IGM Financial Inc

TSX:IGM

Welcome to the IGM Financial First Quarter 2025 Analyst Call and Webcast. [Operator Instructions] The conference is being recorded. [Operator Instructions].



I would now like to turn the conference over to Kyle Martens, Head of Investor Relations.

Thank you, Betsy. Good morning, everyone, and welcome to today's call. Joining me here, 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, 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 the material. And on Slide 6, we provide a list of documents available on our website related to IGM's Q1 results.



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

All right. Thank you, Kyle, and good morning, everyone. I think we continue to demonstrate consistent growth during the first quarter, delivering adjusted earnings per share of $1, a first-quarter record. Our core businesses, IG Wealth and Mackenzie also ended the quarter with record high client assets, while each of our strategic investments delivered double-digit year-over-year growth.



Including strategic investments, our client assets grew by 19% year-over-year, surpassing for the first time, $0.5 trillion at the end of the quarter. As our wealth and asset management businesses continue to execute on their plans, IGM Financial benefits from their diversified sources of growth across multiple geographies. We also benefit from their differentiated go-to-market strategies that are further elevated through real interconnectivity amongst businesses. This combination of diversification and growth is one dimension of our strong positioning as we navigate through today's complex economic environment and continue to execute toward our medium-term objectives.



Another dimension is our balance sheet strength and financial flexibility, which is underscored by IGM's strong credit profile, modest leverage, and a significant unallocated capital balance, which exceeded $600 million at the end of March.



Turning to Slide 10 and the current operating environment for our businesses, starting with recent financial market conditions. While much of the first quarter was characterized by considerable uncertainty, the financial markets, for the most part, proved resilient until early April, when we saw a spike in volatility. Despite the volatility, our businesses remain well-positioned. This is a very good market for financial advice. a very good market for active management, and this is a very good time to have diversification in our businesses and in our client assets. And importantly, the driver of recent market volatility is, at its core, solvable uncertainty. To the extent the underlying issues are solved, the strength of our businesses will be most evident in the near term. If the market chooses not to recognize this, we are in a very strong financial position and have the firepower to purchase more IGM shares and will.



As shown on Slide 11, the positive momentum we saw in the Canadian operating environment during 2024 continued into the RRSP season. By March, the uncertainty had shown signs of weighing on investor confidence. While redemption rates were stable, we saw gross sales soften slightly at the industry level. Damon and Luke will speak to this in each of their businesses during this call.



On Slide 12, we present our Wealth and Asset Management earnings results, which Keith will address shortly.



And on Slide 13, we see how each of the 6 wealth and asset management businesses contributed to IGM's strong asset growth over the course of the last year. We remain very confident in the business that we have architected over the past several years and its ability to drive strong medium-term earnings growth.



Damon, over to you.

Thank you, James, and good morning, everyone. Turning to Slide 15 and Wealth Management's first quarter highlights, including IG Wealth, Rockefeller, and Wealthsimple. During the quarter, we saw record gross inflows and sales into IGM products as well as record Q1 gross inflows from new clients. IG Wealth ended the quarter with AUA of $141.5 billion, up a solid 11% year-over-year and up 1% during the first quarter, driven by financial markets and strong net flows.



Gross inflows during the first quarter were $4.2 billion, while gross sales into IGM products were $4.9 billion. Net inflows for the quarter were $718 million, and net sales into IGM products was $944 million. April saw record gross sales and continued the first quarter trend with gross and net sales into IGM products surpassing gross and net flows as clients continue to dollar average cost into these volatile markets. Total gross inflows from newly acquired clients were $1.3 billion, with mass affluent and high net worth clients representing 76% of these flows.



Our mortgage and insurance businesses continued their momentum as we extended our partnership, supporting our key industry wealth drivers in the first quarter while adding a new partner focused on philanthropy and legacy planning. For the second straight year, IG ranked #1 in earned media share of voice among Canadian banks and independent wealth brands. And for 2024, we also earned the top position of industry spokesperson.



