the world. We have a strong pipeline.

And as we move into the back half of 2025, I look forward to updating you on future progress. Turning to Page 30.

A few comments on the Chinese investment fund industry. On the left-hand side, you can see that the industry grew by 7% in the quarter, driven by strong net inflows of CNY 1.8 trillion, split roughly equally between money market and long- term funds.

On the right, we're pleased with the continued strong performance of ChinaAMC, which has continued to post market share gains on long-term funds, increasing to 6.4% of the market, up from 6.2% last quarter and 5.4% last year. And on Page 31, you can see strong growth in ChinaAMC's AUM with investment fund AUM up 10% in the quarter and 34% last year, driven by CNY 153 billion or CAD 30 billion in net sales during the second quarter.

And on Page 32, you can see another quarter of strong growth at Northleaf with $1.7 billion in fundraising in the quarter and $5.2 billion over the last 12 months. Some of the particular strength of this quarter related to a very successful outing as the team concluded its fundraising effort around our infrastructure fund, NICP IV.

I'd also note that we're pleased with the strength of non-Canadian investors, which with around half of the fundraising over the last year related to foreign investors as Northleaf continues to expand its clientele globally. I'll now turn the call over to Keith Potter.

Thank you, Luke, and good morning, everyone. On Slide 34, you can see key highlights for Q2.

Adjusted EPS, which excludes Lifeco's other items, was $1.07, up 15% year-over-year and a record Q2 high. These strong results were diversified and driven by both our core businesses and contributions from our strategic investments.

We returned $168 million to shareholders in the quarter, including $35 million in share repurchases. We have repurchased 2.6 million shares year-to-date.

And as James mentioned, we are determined to repurchase more shares and are on track toward our 5 million shares for 2025. As we continue to return capital to shareholders, we are also strengthening our financial profile by steadily lowering leverage and cash dividend payout ratio while maintaining financial flexibility with significant unallocated capital.

And finally, as James has already spoken to, we increased the fair value of Wealthsimple to approximately $1.5 billion and realized value from our 2020 investment in Conquest through a partial divestment with gross proceeds of $25 million. Turning to Slide 35, you can see our AUM&A and flows.

On a year-to-year basis, ending assets are up 12% while ending assets were up 3.2% versus Q1, the significant volatility during April caused average assets to decrease slightly versus the prior quarter. On the left-hand side, you can see the volatility in our AUM&A in the quarter.

And it's worth noting that at the end of July, ending AUM&A is up approximately 5% from the Q2 average. If markets remain stable, the increase in assets will be a driver of strong revenue growth for Q3.

Turning to Slide 36. Point 1 and 2 help to illustrate the diversified drivers of our 15% year-over-year growth in adjusted EPS.

On point 3, on a year-to-date basis, our combined operations and support and business development expenses are up approximately 4% from last year, and we are maintaining guidance of 4% for the full year. On Slide 37, we present the key profitability drivers for IG Wealth Management, and I'll highlight a few points.

On the left side, you can see that average AUM&A was down slightly due to the volatility experienced in April. And on the right, as a reminder, the advisory fee rate includes advisory fees charged on AUA and also includes interest earned on client cash on deposit.

During the quarter, our advisory fee rate was up 1 basis point, and this is driven by a change in caring interest that is paid on client cash based on the amount on deposit. As I mentioned, at the end of July, our AUM&A is up approximately 5% from the Q2 average.

And assuming markets hold, we do expect to have an approximate 1 basis point impact on the advisory fee rate in the third quarter as clients move up wealth bans. And for context, this type of strong client return and impact are more aligned with what you'd expect over 1 year versus a quarter.

On Slide 38, IG's overall earnings of $131.5 million in Q2 are up 17.7% year-over-year. And I've already spoken to point one.

On point 2, other financial planning revenue continues to be supported by strong insurance performance, which Damon provided some detail on. And new fundings in our mortgage business are growing, and we are now starting to see signs of growth in the mortgage book, which we expect to continue over the mid-term.

For Q3, we expect mortgage income to be between $6 million and $7 million, excluding fair value adjustments. On point 3, IG operations and support and business development expenses were $164 million versus our guidance from last quarter of $170 million, driven primarily by timing related to spend on technology initiatives.

