IGM Financial Inc. (IGM.TO) Q3 2026 Earnings Call Transcript

Operator: Thank you for standing by. This is the conference operator. Welcome to the IGM Financial Third Quarter 26 Analyst Call and Webcast. As a reminder, all participants are in a listen-only mode. After the presentation, there will be an opportunity to ask questions. Should you need assistance during the conference call, you may reach out I would now like to turn the conference over to Kyle Martens, Senior Vice President, Corporate Development and Investor Relations. Please go ahead.

Kyle Martens: Thank you, Danielle. Good morning, everyone, and thank you for joining us. On the call today, we have Damon Murchison, President and CEO of IGM Financial and IG Wealth Management Luke Gould, President and CEO of Mackenzie Investments Keith Potter, Executive Vice President and CFO, IGM Financial Before we get started, I would like to draw your attention to our cautions concerning forward looking statements on Slide 2 of the presentation. Slides 3 and 4 summarize non IFRS financial measures and other financial measures used in the presentation and on Slide 5 sorry, Slide 50 in the appendix we provide a list of documents available on our website related to IGM Financials' 2026 third quarter results With that, I will turn it over to Damon on Slide 7.

Damon Murchison: Kyle, and good morning, everyone. We delivered another strong quarter with continued momentum across our businesses driving a 15% increase in assets under management and advisement, and 19% increase in adjusted earnings per share compared to last year. Our leadership teams continue to execute and we are making progress against our 3 strategic priorities. First, we continue to grow our core Wealth and Asset Management businesses. IG Wealth and Mackenzie generated a combined $2.7 billion in net flows during the quarter. At IG, client assets reached $178 billion up 14% year-over-year. We are still seeing continued success in attracting mass affluent and high net worth Canadians supported by our ability to build long term trusted relationships and our comprehensive financial planning expertise. At Mackenzie, we have strengthened our competitive position. Allowing us to accelerate momentum across this business The changes we made to sharpen and strengthen our investment capabilities is translating into tangible results. Institutional continues to outperform while we are seeing real momentum in retail. With year to date mutual fund gross sales up 58% and improving retail net sales of $1.4 billion driven by stronger investment performance and expanding adviser relationships. Mackenzie is stronger, more competitive business today. With significant opportunities ahead. Luke will discuss this a little bit later on in the call. Across IGM, we are building on both businesses' strength by sharing expertise simplifying processes, improving data and technology, and investing in AI. Our goal is to create better client adviser experiences drive greater adviser and sales team productivity leading to profitable growth. I will detail our progress here shortly. Second, we continue to amplify growth through our strategic investment. Northleaf's net flows were $798 million, which are now included in IGM's consolidated net flows beginning in the third quarter. Wealthsimple and Rockefeller delivered particularly strong client asset growth of 68% and 27% year-over-year respectively. With Wealthsimple's recent financing representing another important demonstration of value creation. The opportunity for us here extends beyond financial contributions. These partnerships continue to create opportunities for strategic connectivity that will benefit all businesses. And we are continuing to activate these relationships. Year to date, Mackenzie leveraged its presence and established relationships in China to onboard additional assets from 1 of Asia's largest sovereign wealth funds. IGM boarded assets in partnership with Rockefeller, and Northleaf is providing private market capabilities to IG, Mackenzie, and Rockefeller. Third, we continue to allocate capital with discipline. We returned $343 million to shareholders during the quarter, including $144 million in dividends, and $199 million in share repurchases. And in October, we invested an additional $96 million in Wealthsimple. At the end of the third quarter, we have approximately $830 million of unallocated capital. This, combined with our conservative leverage profile, gives us flexibility to continue to invest in our businesses and return capital to shareholders. Our businesses have momentum we have a laser like focus on execution, profitable growth and long term value creation. I will turn to slide 8. I would like to update you on our progress we are making with simplification and AI. Simplification and personalization guide our work. Making it easier for our employees, advisers, and clients. AI is an enabler. Allowing us to elevate the stakeholder experience drive productivity and sharpen our competitiveness. Our June simplification actions create a capacity to reinvest without layering on costs. Keith will give you an update on our savings a little later. We have integrated technology and the business teams more closely and added AI leadership to improve alignment, delivery and accountability. We are beginning to invest in the foundational capabilities needed to use AI responsibly at scale. Which include common data services, a platform for AI solutions, and appropriate monitoring and controls. These investments will support broader deployment in 2027 and help us share effective solutions across IGM. Meaning, we are not trying to build isolated tools in every business. We want to establish common capabilities that our teams can use to solve real problems across the enterprise where possible with clear accountability for results. At IG, for example, we have expanded AI access and training across our adviser network and piloted supporting advisers before, during, and after client meetings. By preparing personalized meeting packages documenting discussions, and simplifying follow-up. We are also piloting chat enabled requests to simplify routine transactions through our corporate channel. The opportunity to give advisers time back means more time with clients and greater capacity to deliver better advice. At Mackenzie, we are seeing tangible progress across investment research, distribution and client services. We are integrating data and research to support AI assisted analysis and expanding AI use cases across our investment boutiques. We have also piloted generative AI for content creation, and AI powered competitive intelligence strengthening our prospecting efforts. Together, these initiatives are helping our investment teams make better informed decisions strengthen our distribution capabilities, simplifying how we operate. We are in the early stages of this journey. And we have been deliberate about putting the right foundations in place. As we look forward to 2027, our focus will increasingly shift towards deploying solutions and demonstrating tangible business value through better client adviser experience, improved adviser and sales team productivity, and strong. Stronger operating performance. Provide regular quarterly updates on this progress going forward. Turning to slide 9. The operating environment remained resilient although markets were more mixed than in the first half of the year. Canadian and US equity markets rose while the Chinese equities and fixed income weakened. Client investment returns were 0.2% for Q3, and 