Both Rockefeller and Wealthsimple had strong quarters, which I'll also speak to in coming slides.



Turning to Slide 16.



You can see IG's Q1, April, and last 12-month net flows. On the left, you can see our first quarter and April net flows. While April is typically a seasonally slow month as clients focus on prepping and paying taxes, I'd like to highlight 2 important things. The first is this year's tax bills were higher than traditionally expected industry-wide due to clients triggering capital gains ahead of the proposed capital gains inclusion rate increase. And two, gross flows momentum slowed, but still remained at record high levels, even with this tough market backdrop.



As seen on the right-hand portion of the slide, market volatility has not prevented our clients from continuing to dollar cost average into the markets, as our last 12-month net sales into IGM products continue to move closer to our total net flows. As our clients continue to adjust to this complex economic environment, we are more confident than ever in the value of our financial planning and our advisers' ability to partner with our clients to build, quantify and preserve, and distribute their wealth.



Turning to Slide 17. You can see our operating results, which provide further insight as to the strength of this business. At the top left, you can see the year-over-year decrease in our gross outflows rate. You can also see the split of our current client assets with current cash, GIC, and HISA balances, which continue to support our clients' dollar cost averaging back into the markets today and over the coming quarters.



Turning to Slide 18 and our gross inflows from newly acquired clients. In the first quarter, we continue to show strong growth in new client inflows from mass affluent and high net worth clients, which grew year-over-year by 10% and 80%, respectively.



During the quarter, high net worth clients acquired accounted for over 38% of total new client inflows. This included over $160 million from 3 clients. And while we do not indicate that this size of client is a core focus, successful closes at this scale provide a further example of how we've transitioned this business and how we now have a firm position at the table as we buy for high net worth and even ultra-high net worth clients.



Turning to Slide 19 and our continued momentum in the mortgage and insurance businesses. I'll make 2 points here. The first is our mortgage funding was up 53% year-over-year, supported by more advisers who are collectively referring more mortgages and increased penetration across the country.



Second point, our new annualized insurance premium increased by 15% year-over-year, reflecting our focus on investing in and growing this business. Q1 is traditionally a slower quarter for the insurance business given the investment focus of RSP season. The fact that this was our best insurance Q1 in first-year commission since 2017 speaks to our strong momentum we have in this business.



Now turning to Slide 20. This slide represents another important component of our journey. Having a national voice, sharing our thought leadership across a number of dimensions, and being omnipresent. 2024, for the second year running, IG Wealth was once again recognized as the #1 wealth brand amongst independent and national banks from an earned media perspective. 2024 also brought 2 additional firsts for IG. We ranked first in the Quebec market in earned media share of voice. And secondly, we took the top position for the most visible industry spokesperson.



We continue to lead from the front in this country, showcasing our knowledge on financial planning, insurance, tax planning, banking, and investment strategy while also providing our thought leadership and speaking to our best-in-class advice experience. We are communicating our ability to solve complex financial problems, which has increased in lockstep with the complexity driven by today's economic backdrop.



Now turn to Slide 21, and I'll provide some updates on Rockefeller's progress. Client assets were up 16% year-over-year, driven primarily by inorganic and organic growth. Over the last 12 months, organic growth has driven $5.5 billion in client assets, primarily through Rockefeller's core wealth platform. Rockefeller also continues to add to their private advisory network, with 24 new advisers being added during the first quarter.



Turning to Slide 22 and Wealthsimple. Wealthsimple continues to deliver strong AUA growth driven by their ability to attract new clients and increase their share of wallet. Wealthsimple increased their clients served by 15% year-over-year, and their AUA increased by $9 billion during the quarter, and this is up 89% year-over-year.



With that, I will turn the call over to Luke Gould.

Great. Thanks, Damon. Good morning, everyone. Turning to Page 24, you'll see a few highlights for Mackenzie and for Asset Management during the quarter. We ended the quarter with a record high AUM of $219 billion of Mackenzie, up 7% versus last year and 2.5% in the quarter. Net sales of $3.4 billion during Q1 included previously announced institutional awards of $3.6 billion that funded during the quarter.