And we are maintaining our guidance for expense growth of not more than 2.5% for the full year. Moving to Slide 39.

We have Mackenzie's AUM by client and product type as well as net revenue rates. On the left, you can see average AUM is in line with Q1.

And on the right, overall third-party rate, excluding Canada Life, decreased primarily due to the onboarding of $3.7 billion in institutional assets as we guided during the Q1 call. And as we look forward to Q3, with the additional $600 million institutional assets onboarding in July and continued success of our wealth management partnerships, we expect to see this rate come down about 0.5 basis points in Q3, which is in line with the guidance we also provided in Q1.

Turning to Slide 40. Mackenzie's earnings were $57.8 million, up 3.4% year-over-year.

And on point 2, operations and support and business development expense growth was $118 million and relatively in line with our guidance of $120 million. Slide 41 has ChinaAMC results.

First, on the left, we saw another strong quarter in AUM growth. And on the right, you can see ChinaAMC's earnings of $29.7 million was slightly below Q1 2025.

And adjusting for currency, Q2 earnings would have been in line with Q1. Slide 42 has earnings contributions from companies in each segment.

A couple of comments on the strategic investments. First, Rockefeller earnings were close to breakeven this quarter, a meaningful improvement from last quarter.

And as stated on the Q1 call, we do expect earnings to turn positive in the second half of the year. Northleaf's second quarter earnings were up 76% from 2024 at $7.4 million after noncontrolling interest, driven by higher revenue and expense management.

I would note that Northleaf has delivered very well during the first half of the year, including strong incentive fees during Q1 and solid revenue growth and expense management through the second quarter. During the second half of the year, we would expect a base level of earnings closer to $5 million per quarter on average net of NCI with line of sight to upside driven by the final closing of a committed capital fund where clients that commit to the fund after the initial investment pay a catch-up fee sometime in the next couple of quarters.

A few points on Slide 43. First, you can see Wealthsimple's revised fair value of approximately $1.5 billion, up from $1.2 billion last quarter.

The change considers the increase in public market peer valuations in the quarter, Wealthsimple's business performance that has seen AUM&A grow by over $20 billion year-to-date driving our revised revenue expectations as well as third-party secondary transactions that occurred at the end of the fourth quarter. On Northleaf, we increased the carrying value by $40 million net of NCI for the earn-out, which reflects the very strong fundraising quarter.

And finally, at the bottom of the slide, you can see that our strategic investments and unallocated capital now have an indicative value of $6.6 billion, which represents a $28 per share value. Slide 44 demonstrates execution against our capital allocation priorities.

We continue to return capital to shareholders and strengthen our financial flexibility. In addition to paying the quarterly dividend and repurchasing shares, we continue to reduce leverage now just under 1.5x and decrease our cash dividend payout ratio now at 62%, down from 64% last quarter.

At the end of the quarter, our unallocated capital remained above $600 million. That concludes my remarks, and I'll turn it over for questions.

Just more of a strategic question with respect to ChinaAMC. I think at your Investor Day a few years ago, you talked about 15% growth in the strategic investments.

And I think part of ChinaAMC, you were looking for assets to kind of grow in the 13% to 15% range. Now we've seen much better growth in ChinaAMC assets, but your share of the ChinaAMC earnings is probably up, I don't know, mid to high single-digits over the last couple of years, even if we adjust for the change in ownership.

What makes you feel comfortable in getting the 15% growth from ChinaAMC? And where does it sit strategically really with respect to IGM?

Are there any other synergies you get from it?

Sure. Tom, it's James speaking.

When I compare and contrast the external environment that ChinaAMC is operating in to the actual performance of the business, all that, that company has done for us is, frankly, surprise to the upside. The business performance has been excellent, having, as you know, navigated significant equity market declines a couple of years ago, a meaningful reduction in active equity fees and an even bigger reduction in passive ETF fees.

So as we came into this year, we said, look, they're going to earn through all of that, and we're expecting 2025 earnings to be flat to 2024. I think they may do better, which, again, all things considered, in particular, things that have occurred in the external environment, I think it's a pretty remarkable performance.