9.4% year-to-date. Despite economic uncertainty, the industry flows remain positive. We cannot control the markets, but what we control is the advice, sales, service and investment experience we deliver. Slide 10 illustrates the breadth of our earnings. Adjusted net earnings available to common shareholders increased 17% to $351 million Wealth Management earnings rose 30% supported by IG and Rockefeller. Asset Management was slightly lower as Mackenzie and Northleaf growth was offset by China Asset Management. Corporate and Other was also a contributor in the quarter. Our core business is our delivering, and Keith will cover the financial drivers in his comments. Now I will turn to IG Wealth's continued momentum. Turn to Slide 12. I would like to start by recognizing a very special milestone for IG Wealth as we celebrated our 100th anniversary this year. For a century, we have helped Canadians achieve their financial goals through comprehensive financial planning and trusted advice. A legacy that we are incredibly proud of. And what is particularly encouraging is that we are celebrating from a position of strength, IG ended September with record quarter end client assets of $178 billion up to 14% year-over-year and generated $666 million in net flows. We also delivered record third quarter new client gross inflows of $1.4 billion with 80% coming from mass affluent and high net worth Canadians. Which is exactly where we have been pointing this business. Gross inflows per adviser practice increased 23% year-over-year and 69% since our 2023 Investor Day. We have also strengthened our offering with a tiered interest cash solution and partnerships including Goldman Sachs and National Bank. This anniversary was an opportunity to recognize what our advisers and employees have built together. But it is also about the next chapter. Going forward, we will continue investing in our advisers technology, and client experience to help more Canadians navigate their complex financial needs. Rockefeller and Wealthsimple continue to execute their strategies and delivered impressive growth in Q3, which I will also detail. Turn to Slide 13. Gross inflows increased approximately 18% to $4.5 billion while our gross outflow rate improved modestly. That supported $666 million in quarterly net inflows and a 12. A trailing 12-month net flows rate of 1.6%. This consistency reflects sustained new client acquisition and strong existing client relationships. At quarter end, 76% of IG's investment solutions were rated 4 or 5 stars by Morningstar. And 98% were rated 3 stars or higher. We believe the combination of competitive investment solutions and comprehensive financial planning advice continue to fuel our growth. And we continue to see an opportunity to improve how we support our advisors so they can spend more time building relationships and less time navigating administrative work. Slide 14 shows how our client mix has evolved. New client gross inflows reached approximately $1.4 billion in the quarter. Over the past 5 years, inflows from high net worth households increased by more than 150%. And those from mass affluent households, grew by more than 40%. This reflects years of investment in technology, financial planning tools and our advisors capabilities allowing us to serve more mass affluent and high net worth clients in a more meaningful way. Tax planning, wealth transfer, business succession, and retirement all create growing demand for personalized financial planning advice that we provide at scale. Our value proposition goes well beyond managing investments. As our clients' financial needs become more complex having a trusted adviser who understands their family's full financial picture becomes increasingly more important. that is why we have been so deliberate about building our business around comprehensive financial planning and long term relationships that span multigenerations. We believe there is a significant runway to attract more affluent clients and deepen those multi generational relationships. Turn to Slide 15. This covers 2 important parts of comprehensive financial planning. Insurance and mortgages. With insurance, we delivered another strong quarter with new annualized premiums increasing 33% year-over-year to $27 million. Mortgage fundings declined 13% year-over-year in a more challenging environment. Both mortgages and insurance remain important ways to support our clients as they make significant financial decisions. Going forward, our opportunity is to bring these 2 capabilities together more seamlessly, helping our advisers deepen client relationships, and serve more of their credit and protection needs through a comprehensive financial plan. Slide 16 highlights our strong adviser satisfaction in the Investment Executive 26 Dealer Report Card. IG ranked first among direct peers with an overall score of 8.9, up from 8.8 last year. We also ranked first in 14 of 25 categories. Including financial planning support, high-net-worth solutions, and adviser development. Our adviser net promoter score remained exceptionally strong at 92. Why does this matter? It matters because great advisers are central to our competitive advantage. it is proven that we have the right support technology and capabilities that they can spend more time with clients building stronger practices and delivering better outcomes which drives value through greater share of wallet new client acquisition, and stronger adviser recruitment. We believe this matters more today than ever before as the industry faces adviser succession and Canadian financial needs become more complex. These results reinforce the strength of our platform and advisor proposition and we are gonna keep on investing Turning to slide 17 in Rockefeller. Client assets reached approximately $237 billion up 27% year-over-year. Rockefeller generated $5.3 billion in record third quarter organic asset growth. And $4.8 billion from inorganic growth via new adviser teams. Private adviser count reached 482, up 15% or 62 advisers year over year. Family office offering continues to attract leading advisers ultra high net worth clients. We see meaningful runway for further expansion in The US alongside opportunities to share expertise and strengthen collaboration with IG Wealth. it is another example of how strategic investments can bring both attractive growth and capabilities that are relevant to the broader organization. Finally, turning Wealthsimple on slide 18. This business continues to demonstrate exceptional growth. Assets under administration reached $169.2 billion up 68% year-over-year with approximately $11 billion in net flows during the quarter. Wealthsimple now serves more than 3.8 million clients up 27%, including 1 in 4 Canadians aged 18 to 40, and more than 30 thousand business clients. it is broadening its banking, business and trading offerings supported by simple, personalized client experience. With the recent announced financing, IBM invested an additional $96 million bringing the pro forma value of our investment to approximately $3 billion We remain Wealthsimple's largest single shareholder. The combination of client growth broader product offerings and deeper relationships create significant opportunity for Wealthsimple over time. And for IGM, the value of this relationship extends beyond our financial investment. Wealthsimple's approach to simplification, personalization, and client experience provides important insights as we continue to strengthen our own business. With that, I will turn the call over to Luke Gould to go over Mackenzie's results.