During Q2, another $1 billion of these institutional awards will fund and the size was extended around $600 million beyond what was previously announced. Year-to-date, we've launched 11 new investment funds for retail, focused on areas of emerging growth and to complement our existing offerings. I'll give some color on these in a few slides. And at the bottom, both ChinaAMC and Northleaf continued to have good growth during the quarter.



ChinaAMC's investment funds have grown by 27% year-over-year, while Northleaf delivered another consecutive quarter of $1 billion in fundraising, as they've done every quarter since our partnership began with them 4 years ago.



Turning to Page 25, you can see the trend and history of Mackenzie's Q1 and April net sales. On the top left, our Q1 investment fund net flows were slightly positive and up meaningfully from last year, and gross sales were up 12%. In the bottom left, you can see that in the context of a challenging market environment, our April flows were up from 2024 and our best level since 2021. I'd also note that following the launch of a range of active equity ETFs last year, we're seeing an increasing proportion of our flows come in ETF forms.



On Page 26, at the bottom left, you can see our net sales segmented between retail and institutional and by product type. While retail gross sales were up 11%, net redemptions were in line with last year. Improvements we're seeing in products with strong momentum have not yet offset the declines in products that had softer performance in the environment that we've just exited, and I'm going to review this trend on the next slide. And in the bottom left, you can see the momentum in institutional investment funds as well as the Q1 institutional fundings, which brought net sales there to $3.5 billion.



At the top right, you can see a reduction in our share of assets in 4- and 5-star funds. We lost March of 2020, the start of the pandemic from our 5-year track record in a few of our larger, more durable funds that have generated significant alpha at the start of the pandemic. Importantly, these same funds are now generating meaningful alpha and strong performance within the current environment that we're now in. And I'd also note that the share of assets that we have in 5-star funds increased in the quarter from 7% to 11%.



Turning to Page 27. You can see our performance and net sales for our retail mutual funds and ETFs by boutique. As I spoke to on the previous slide, we've moved out of that narrow [Indiscernible]-led environment into this moment of greater volatility and breadth of returns, and we are seeing very strong relative investment performance being put on across many of our boutiques. At the left, the third column from the left, you can see our IV franchise with its quality focus delivers very well in environments like this, and you can see strong near-term performance here.



And as you go across to the right, you'll see that we've also seen improvements in near-term performance in Bluewater with its durable growth approach, as well as Greenchip with its focus on the environment transition. I'd also highlight towards the right, the continuing strength in our global quant equity and global equity and income boutiques. You can see we've got net sales momentum here, which has been building with retail net sales of $529 million here this quarter and this momentum continuing into Q2.



Turning to Page 28. I want to take a moment to focus on one of our key priorities, product innovation, and a breadth of relevant offerings. We've had a very busy retail product launch program in 2024, and this is continuing into 2025 with a focus on areas with emerging growth and ensuring that we have a comprehensive shelf with positioning in all the right places. 2024's product launches focused on trailblazing quant as well as bringing active equity ETFs to market. Last quarter, we highlighted our global quant equity boutique and their strong growth and recent business development wins, and we've updated that snapshot on the right.



On the left, you can see the 11 mandates that we brought to market year-to-date, and we've highlighted the themes. Beyond these themes, upcoming 2025 launches will also be focused on better beta and expanding our Northleaf private offering. With the 4 new quant products launched this quarter and the 9 launched last year, we now have a very broad quant offering of 15 different mandates, all with very compelling track records delivered by our team's holistic quant approach.



You can see as we go down the schedule on the left, we've extended our active fixed income ETF offerings with target date maturity ETFs and a AAA CLO mandate that brings to retail a strong track record and proven capabilities that we've developed elsewhere. We've also added to our liquid alts offering with 2 enhanced yield funds that combine our flagship 5-star global dividend fund with an option strategy to enhance yield. And we've also brought to the Canadian market our U.S. Alpha extension strategy that we've been running for SEI in the United States. This is a 1/20/20 long/short strategy with a very strong track record that seeks to generate excess return with the same market exposure.