So as we look into 2026 and beyond, we're now expecting -- having come through this period that I think they've navigated particularly well, we're now expecting a return to growth. And that will be driven by a lot of the kind of the system, the macro factors, the retirement reforms, the move out of property markets and into financial markets.

We're now expecting that growth to resume in 2026. And a number of us, a significant number of us -- we'll be over in Beijing in September.

And at those meetings, we -- this is the conversation that we're going to have, and we do expect to confirm a return to growth for ChinaAMC. Luke, do you want to add some comments?

Yes. Yes.

Thanks, James. Yes, I just want to reinforce James' comments.

The structural changes put forward in that industry in the last 24 months to reduce fees on active equity and balanced funds as well as ETFs were really designed to make sure this industry is realizing its full potential. And we're very supportive of the changes that have been made in the Chinese investment fund industry.

And we're as optimistic as ever that they are indeed going to continue to see this strong growth with Chinese investors increasingly using investment funds as a savings vehicle. Beyond that part of your question was how we get benefits outside of the direct holding.

I'd highlight 2 that you're clearly seeing in our results. The first is the opening of doors for us in Asia.

A number of the institutional client wins that we've announced over the prior quarters have occurred in the Asian market. So this has been a clear proof point on our investment in China and ChinaAMC.

The other thing that is less transparent is knowledge sharing across our businesses. This includes our investment team franchises as well as just sharing of information on how we run our business.

So we're very pleased with this relationship and how it's going and the value that's being delivered for IGM and Mackenzie.

I wanted to just dive into the simplification you announced where you merged mutual fund investment dealers. Like can you quantify some of the benefits you expect?

You called out streamlining processes, supporting future growth. So any sort of numbers you can provide on those expected benefits?

Yes, it's Damon here. I'm not going to focus on the numbers, but I'll give you kind of our take as to how we see this.

When you have 2 dealers, you have 2 legal entities. So you have multiple filings, multiple audits, multiple general ledgers, multiple client applications and forms.

This all gets streamlined so that we can have one of each. And for us, that's extremely important.

It improves the client and the advisor experience. Also along with that, we can finish our brand transformation because we can retire the Investors Group name finally.

Investors Group Financial Services was our mutual fund dealer. Investors Group Securities Inc.

was our securities dealer, and now future is IG Wealth Management, Inc. So that's a good thing for us.

But we're really poised for future growth with this move, and let me share you kind of why we feel that way. First off, it allows our advisors in a much more efficient and streamlined fashion to switch licenses if they so choose.

And every advisor has the right to choose that and be able to ensure that they are able to compete in their marketplace. Number two, we believe in the future, it's going to allow our advisors to be much more effective building high-performance teams.

In our view, high-performance team does mean that you should -- you can have members of your team that have different licenses. So we're potentially excited about that.

The last one is it allows us -- it's going to allow us to be even a better recruiter out there, talking to experienced advisors in the marketplace that want to be financial planners and focus on competing in their marketplace. So for us, this was a big move.

That's helpful. And then just on Wealthsimple, maybe a 2 part question.

One, help us understand the key drivers of that valuation mark increase. And then maybe more strategically, we're seeing capital markets come back.

The environment is pretty healthy out there. Like any updated view in terms of monetizing that asset or leveraging further benefits in that regard?

Bart, it's Keith Potter here. Yes, in terms of the valuation for Wealthsimple, we take under consideration a number of factors.

One, to the extent that there's a recent transaction, we can look to a recent transaction on the property. There was a couple of transactions at the end of 2024, so we took that into consideration.

Also during the first half of the year, you can see a real rise and especially this quarter in fintech peer multiples in the marketplace. So that's another point of observation.

Now we know private market firms don't necessarily trade like public market firms, but that's an important consideration. And as importantly and more importantly, we've seen Wealthsimple business in the last, call it, 2 quarters, grow their AUM by $20 billion, and that results in sustained revenue growth.

So when you think about the cash flows and the future forecast and for the business, we look at all those 3 elements for the valuation.

And Bart, it's James. I would just add to the second part of your question.

Our interest in Wealthsimple is strategic. It's not financial.

It's not a trade. We have no desire to monetize our stake I expect us to be a long-term shareholder.

And as I said in my remarks, I think the earnings we're delivering here are before we get earnings, any earnings contribution from either Rockefeller or Wealthsimple. And I think an earnings contribution from Rockefeller, I think, is right around the corner.