Luke Gould: Great. Thanks, Damon. Good morning, everyone. To Page 20, you will see highlights from Mackenzie and the Asset Management segment in the quarter. We are pleased with the continued momentum in the quarter across many dimensions. Our AUM is up 12.5% in the last year to a record high of $269.5 billion. We had net sales of $2 billion in the quarter and $5.6 billion year-to-date. Investment fund net sales of $664 million in Q3 were up noticeably from 2025, with all of this increase relating to retail net sales improvement of approximately $300 million from last year. And we continue to experience significant sales momentum from global institutional clients I will provide a bit more color on this in a few slides. At the bottom left of the page, we have reiterated our 3 strategic priorities at Mackenzie. Raise the bar in investment excellence, build better product, deliver a great service experience And all of our initiatives to enhance the business are focused around these 3 priorities. We have highlighted a few milestones on each of these priorities in the quarter. On investment excellence, we continue to see improvements in overall Morningstar ratings in the quarter and this is the highest share of our AUM and 5 star funds in almost 5 years. We also completed the implementation of our middle office and data foundation with BNY Mellon. This was a multiyear program that provides our investment professionals with a world class operating environment to do their best work. On the product front, we added to our Mackenzie Modis Systematic suite of ETFs leveraging capabilities within our multi asset team. And we also launched our novel global equity and gold overlay ETF, MGIC for those seeking protection from currency debasement or otherwise wishing for gold exposure as part of a single ticket solution. And within delivering a great service experience, we have a number of roll up milestones coming in Q4 on our digital platforms to advisors and clients in partnership with OneVest and Salesforce. This new online platform addresses feedback we have received from clients over time on how to enhance their experiences with Mackenzie. And on the bottom right, we have highlighted that we have received the results of the 2026 adviser perception study from Environics, and we are very pleased with these results. We have increased our overall score and had increases on most of the 40 measures in the survey. Our overall score rank is 2nd out of 25 assessed competitors. We are also pleased to have increased our adviser sales penetration. The percent of advisers in Canada actively purchasing Mackenzie and we maintained a rank of #2 on this measure across adviser types. As you will see in a few slides, we have introduced supplemental disclosures this quarter on new client acquisition, And these measures are consistent with what we have seen from the Advisor Perception Study and the number of advisers working with us. We also saw our Net Promoter Score improved to #3 relative to our rank in 2025 of #8. And I just close by saying it is so good to get this feedback from Canadian financial advisers and Temporonics. We do appreciate your study and get a lot out of it. Turning to page 21, you can see the trend in history of Mackenzie's net sales. On the middle left, you can see solid flows and continued improvement on our investment fund sales year to date. And on the right, you can see that this improvement has been driven by ongoing improvements in retail. At the bottom left you can see the strong year to date net sales overall, at the same level as 2025, which was a record high year for us on this measure. This was driven by continuing inflows from institutional investors. We are expecting continued improvement in sales across channels over the coming quarters as we continue to have winning conditions in a number of places within our offerings. Turning to Page 22, I would highlight in the bottom left that the industry environment remains healthy. The mutual fund net sales rate for the industry peers is around 2% and we are slightly above this. In the top right, we have highlighted the continued growth in retail with $92 million in improvement as well as meaningful institutional net sales in the period. If you look at the institutional SMA line, you will see that $1.362 billion reflects onboarding from some of the awards in Q2 that we telegraphed last quarter. We had a number of these new awards fund in the third quarter, And also, we had many, many new awards during Q3. And right now, the awarded pipeline meaning the. We have been awarded the mandates, but they have not funded yet, totals about $5 billion, and that is going to be coming in the coming months. And beyond this, we do have a very strong high probability pipeline as we enter 2027. I would comment that the institutional onboarding continue to reflect a good mix of some of the largest public pensions globally, sub advisory to financial institutions, many foreign clients, a few Canadian clients. And I would also highlight that while a lot of the institutional growth has come from our global quant equity team, we also saw very good growth from our Canadian equity team during the quarter. And in the bottom right, overall investment performance continues to be solid, and the share of assets residing in 5 Star Funds is mentioned remains at the highest level in almost 5 years and we have very compelling performance across a broad range of relevant strategies. Moving to page 23, we provide some new disclosure relating to our Canadian Retail business Serving Financial Advisors. At the top, we presented the quarterly sales trend for the last 7 quarters and year to date. And as a reminder, if you look at the quarterly numbers, there is seasonality in our business. At the top right, you can see the improvement of retail gross mutual fund sales at 58% year-to-date and you can see net sales improvement of $1.35 billion. At the bottom, I want to provide some context on new client acquisition. Highlighting the sale activity we are seeing from new advisors who started doing business with us, at the bottom left, you can see a contributor to the gross sales increase has been meaningful improvements in sales from new advisor relationships, which were up 129% I would also note that these numbers exclude ETF purchases. Year over year increases would be much larger when this activity is included as we have seen success in our active equity ETFs in particular. In the middle you can see that we are at an all time high in new advisors choosing to work with Mackenzie with very strong momentum here as we enter 2027. And in the bottom right, we are pleased to see this reflected in the adviser sales penetration numbers from the adviser perception study. Turn to page 24. You can see the performance in net sales for our retail investment funds by boutique. I highlight a few things on this slide. First, in the third column from the left, we continue to see noteworthy retail flows and momentum into our global quant equity boutique. As mentioned last quarter, I would note that we do not see these flows as being near their potential yet. We have 15 retail mandates here in large categories and the track records are exceptional. We are working hard on continuing to get the word out on this holistic quant approach. And as you scan across the top section of the slide, looking at the other boutiques, you will see that we have very compelling performance in a number of relevant product categories that this moment that we are going to lean into. Includes our multi asset strategies team, our value team, our resources and energy evolution, Greenchip team among others. Turning to page 25, a few quick comments on the Chinese investment fund industry. You will see that industry assets declined 1% in the quarter, And you can see at the very bottom there were relatively healthy long term net sales of ¥1.1 trillion this was offset by the equity market declines during the quarter. Around half of industry net sales were into fixed income products with the remainder into index equity products. And on the right, China AMC maintained its rank of #2 in the industry. With a 5.4% market share, up slightly from 5.2% in June. Turning to Page 26, China AMC ended the quarter with total AUM of ¥2.9 trillion, down 2% in the quarter. I would note, if you look at the bottom right, you will see China AMC had a solid ¥145 billion in long term fund net inflows during the quarter. And the composition of these flows was generally aligned with the industry with a mix of fixed income and equity index products. Turning to Slide 27, it was another good quarter for fundraising for Northleaf. Around $800 million raised primarily across private equity and private credit offerings. This brings fundraising over the last 12 months to $3.6 billion they have continued to average around a billion dollars in fundraising consistently. Since we commenced our partnership with them just over 5 years ago. Continue to be very pleased with the results at Northleaf. And with the management team's execution against its strategic vision and priorities. As you know, we started consolidating the results of Northleaf into ours effective July 1, I will now turn the call over to Keith Potter, and Keith will cover the financial results. As well as the accounting impacts related to our consolidation of Northleaf.