I also do want to highlight that we brought our Asian and European equity teams to Mackenzie Retail with an international all-cap equity mandate, where we've brought a strong track record in a space that we believe is really well positioned for the time period we're entering. And lastly, we partnered with Putnam to bring their flagship U.S. value mandate to the Canadian marketplace, and we are seeing a renewed interest in value investing. The only other comment I have on this slide is to remind on the right that we do have an additional $1 billion in previously announced institutional and partnership business funding in Q2.



Moving on to Page 29, a few comments on the Chinese investment fund industry. On the left-hand side, the industry experienced net redemptions during the first quarter, and we did have some investors redeeming following equity market recoveries during Q4. ChinaAMC's market share and position remains very strong. They're the second largest in the market in long-term funded overall, and they saw their market share increase from 5.6% to 6.2% in the last year.



On Page 30, you can see that while ChinaAMC's long-term fund assets declined in line with the industry in the quarter, money market and institutional assets grew very well, driven by net inflows, and total assets have now reached a record high level of KRW 2.7 trillion or CAD 525 billion.



And turning to Page 31. As mentioned, you can see another quarter of strong growth at Northleaf with $1.1 billion fundraisings in the quarter and $5.3 billion over the last 12 months.



I'll now turn the call over to Keith Potter.

Thank you, Luke, and good morning, everyone. On Slide 33, you can see key highlights for Q1. Adjusted EPS, which excludes Lifeco's other items, was $1, a record Q1 high. We returned $213 million to shareholders in the quarter including $79 million in share repurchases, and during Q1, we accelerated our repurchases to offset the heightened option exercises from Q4 and we expect the repurchases during 2025 will extend beyond the anti-dilutive actions as we continue to execute on our NCIB program to purchase up to 5 million shares.



Our operations and support and business development expense growth was approximately 6% year-over-year. I'll speak to the business-specific seasonality for IG and Mackenzie on their respective slides, but reaffirm our 4% expense growth target for the full year. And finally, our unallocated capital increased to $615 million, which is a jump from $531 million last quarter, and this increase is primarily driven by retained cash earnings and a $66 million dividend from ChinaAMC.



Turning to Slide 34. You can see our AUM&A and flows. As seen on the right side, Q1 asset growth was positive and ended assets up 9.1% year-over-year and 1.7% in the first quarter. April was defined by significant volatility, which is visible on the chart on the left. And despite this, assets were down only 2% compared to the end of March.



Turning to Slide 35 on point 2. Net investment income of $7.8 million primarily reflects interest on cash balances, and this is down from prior periods due to lower interest on cash, lower seed capital gains, and FX on some U.S. cash balances. Looking forward, market volatility may impact net investment income in the coming quarters and seed capital gains.



Point 3 for operations and support and business development expenses to help with seasonality and models, we expect expenses to be slightly higher in Q2 than Q1 and are targeting Q2 expenses to be approximately $290 million, plus or minus, as there's always some uncertainty in timing of expenses.



On Slide 36, we present the key profitability drivers for IG Wealth Management, and I'll highlight a few points. On the left, you can see that average AUM&A was up 2.3% over last quarter, driven by investment returns and net inflows. And on the right, the advisory fee rate and product and program fee rates are both in line with expectations, and the asset-based compensation rate is down slightly in the quarter. As we move forward through the next couple of quarters, we do expect slight upward movement in this rate.



On Slide 37, IG's overall earnings of $128.4 million in Q1, and I'll point one other financial planning revenue, which primarily reflects the insurance business as well as mortgage results that were in line with our expectations, excluding fair value adjustments. And looking forward, we expect to see similar results in the mortgage business next quarter, again, excluding the impact of fair value adjustments. And on other revenue, which is primarily comprised of insurance, but it also includes the roll-off of some of our legacy banking programs, we expect to see similar growth on a year-over-year basis in Q2 as in Q1. Also as a reminder, insurance volumes and revenue tend to be seasonally higher in Q4 relative to Q1, as Damon spoke to.