And in the fullness of time, we'll get, I think, a very significant earnings contribution from Wealthsimple as well. So it's a long-term driver of growth and another source of diversification within IGM Financial.

Maybe we could just touch on, Luke, just on the improvement in the retail flows. At Mackenzie, can you just maybe touch on what you think the key drivers are there and sort of turning that momentum, I guess, at the margin?

I guess really 2 things, Graham. Thanks for the question.

One, it has really been the places in the market we've been leaning into. So a lot of our strength came from international equity, global equity, where we have that strong offerings in quant, our [ Global Div, ] which is a core global equity where we've seen that demand.

Our emerging markets fund also by our team was added to a number of reckless. And so it's really been executing on the basics of making sure that we're leaning in to mandates where its compelling performance, and we see strong demand in the marketplace.

The other thing I'd highlight is just the sheer work effort of the retail sales organization. And we had an important event in London, England in May to showcase our Northleaf private capabilities.

And this was another moment where we're going to report more on it next quarter, but we've seen a lot of momentum and scale building in our private business. And this effort to build privates for retail investors has helped us get in front of people that we didn't touch before and are getting to know Mackenzie's story, and that's building improved momentum as well.

Okay. Great.

On that Northleaf, what's -- I think your result this quarter in terms of earnings is higher than what you've guided to for the second half of the year. So what's driving either the stronger earnings this quarter or the outlook for contraction in the second half?

Graham, it's Keith Potter here. Yes, the earnings were quite strong this quarter.

Revenue growth has moved upwards. We expect that to continue.

It was a very disciplined quarter for expense management at Northleaf. So that was one of the areas that even beat our expectation.

And that's why guiding to something closer to $5 million for the next -- as a base for the next couple of quarters is what I commented on. But like I said, there is upside potential.

There's an expected close of a committed capital fund where there is -- we do expect catch-up fees that could occur in Q3 or Q4. But that would be the main driver for this quarter, strong expense management.

Okay. Understood.

And then just lastly, can you remind us what your sort of threshold is for considering a dividend increase. And with your excess capital, it sounds like buybacks and reducing leverage are sort of your primary focus.

Is that correct?

Yes. We've -- it's James.

We've long said that as we approach 60% payout ratio on a cash basis, we'll take a conversation to our Board as to whether it's time to increase the dividend. And so we're making -- I think we're making pretty good progress in that regard.

So that conversation is not far away. But our current thinking is kind of unchanged to recent conversations we've had with you folks.

We just think we can add more value to our shareholders by buying back stock than by increasing the dividend. We have an attractive yield.

Even today, it's about a 5% yield. But we look at what we've built.

We look at the quality of the 6 businesses we're invested in. And we believe, as I said, our shares are undervalued, and that's where we should be committing capital.

And so when you look at the free cash flow generation of this business, when you look at the unallocated capital position of $600 million plus and you look at our leverage ratio, which is now 1.49, with snick under 1.5, I think there's lots of opportunity for us to approach 2026 with a goal of buying back meaningfully more shares than I expect we'll buy back this year. And as Keith said, this year, we're targeting $5 million.

First question for Keith. Just wanted to get a little bit more clarity on the advisory fees at IG Wealth and the moving parts quarter-to- quarter here.

It sounds like there's going to be an impact, but it wasn't quite clear if it was moving up or down longer-term or if it was going to stabilize around these levels with some of the AUM coming in. So maybe just run through that again for me.

Yes, sure. Thanks, Jaeme.

Yes, just in terms of the advisory fee and the change this quarter to our interest, you can kind of think about the 1 basis point being kind of a permanent increase of [ 1 ] basis point going forward. The comment on where that rate is going in the future, it really is going to be driven -- or my comment was assets are up about 5% at the end of July relative to the average last period.

And as assets rise, clients will migrate up the wealth tiers where the higher the wealth tier, the lower the rate. And so my comment is we've kind of guided to 0.5 basis points per quarter with the strength of moving toward high net worth mass affluent market.

But given the strength of what we've seen in market returns, that could be up to 1 basis point next quarter. So I'd separate kind of the client interest comment where I think that's a permanent increase.