Keith David Bernard Potter: Thank you, Luke, good morning, everyone. Turning to Slide 29, IGM delivered another record quarter of strong broad based results. With adjusted EPS of $1.51, up 19% year-over-year. Reported EPS was $2.10 The main adjustments that are new this quarter include the noncash gain of $144 million that stems from the change in Northleaf equity accounting to consolidation accounting where we remeasured our existing investment prior to consolidation. And the amortization of acquisition related intangible assets driven by the purchase price allocation associated with Northleaf. Turning to capital allocation. We returned $343 million to shareholders in the quarter, including $199 million in share repurchases. Also ended the quarter with unallocated capital of $830 million and reduced our gross debt to EBITDA ratio to 1.22x, which leaves us with substantial financial flexibility as we continue to invest in our businesses and return capital to shareholders. In other highlights, as you have seen in recent press releases, we participated in a Wealthsimple financing round and increased the fair value by 13%. IGM now has an equity interest valued at $3 billion As discussed last quarter, we are consolidating results for Northleaf As you review our disclosures, you will see this impact consolidated financial statements as well. As our AUM and A and net flows reporting And if you have any questions, as you review the disclosures, please reach out to Kyle and the IR team and they can help you out. Turning to Slide 30, you can see our AUM and A and flow trends. AUM and A for IG and Mackenzie combined increased 0.7% relative to Q2. And as I commented, can see in the table, we started to include Northleaf in our consolidated AUM and A metrics. Starting in Q3 consistent with the consolidation of financial results. Slide 31 consolidates IG, Mackenzie, and Northleaf average AUM and A for IG and Mackenzie combined increased 17.1% year-over-year to support adjusted EPS growth of almost 20%. Excluding Northleaf, Q3 operations and support and business development expenses were flat year over year and up 3.6% year-to-date. Our results benefited from simplification initiatives we announced in June, which are progressing as expected. We expect to generate approximately $15 million in savings in 2026 which will be reinvested to strengthen our capabilities across IGM. We have begun that reinvestment with an initial focus on foundational AI capabilities and other priorities as Damon discussed. We are on track to meet both 2026 savings and reinvestment milestones. Looking ahead to the fourth quarter, are maintaining our full year Operations and Support and Business Development expense growth guidance of 4% excluding Northleaf, and I will speak more to this. We will also look forward to providing our 2027 expense guidance on the February call. Slide 32 presents key profitability drivers for Wealth Management. On the left, you can see average AUM and A was up 3.9% from last quarter. And on the right, our advisory fee rate decreased 0.7 basis points which was slightly higher than guidance provided last quarter the decrease was driven by more cash being invested into long term solutions And as a reminder, cash spreads are higher than the standard advisory fee rate. Looking ahead to Q4, we expect the advisory fee rate to decline slightly as cash is put to work in long term solutions. This trend is expected to reverse in Q1 of 2027 from investment fund year end cash distributions similar to what we saw in Q1 of this year. Asset based compensation rate was up slightly in the quarter and expect a modest increase in Q4. On Slide 33, IG's overall earnings of $197.9 million is another record quarter and up 27.4% year-over-year on revenue growth of 15%. The business continues to demonstrate strong and positive operating leverage. On Point 2, other financial planning revenue continues its positive growth trend year over year. Supported by strength in the mortgage and insurance businesses. Other product commissions is up in line with growth of insurance sales. And finally, expenses for the quarter are down year-over-year mainly due to simplification savings and timing of expenses As Damon mentioned, we are reinvesting savings in AI capabilities in Q4. And expect conference expense to be higher, including the IG 100 anniversary celebration and expect full year expense growth of around 4%. Moving to Mackenzie on Slide 34, average AUM was up 3.8% versus Q2 On the right, the third party rate excluding Canada Life decreased 0.6 basis points which was less than guided to last quarter and mainly due to timing of institutional fundraisings. As we look to the next quarter, our best estimate for the third party fee rate excluding Canada Life is to decrease approximately 1 basis point and overall third party rate to decline approximately 4.5 basis points. This reflects institutional businesses onboarding of approximately $1 billion in Q3, $1.3 billion in October and an estimated $2 billion for the remainder of the year. Turning to Slide 35. Mackenzie's earnings were $73.9 million, up 8.4% year-over-year with underlying growth of approximately 14.5%, excluding net investment income and other, which benefited from high seed capital gains in the prior year. Operations and support business development expenses increased 4.6% year-over-year primarily reflecting higher business development costs associated with variable wholesaler compensation. These commissions were higher this quarter given strong retail flows and growth in new supporters, as Luke discussed. it is important to recognize that timing dynamics of wholesaler commissions are expensed as paid, while the related revenue is earned over time. Unlike IG where sales commissions are capitalized. And amortized, If we see a strong finish to gross and net retail sales, this could result in some incremental variable commission expense in the fourth quarter. Turning to China AMC on Slide 36. Luke. Already commented on AUM. Q3 earnings were $33.5 million, down year-over-year and sequentially. Both comparative periods benefited from strong equity markets while the CSI 300 Index declined nearly 12% this quarter. This drove unfavorable fair value movements on China Embassy's investment holdings and it disciplined expense management helped offset much of the impact. Slide 37 has earnings contribution from companies in each segment, Rockefeller earnings have improved significantly driven by continued growth in the core business and transaction related revenue from their Alts platform. While these fees are part of Rockefeller's ongoing business, their timing and magnitude can vary from quarter to quarter. Transaction related revenue contributed approximately $6.5 million to earnings. Northleaf contributed $4.9 million to adjusted earnings, net of noncontrolling interest in line with expectations. On Slide 38, continue to make progress against our capital allocation priorities. We returned $343 million in capital to shareholders in Q3 including $199 million in share repurchases and $144 million in dividends. At the same time, we maintained $830 million on unallocated capital. Our gross leverage ratio ended the quarter lower at 1.22x compared to 1.25x in Q2. Our cash dividend payout ratio was 52%, reflecting continued growth in earnings. Overall, we remain focused on investing in our core wealth and management wealth asset management businesses investing in strategic investments we own today returning capital to shareholders and maintaining financial strength and flexibility to support our long term priorities. Turning to Slide 39. IGM's indicative value of approximately $91 per share We derive the indicative value of our core operating companies using average for PE multiples from a diversified group of wealth managers for IT and asset managers for McKinsey as of market close on October 30. it is worth providing some context on how these multiples have evolved. Global wealth peer multiples have declined from approximately 15x forward earnings earlier in 2025 to 10-11x today, approaching decade low levels. While asset manager multiples have remained relatively stable at approximately 10-12x. In contrast, Canadian banks and insurers are trading at approximately 15 and 14 times respectively reversing historical valuation relationship with Global Wealth and asset managers. Our indicative evaluation reflects a consistent approach using the Global Wealth and Asset Manager peer multiples. That will end our prepared remarks, I will turn it back to the operator to open it for questions.