On point 2, IG's operations and support, and business development expense growth was 2%. As we look forward, we expect seasonality for IG to be similar to 2024, so higher expenses in Q2 versus Q1, with a target of approximately $170 million for Q2. And similar to last year, the second quarter will include higher discretionary spend.



Moving to Slide 38. 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 up 1.7%, which is supported by the onboarding of $3.6 billion in previously announced institutional wins. And on the right, you can see our overall third-party rate, which dropped due to mix shift driven by both our institutional wins and the ongoing success with our wealth management partnerships. And rates were also impacted in the quarter by fewer days during the first quarter, which we commented on on our Q4 call.



Looking forward, the onboarding of $3.6 billion institutional wins, plus the expected $1 billion win Luke commented on, will have a further one basis point impact on the overall third-party rate and a three basis point impact on the rate, excluding Canada Life. And to be clear, this is a pro forma perspective once the full $4.6 billion has been onboarded for a full quarter.



Turning to Slide 39. You can see Mackenzie's earnings of $52.6 million. On point two, I've already spoken to the change in net investment income relative to prior periods. On point 3, we are maintaining our full year guidance of 6% expense growth relative to 2024. And to help with seasonality in your models, we are targeting expense to be approximately $120 million in Q2, slightly lower than Q1.





First quarter expenses were higher than typical due to a number of items. First, Mackenzie strengthened their product breadth with the launch of several new products that were supported by retail and institution distribution capabilities and marketing, and Luke spoke to this just a few moments ago. And Mackenzie is also strengthening core capabilities with continued focus on tech delivery and middle office back-office capabilities, overall resiliency in the client experience.



Slide 40 has ChinaAMC's results. First, on the left, AUM growth was strong in the quarter, increasing by approximately 8%. And on the right, you can see ChinaAMC's earnings of $30.6 million for the first quarter, which includes $3.6 million in fair value gains. Excluding those gains, results were in line with Q1 2024 and still up from Q4. The quarter's results reflect ChinaAMC's ability to grow AUM and help offset some of the changes in fee rates we spoke to during our Q4 call. And on the bottom right, you can see the annual dividend received of $66 million.



Slide 41 has the earnings contribution from companies in each segment. A couple of comments on strategic investments. First, Rockefeller earnings were in line with last year, and we saw strong business growth in the core Global Family Office business during the quarter, and earnings were down from last quarter, primarily due to timing of some transactional revenue, which we expect to pick up in the coming quarters. And Northleaf's first quarter earnings of $6.7 million includes strong annual incentive fees typically paid in Q1 and earnings would have been closer to $4 million, excluding these fees.



On Slide 42, at the bottom right, I'll point out that at the end of Q1, our strategic investments, including unallocated capital, now represent approximately $6.5 billion in value. That's up over $1 billion versus Q1 of last year. Slide 43 highlights execution against our capital allocation priorities, where you can see the return of capital to shareholders and decreasing leverage, and our last 12-month trailing cash dividend payout ratio of 46% is in line with last quarter.



That concludes my remarks, and I'll turn it over for questions.

[Operator Instructions] The first question today comes from Graham Ryding with TD Securities.

Luke, maybe I'll start with you. I just want to make sure I'm sort of getting your message correct. It sounds like you're seeing signs of improving fund performance and some of your mandates.



Global equity quant is performing well, and you're rolling out new products around that vertical. Is this what you think the pieces are that will turn flows positive? And if so, is that a 2025 dynamic? Or does it take longer to sort of turn the ship?

Thanks, Graham. Yes, absolutely. On Page 27, especially looking at the period from December 31 to where we're sitting right now, we have a number of boutiques that really do their best work in an environment like this, where things are much broader and there is some volatility. So within quant and global equity income, those are strong and just continuing, and they continue to put on strong numbers. And then besides them, in some of the boutiques that didn't favor that narrow Navidea like environment like our durable growth Bluewater boutique, our Greenchip environmental thematic boutique and our ID quality boutique, those 3 boutiques have now really delivered a strong year-to-date performance, and you can start to see the 1-year, the 3-year and other numbers changing favorably.



