The feeling is mutual at IGM Financial

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This article was published 08/05/2021 (1602 days ago), so information in it may no longer be current.

The mutual fund industry is coming off its best quarter ever… ever.

As one of the largest players in the field, Winnipeg-based IGM Financial Inc. has taken full advantage of that industry trend, generating a record-high net inflow of investments of $2.2 billion, record-high assets under management and advisement of $248.5 billion and a 25 per cent increase in earnings per share in the first quarter compared to the year before, in results released Friday.

Considering that across the country many of the things people might normally spend money on have become inaccessible, it might make sense that more are choosing to beef up their retirement savings, and in fact household savings has been one element of the economic affairs of the country that has benefited from the pandemic.

But the company has not just been a passive beneficiary. IGM has taken the kind of action that many experts advise during times of disruption — it has invested in technology to increase efficiencies.

During its annual general meeting on Friday, the CEO of IGM Financial, James O’Sullivan, said, “Our improvement in performance can be directly attributable to the continuing transformation of our business. In 2020, we made significant progress on initiatives that enhanced our efficiency and elevated client and adviser experiences.”

The company has recently become the first major enterprise client of a new AI-driven software tool created by the Winnipeg fintech company Conquest Planning Inc., while the thousands of IG Wealth Management consultants have moved to video conferencing, new mobile apps and have adopted online documents to make processes easier and faster.

Its performance has pushed the company’s stock price up to its highest point in more than three years to close at $44.79.

Jaeme Gloyn, an analyst with National Bank of Canada Financial Markets raised his 12-month target price to $55 from $51.

In an interview with the Free Press on Friday, O’Sullivan said that while he doesn’t know what the market will look like post-pandemic, he said it would be naive to think the current run will continue to grow and accelerate endlessly.

“Trees don’t grow to the sky and we are not going to pretend that they do,” O’Sullivan said. “At some point the remarkable growth in net sales and net flows and assets under management will start to taper.”

But O’Sullivan and others believe IGM’s combination of a quarter trillion dollars worth of assets under management, a well-run business that has been at it for a long time — the company is 96 years old — and substantial investments and connections to some of the most successful new financial technology companies, means that the company has a good runway to look forward to.

“Even if sales abate we will continue to do what we do, which is help Canadians with financial planning and help them prepare for secure financial retirement,” he said. “All of that is ahead of us whether sales and flows abate a little or abate a lot.”

Another boost to the company during the first quarter was the revaluation of its stake in WealthSimple, the Canadian robo-advisor targeted at millennials that IGM first invested $30 million in, in 2015. By October 2020 it had put in an additional $157 million which was then valued at $252 million.

Last month, after WealthSimple raised an additional $750 million, IGM remains its largest shareholder and that stake is now worth $1.15 billion.

O’Sullivan said there will always be different models and “no doubt some still to be created” but he said IGM’s connection to a company like WealthSimple allows IGM to better understand the marketplace.

“We are learning from it,” he said. “I want my management team to be thinking about the business, not just as it exists today but what is it going to look like in three years, five years, 10 years. Being part of this ecosystem where we are an investor in a company like WealthSimple… makes our management team all that much sharper and more capable and ready to deal with the future as it unfolds.”

martin.cash@freepress.mb.ca