Operator: Thank you. We will now begin the question and answer session. If you are using a speakerphone, The first question comes from Etienne Ricard from BMO Capital Markets. Please go ahead.

Etienne Ricard: Thank you, and good morning. At IG Wealth, it is interesting to see flows from high net worth clients, which appears to be accelerating what do you see as the key drivers of this trend, and would you expect a continued mix shift towards higher wealth households to support higher margins.

Damon Murchison: Yeah. it is Damon here. So the reason why you see that growth is quite simple. it is the services that we are providing quite frankly, which is we solve complex financial challenges for Canadians through you know, our financial planning expertise is needed in this country. More and more Canadians that we are in front of are looking for advice that extends beyond just investment advice. They are looking for tax planning, They are looking for intergenerational conversations and estate planning. They are looking for how can you help me with my business and how do I structure my business or how can you help me value my business and sell my business How can you help me explain my wealth to my kids? Because they are going to inherit wealth the likes of which they have never seen. And then how can I give to the causes that matter to me while I am living? So I can leave a legacy? These are all just examples of the type of advice that we provide at IG Wealth. And then, you know, we provide it at scale because we have advisers that are in every community across the country. In terms of forward looking, we see it just continue to grow. We have a very, very long runway. When I take a look at our penetration of clients or Canadians that have investable assets between $1 million and $5 million. So the start of high net worth we are sub-2% penetration. And when I look at Canadians that are $5 million-plus, we are sub-1% penetration. So given that we are providing a service that few others can provide and we are doing it across the country at scale, we have a huge opportunity here to continue this.