So we feel there's a lot of momentum and a lot of place for us to lean in. And to your point, we are seeing a lot of momentum in global equity income and quant, as well as in the new products that we've launched in 2024 and 2025. Will we be positive in retail in 2025? That's our hope. We're pushing with all we got, and we certainly have a lot of things to lean into right now.

And then I'll stick with you for one more. Just on the private asset side. Can you sort of give us an update on what you are focusing on, either with Northleaf or other managers? And what are you doing in terms of marketing these funds or looking to potentially add?

So we've got our 4 products in market right now across infrastructure, private equity, and private credit. And we've been focused for the last couple of years on removing every single impediment properly putting these products in retail investors' portfolios. Those impediments have included scale, and the products are scaling nicely. We're at about $500 million across the 4 products now. Things like RFP eligibility, where we've acquired exemptive relief and now have it to make sure the products can fit and register plan. And the other impediment has been educating advisers, making sure dealers have the right licensing to sell the products, making sure advisers are educated. And with our sales team across the country, we've been doing a good job in getting noticed. So we are at a tipping point.



The last thing we've been very focused on is making sure the products are approved on all dealer shelves, and we've been making very good progress on that in the last 12 months. And then on promotional activities, we're quite excited. We have an event in London and England at the end of this month, where we have about 80, 90 advisers coming who collectively represent the tens of billions of AUA, and we are expecting that to provide a lot more momentum to the products. And as mentioned, we do have a fifth product coming, a multi-asset product later in the year. So this is feeling like a tipping point moment. And yes, these products, we call them the missing middle. They properly belong in retail investors' portfolios, and we're so excited to be on that, leading the way on it.

And is there any opportunity to sort of push on to sort of defined contribution platforms with those products? Or is it more of like a retail financial adviser is the focus?

Yes, that's our hope for Northleaf. In Canada and beyond, for any client who's got a target date solution where target date 30, target date 40, whatever the case might be, private asset classes fit very well. And we do expect that those asset classes will evolve into group platforms over the next decade. They just fit there.

And then, Damon, similar theme, can you just give us an update on how much of your discretionary AUM today would be in private assets, and sort of how you're thinking about that vehicle and asset class from sort of the top of the house?

So if you were to me down in terms of the total amount of assets, it would be approaching about $6 billion when you include our real property fund. Our strategy is much like Lucid's. We believe that private assets deserve a place in every single client's portfolio. It doesn't matter if they're mass market, mass affluent or high net worth, or ultra-high net worth. What we want to do is we want to be able to provide those solutions, both in managed money solutions, but also a la carte, leveraging Mackenzie's lineup through the OM. So we've been able to do both of those things. And we will increase access to private assets. It's not just Northleaf, it's also through Sagard and a number of other managers that we have access to.

The next question comes from Tom MacKinnon with BMO Capital.

Just a question with respect to Mackenzie. The impact on the net management fee rate, I think, Heath already suggested what the decline would be just due to the mix by adding some institutional. Now, if I look here, ETFs, albeit smaller as a percentage of the Mackenzie assets, it's really been the growth vehicle in terms of flows or one of the bigger momentum there, and it's certainly on the industry front there. You mentioned these active ETFs really gaining traction. I'm just wondering, as the mix potentially shifts to more and more active ETFs, does that have any impact on the net management fee rate?

Good question, Tom. So the ETF structure, when we brought active fixed income and now active equity margin in ETF form, we price them agnostically. So, whether you choose to buy the mutual fund or the ETF, generally, you're paying the same price for the services that you're getting. So if someone is purchasing retail active ETFs, you can expect the margins to be very similar if they start using different ETF types, like better beta, will be lower down the pricing continuum. And of course, the straight beta cap-weighted benchmarking is going to be a much lower fee. But for the active equity and the active fixed income, they're priced in line with the mutual fund structure.