And then -- but the overall rate will vary based on our clients moving up wealth tiers as it relates to our focus on high net worth and mass affluent.

Yes. Okay.

That's more clear. Thinking about Rockefeller, the guidance now is that it should deliver positive income in the second half.

My question -- I understand that. My question is maybe more around the trajectory of Rockefeller's income?

Is this -- should we expect positive results consistently quarter-to-quarter going into 2026? And then the guidance before was that it would replace IPC earnings.

It doesn't seem like it's on track to do that in 2026. So maybe if you could just help us think through some of the data points to focus in on for Rockefeller, where that revenue or income can get to in 2026.

Yes, Jaeme, it's Keith again here. So if you look at last quarter, earnings of negative $4.4 million, now negative $7 million this quarter.

a strong quarter of asset growth, like we would see trajectory into the third and fourth quarter of continued progress to that positive earnings. And as we head into 2026, we do believe that it's growing at a pace that could and would replace IPC's earnings.

I talked about that last quarter. We're -- call it, about a year delayed, but we would see 2026 as that moment of opportunity.

Yes. And Jaeme, it's James.

When you peel apart the business, the heart and soul of that business is what's called our GFO, Rockefeller's Global Family Office business. And that business is performing very well.

It's strong. Overall, it's as was promised, I would say.

They also have a strategic advisory business, an M&A business, if you will, and that's been softer, consistent, I think, with every M&A business on the planet that I'm aware of. And finally, they have an asset management business that, it's doing reasonably well, but perhaps not -- the growth isn't quite as robust as we might originally have expected.

So the sum of all of that is it will take a little bit longer. But I do want to highlight that Rockefeller has meaningfully increased their recruiting targets for 2025 versus 2024.

They are more confident than ever that, that combination of a very successful business platform that they have and an iconic brand, great management team that that's going to continue to make them kind of the destination of choice for wirehouse advisors who are looking for a new home. So the heart and soul of that business is just going real, real well.

Okay. Great.

And then last question. Obviously, a good chunk of unallocated capital today.

It does sound like buybacks are still a very important focus for capital allocation. But thinking through the Rockefeller stake and other opportunities with -- also with leverage fairly low as well.

Is Rockefeller the most likely strategy? Are there -- like maybe talk through some of the -- like is it an active -- more active market today than over the last few quarters for potential acquisitions?

What else might you be looking for?

Yes. We said in December of 2023 that we were -- at our Investor Day that we were entering a 2 year period where the focus would not be M&A instead the focus would be investing in the core, investing in IG, investing in Mackenzie, and that's very much what we've done.

And so that 2 year period will end, I suppose, at the end of this year. So I suppose the door opens.

And what I would say to that is I just want to reemphasize, we have the businesses we want. We're not looking for new businesses.

We've got 2 divisions, 3 wealth management businesses, 3 asset management businesses, we're proud of the businesses, and we're not looking to add to the current kind of portfolio. So any M&A we do, you should expect it to be restricted to the current portfolio.

I'd also add, again, as we kind of close out on this 2 year period, we're thinking -- we are thinking about what are the criteria for any further capital deployment. And the 2 criteria that we're very focused on are that any further deployment of capital within the current portfolio, the deal needs to be 2 things.

One is risk smart. We talked about that in the original Rockefeller deal.

So the first is risk smart. The second is it has to be value creating, clearly, value creating for IGM shareholders.

So those are the kind of the 2 criteria. I look across the portfolio, and I can see a world where it's -- like we know we will be putting more capital into Northleaf, okay, because we have obligations happily to purchase more equity in Northleaf, which we're pleased and proud to do.

But I also want to point out that as we do that, I'm also pleased to say that the founders and the employees of Northleaf are going to remain through -- at least through the medium-term shareholders in that business, owning the exact same instrument as us, common shares. And then I look over to Wealthsimple and Rockefeller.

And I do see a world where possibly we could put some more capital into one or both of those. But I do want to emphasize that the 2 criteria for any further capital deployment, particularly when we're in a world where our stock is trading where it is, the 2 criteria are the deployment of capital has to be both risk smart and value creating.

Thank you, Galeen. And once again, we'd like to thank everyone for joining the call with us this morning.

And Galeen, with that, we can end the call.