Etienne Ricard: And just circle back on margins, how would you expect a continued mix shift to help maybe raise the margin profile?

Keith David Bernard Potter: Yes. it is Keith here. Just it really impacts the advisory fee rate. You know, if you look at with the advisory fee rate and the trend over the past couple of years, I would expect it to continue to come down as we put on more high net worth clients that typically pay a lower fee rate than other clients. But I would also expect it to be a decent. it would move down at a decelerated pace relative to what we have seen in the past.

Etienne Ricard: Okay. And just to come back on Wealthsimple you maintain your ownership stable in the last equity raise. Where do you see IGM's ownership in the company move over the next few years to the extent more capital is raised and just an update on how meaningful Wealthsimple is for Mackenzie for. From a distribution channel perspective, that would be appreciated.

Damon Murchison: Yeah. So it is Damon. So I will start off that, and then and then Luke can talk about Mackenzie. But we have we have gone on record saying that Wealthsimple is strategic for us. it is strategic for us for a number of reasons. Obviously, they are phenomenal at what they do. And not just attracting new clients, but really embracing their existing clients and being able to broaden out relationships and deepen relationships over time across a number of different verticals. And Michael and team are very adept at that and we believe they are going to continue to do so. They are also very valuable for the organization because we learn from them. On a day to day basis. We are on a journey of personalization and simplification and there is probably no other organization in the financial services. Side of this business in this country that does that better than Wellsimple. So you know, they make us better each and every day. So you know, we are very proud to be their largest shareholder and want to continue to be their largest shareholder.

Luke Gould: Hey, Etienne. it is Luke. Welcome. Yeah. In terms of Mackenzie relationship, we are very pleased to support Wealthsimple and product offering. We support them through ETFs. The ETFs are substantially all passive. We do have some private label ones. We worked on with them. Think of it as about, you know, just north of $5 billion. In ETF business and think of it being a very, very small part of our revenue. Thank you very much.

Operator: The next question comes from Scott Fletcher from CIBC. Please go ahead.

Scott Fletcher: Hi, good morning. Just wanted to ask on the Mackenzie adviser relationships, good data there on the acceleration of new sales. Just could you unpack some of the strength there and what you are seeing resonate with the new advisers and how they are able to sort of increase their gross sales rates?

Luke Gould: Yes, absolutely. So we have it is interesting, Enverox has been doing this study for over 30 years and it is been such a gift for us. We really, in earnest, started using the feedback from the study to guide where we needed to make changes and make investments over a decade ago. And this is 1 of our key measures of how advisers feel about us. You look at the study itself it does have 40 measures and so you can think of it as covering everything that matters to an advisor from a product provider. So that includes the strength of product offering, the breadth of the offering, at the strength of sales support brand that sales and service. Every single dimension. This year, we are so pleased to see improvements across the board. We have generally been overall in the last, I will call it, 8 years, a consistent top 3. 8 years, a consistent top 3 We really do have as our KPI for the company to be #1. Nobody wants to be #2. it is a big rally cry for us. We want to be the very best the most relevant, respected, admired. And we do believe this study would inform, you know, who actually is holding that position. So we are very pleased to see the success and again we are we are generally top 3 in most measures, and we are aspiring to be #1. on every measure. And we have got all of our initiatives lined up to do that and all the investments we keep making in the business. to help us be the very best in this country. On the new advisory supporters, a lot driving that. We have got the feedback across the board on where things are getting better. And why advisers should be proud to work with us as a trusted partner in the business. And right now, there is a lot of relevance across the number of product offerings, a lot of the new advisers coming on. Have come for Quant. that is been a lead offering that we have had right now. And so that is been nice to see having these new relevant and compelling offerings to really provoke discussions with new folks who are adding us to their practice.

Scott Fletcher: Okay, thanks. And sort of a follow-up on the quant boutique, really the engine of flows on the retail side of things. I was curious on the mandates that you transferred over into those into that boutique. Are you seeing those flows in those funds improve after you move them over?

Luke Gould: Yeah. For the ones we talked about last quarter, that was our US mid mandates. And yes, we have seen improvements. And again, on this holistic quant approach, we now have over 30 mandates. Of those 30, about 15 have been launched in retail in Canada. And, yeah, it is the level of alpha has been has been impressive. The approach is proven. And what is been most compelling for us is the consistency of alpha across different style led environments or factor led environments. So, yeah, the reassignment of mandates has gone very well in US SMID. And more broadly, again, the focus is just getting the word out. You know, this combination of AI and HI you know, artificial intelligence and human intelligence, it is really paying dividends in this space at this point in time.

Scott Fletcher: Great. Thanks, Luke. I will pass the line.

Operator: The next question comes from Bart Ziarski from RBC Capital Markets. Please go ahead.

Bart Dziarski: Great. Thanks for taking the question and good morning everyone. So just wanted to ask on Wealthsimple, there is a product release day yesterday. Could you maybe walk us through kind of just the flavor of those product launches and how you expect the product mix to evolve for Wealthsimple going forward? Thanks.

Damon Murchison: Yeah. Hey, Bart. So it is Damon. So I will say that in terms of the announcements, focused on 3 key areas of their business. First off, just making sure that they are focused on AI. And offering new tools to their clients. That leverage AI. So it makes it easier for them to you know, manage their money and do analysis and do all the wonderful things that they need to do to be able to understand their financial situation a little bit better. Including, you know, a little bit of a of a concierge or private banker as they would say. The second theme was just around investing and trading. They want to step change and have the most sophisticated investing platform in the country. But also the simplest investing platform to use in the country. So they have gone on record in saying that, which is certainly ambitious, and they are more than capable of delivering that. And then they want to enhance their app experience. For their clients. So those are the 3 areas as well as continue to launch products in the banking space and the investing space. So they have got an ambitious plan. To be able to do so. And we fully support Michael and his team.