Price in line, not from a fee rate perspective, I think you mentioned margins being similar, but price from a fee rate perspective.

Yes, from a fee rate perspective, you've got Tom. The fees are identical for the services being provided. The only difference in the fee between the mutual fund ETF tends to be administration because there the same service attached ETFs, but the management fees are identical.

And then I believe you said there's $1 billion expected in the second quarter in terms of institutional flows. I think there was something like $350 million out in April in institutional redemptions. So is this $1 billion on top of that? What drove the redemption? And what's driving the $1 billion coming in?

We fueled some ETFs in Hong Kong run by our sister company, ChinaAMC Hong Kong. There was a rebalance there that led to $350 billion out in April. And the $1 billion of the awards that we announced last quarter, that will be coming in May and June. And we also are seeing some good follow-on business. And so, we do have another award in the hundreds of billions of dollar range that should fund in Q3 as well.

[Operator Instructions] The next question comes from Jaeme Gloyn with National Bank Financial.

Just looking for a quick update on the Rockefeller. Obviously, some good success since acquisition and acquiring inorganically. What does the capital position look like over there at Rockefeller? Is there still lots of capacity to continue to run at these rates? Or maybe a quick refresh on where we are there?

Jaeme, the capital structure remains strong. There's lots of capacity, which I don't think is a surprise given the credit markets out there. There's lots of capacity for them to borrow as needed to fund adviser acquisitions. And in fact, they've meaningfully increased their acquisition target for 2025 relative to 2024. So the business overall is going very well. I mean there's really no substantive change. The Rockefeller Global Family Office business is performing as expected. They remain a destination of choice for wirehouse advisers looking to leave.



But I'd also acknowledge the slowness that we've spoken about in past quarters with respect to the M&A business, that continues and growth in the asset management business is modest. So, the delta to what we might have originally expected has nothing to do with the core business. The core business is rock solid. It's really related M&A and to asset management.

And the profitability of the business, I think when the acquisition was made, it was stated that it would replace the earnings of IPC, I believe, in '25. Is that still the case? Or is there a little bit longer runway here before we turn to profit on Rockefeller?

Jaeme, it's Keith here. We would expect Rockefeller from our portion of share to turn positive in the second half of the year. I'd say there's still work to do to replace IPC's earnings. As James mentioned, the M&A business and the asset management business are a little bit slower, but the core business is performing well in line with expectations. But I would say it's pushed off a little bit.

And just last one, since you guys called it out or Damon called it out in the IG Wealth section around mortgage business and insurance, it seems like top line or KPIs are growing nicely, but we're not seeing a flow through into earnings necessary, it's been kind of flat from a quarterly basis for a couple of years now. Should I take this, is there an active push to grow these businesses? And what do you need to do to be able to get those earnings to sort of get out of its last several quarter run rate?

It's Damon. I'll start, and then Keith will jump in. So I'll say to you, first off, that there is 100% an active push to grow this business. We believe firmly that mortgages and the mortgage whole credit discussion integral part of the financial planning discussion. So that's number one.



Number two, it is a process here. If you remember correctly, when we got out of the National Bank relationship, our mortgage book was actually shrinking. We've been able to stabilize that business now, and now we've started to grow it. So it's more of a process than anything, but we've certainly turned the corner, and I feel quite bullish on this business going forward. Keith?

I'd just add, James. So as David mentioned, the mortgages under administration have stabilized, which is great. And so, from this point, growth and then we'll see growth coming in the earnings side. I'd also highlight too, just for this quarter and the next quarter, there's some higher-margin business rolling off from 5 years ago. And so, you're seeing that this quarter. You'll see a little bit of the next quarter, but we should see improvement in the second half of the year. But on the mortgage business, expect similar results next quarter, but great opportunity to grow and grow earnings as we grow the mortgages under.

This concludes our question-and-answer session. I would like to turn the conference back over to Kyle Martens for any closing remarks.

Thank you, Betsy. We'd once again like to thank everyone for joining the call with us this morning. And Betsy, I think with that, we can close up the call.

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