Bart Dziarski: Got it. Thanks, Damon. that is helpful. And then maybe for Luke. You commented that you have seen the highest share of AUM in the last 5 years of 5-star performance, so obviously a strong result. And there is changes there earlier this year. Can you maybe walk us through just where you are seeing the momentum and what is sort of driving that strong performance? Thanks.

Luke Gould: Yes, absolutely. Page 24 is a good summary by boutique. Can think of Morningstar ratings generally being a weighted average of the percentile rankings of the 10-year, the 5-year, and the 3-year returns. When you look at the roster, we have now got 13 of our 20 largest funds have a rating of 4-star or 5-star. And so it is been nice to see that trend evolve. And when you when you think of the offerings, that have that relative strength, just eyeballing that page 24, you can gather where they are. Our multi asset strategies team with their managed solutions have exceptional performance that the best they have ever had. Our global quant team global equity income, has also seen a real recovery in performance recently. And resources Greenchip, lots of 5-star products there as well. So you can see we have got a big range. I would also comment on the quality teams, Ivy and Bluewater. Where the quality style and the defensive style in the last few years has not been a style that is been in favor. it is been interesting to watch the last, you know, 6 weeks how markets have changed and to see a lot of these styles start getting legs under their feet again. So it is sort of shelf is evolving quite nicely as we enter 2027.

Bart Dziarski: Got it. that is helpful. Thanks for taking my questions. Yes.

Operator: Thank you. The next question comes from Graham Ryding from TD Securities. Please go ahead.

Graham Ryding: Maybe just a follow-up question there. Luke, when you talk about the quality team, sort of lighting up a little bit in the last 6 weeks, you talk about performance noticeably outperforming, or are you talking about interest from, you know, advisers and clients?

Luke Gould: But that was that was performance starting to turn. Yeah. So for those 2 it is been different environment and environment much more suited to their other style. I would say on the on the flow side, we do see this as being a tailwind that as you can see on page 24, those franchises have been in net redemptions. Over the past number of years. And we are seeing those net redemptions starting to kind of peak and come back the other way. So we do have a few tailwinds there as we enter 2027.

Graham Ryding: Okay, great. Maybe Damon similar sort of theme, but just anything at the margin that you are seeing in terms of client behavior or feedback from your adviser network just given the recent, you know,, market volatility with interest rates the last sort of, I guess, 6 weeks and obviously market volatility more recently. Are you seeing anything with client behavior or feedback? And. Or are you expecting any sort of impact here if this volatility persists.

Damon Murchison: Yeah, I think what we are seeing from what we are hearing from our advisors and we are from our clients is traditionally what we have always heard in periods of significant volatility at IG Wealth where you know, our advisers really look to their clients and to start to dollar average cost. Into the markets during periods like this. Versus commit all at once. And then this is something that we always traditionally do. And so you get are paid to wait right now, you know, in, you know, particularly if you if you if you wanna go a little bit longer. So, you know, that. that is something that is just consistent with our business. And if the volatility persists till the end of the year, then you will certainly see more of that.

Graham Ryding: And how do you sort of feel your positioned maybe relative to some of your peers if we are in a more volatile market? Do you feel like your scale or you are more defensively positioned perhaps?

Damon Murchison: Yeah, you know what, in volatile markets, we tend to do quite well for a few reasons. Number 1, you know, our clients tend to be invested for the long term. We talk to them about reinvesting in the long term, and we hold their hands. So they are less adept to try to make rash decisions. It just becomes, okay, when do we commit, you know, the monies that we have on the sidelines? And that is where dollar average costing comes in. Number 2, it allows us to talk about other levers in their lives that matter, particularly protection. Credit. You know, wealth transfer, all the other things that people start to think about when they see the markets kind of go a little bit wonky. They start to look at the other parts of their life. So it allows us to really get into that financial planning conversation. And when we do that, you fortify your existing relationships, but then you are in a position to then get referrals, that drives new client. Acquisition. So for us, periods of volatility, we tend to do quite well.

Graham Ryding: Great. My last question would just be buybacks have been elevated this year relative to what we saw in 2024 and 2025. Should we expect this sort of cadence of buybacks to continue going forward? Or is this perhaps somewhat of an elevated year?

Damon Murchison: Yes. So let me take a step back first and just talk about year to date, like the organization's in a very strong financial position. Unallocated capital of $830 million, low leverage profile. Which has allowed us to continue to invest in the business and return capital to shareholders in a disciplined fashion. We are very proud that year to date we returned a record amount of capital to shareholders Our priorities remain consistent. So first, we want to invest in our core businesses. IG Wealth and Mackenzie. 2, we do wanna grow our dividend. Commensurate with our ability to grow our earnings. And 3, we do want to return continue to return capital to shareholders. In context of continuing to invest in our core businesses. The momentum that we have now at IGM and Mackenzie along with our unallocated capital position and low leverage gives us a lot of flexibility going into 2027 as it relates to continue to invest in these businesses and return capital to shareholders. And we look forward to going to our Board with our capital plan at the end of this year.

Keith David Bernard Potter: Yes. This is Keith here. I would just add as well. So we if you look at October, I mean, we are on pace for the same share buybacks we had in Q3. As Damon mentioned, we will be going to the Board in October with our capital plan. I will just remind as well that late last year, did have the proceeds from the Rockefeller transaction, which was you know, part of the proceeds that we are using to buy back shares this year. And as Damon mentioned, after we invest in the core, we will review dividend with the Board. That gives us a lot of flexibility for share buybacks and we will weigh that against other opportunities, capital allocation opportunities.

Graham Ryding: In the New Year. Okay. Great. That helps. Thanks.

Operator: The next question comes from Adi Gupta from Desjardins Capital Markets. Please go ahead please.

Adi Gupta: Hey, good morning. Thanks for taking my question. Just a quick 1 here on Northleaf and the strategic connectivity your other businesses. We have seen decent growth in the amount of assets that it manages for Mackenzie and the assuming it manages assets for IG Wealth and Rockefeller as well. Is there any room here for, you know, for you to kind of put your. Put the pedal to the metal here and maybe just kinda doing more And maybe, like, just thoughts around time frame time frame of that Thanks.

Damon Murchison: Yes. So it is Damon. I will start it off. In terms of IG Wealth, mean, Northleaf has been a fantastic partner of ours and we are always looking for ways to leverage their expertise in infrastructure in private credit, and private equity through our managed assets program. And our managed assets program allow us to invest in Northleaf in ways where we do not have to provide liquidity at their product level, but at the program level. So we get the pure play. So, you know, over time, I think that the opportunity is significant for Northleaf and for IG. And then Rockefeller, they certainly are on Rockefeller shelf and they will look to over time to increase that.

Luke Gould: Yes, it is Luke. I will just I will just say we have added 5 products, Mackenzie Northley product for Canadian households. And we are very proud of those and our continued work on getting those products in Canadian's portfolios. I would say another area of growth that we see at Mackenzie is more inclusion of North within our RMAT solutions. Much like Dana was speaking. So that is something you could expect to see more of here. And I will I will also expand on Damon's comments on Rockefeller. Within the PowerGroup ecosystem, do see a lot more opportunity for NordLeaf inclusion. That includes the mPOWER in The United States Of America, which is the second largest retirement service platform in The States. that is something the North Leaf and MPART teams are actively working on. And so we do see a lot more opportunity within the group for Northleap to shine.

Adi Gupta: Awesome. No. That. that is great color. And just 1 quick question on Rockefeller. We saw a pretty decent uptick in adjusted earnings. I think you talked about transactional revenue being a portion of that. Maybe just how to think about the earnings trajectory for Rockefeller as we head into 2027? Any color there would be appreciated.

Analyst: Thanks.

Keith David Bernard Potter: Yeah. You know, it is Keith here. We sit on the border of Rockefeller, so they are going to put a plan in front of us in the new year and we can give you more perspective then. But what I would say is if you look at kind of their core you know, base business, on a quarterly basis, they are, you know, kind of look at earnings growing at about $1 million to $1.5 million per quarter. That would exclude, you know, a key part of their business, which is transaction revenue, and they generate that in 2 areas of their business. 1 is their M&A advisory and the other 1 is their alt platform. And so in this quarter, obviously, they have generated meaningful growth from that. Bart of the platform. As I said, we would expect that to be, you know, part of their earnings going forward. It will be lumpy over time, but I would go at, you know, kind of a base $1 million to $1.5 million per quarter. But upside to that as they have other transaction related revenue associated with M&A in their Alt platform.

Adi Gupta: Great. Thank you.

Operator: The next question comes from Rommel Sabat from Jefferies. Please go ahead.

Rommel Sabat: Hi, good morning. Thank you for taking my question. So we have seen significant margin improvements, notably in IG Wealth. So I understand that this is driven from the cost savings that you mentioned that is gonna be reinvested into AI and technology. So I understand from an absolute basis, operating expenses should not change much. But we. When we think about the margins, should those productivity gains and cost efficiencies drive meaningful margin expansion in 2027, or is that something further down the line?

Keith David Bernard Potter: Yeah. Yeah. it is Keith here. So the savings that we are generating, we are going to reinvest in AI capabilities, whether that be people, processes, or technology. And so we have you know, our expense growth guidance for this year is 4%. We will provide you with guidance for next year. But that will help us, you know, build stronger businesses and generate the growth in revenue and, you know, the top line of the business. So I would not necessarily say that specifically is gonna drive, you know, margin expansion. But it is just contributing to a stronger business that we can achieve our objectives and priorities.

Rommel Sabat: Okay. I get it. That makes sense. Thank you. that is the only question I have.

Operator: Thank you. This concludes our question and answer session. I would like to turn the conference back over to Damon Murchison for closing remarks.

Damon Murchison: Thank you, operator. Let me close the call on a few points. First, our core business at IGM continued to demonstrate strong momentum. Second, our strategic investments provide additional opportunities for growth and value creation. And thirdly, we are taking meaningful steps to simplify IGM and invest in our capabilities. That will strengthen our competitiveness. And lastly, we have the financial strength to compound value while returning capital to shareholders. Our strategy is working, and we are focus remains on execution, profitable growth, and long term shareholder value. I wanna thank our employees and advisers for their continued dedication and our clients for the trust they place in us. Thank you for joining us on today's call and your continued interest in IGM. With that, I will turn it back over to the operator to close today's call.

Operator: This brings to a close today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.